The Power Of The Line Of Credit

Most people in North America are bogged down by debt. Car loan debt, student loan debt, mortgage debt and most importantly credit card debt. Credit card debt is the easiest to access and easily the worst form of debt that one can amass. Most credit cards have an interest rate that starts at 10% annually … Continue reading “The Power Of The Line Of Credit”

Most people in North America are bogged down by debt. Car loan debt, student loan debt, mortgage debt and most importantly credit card debt.

Credit card debt is the easiest to access and easily the worst form of debt that one can amass. Most credit cards have an interest rate that starts at 10% annually and others even run up to 20% and 30% depending on the special extras associated with that card.

Credit card companies entice you with so many special incentives, but most people fail to realize that they could and should get a line of credit instead.

A line of credit is a loan from the bank that is similar to that of a credit card, but just with much lower interest rates. Some may be 2% or 3% or maybe up to 5% or a little more. However, it is to be noted that they are much lower than credit card interest rates no matter how you look at them. Anybody who would choose a credit card over a line of credit to gain access to some borrowed funds is surely ignorant of the benefits.

I know of a man who managed to amass $75,000 in credit which he used to finance a project that blew up after a year or so.

This man who didn’t even make $2,000 from the profit of this project ended up being responsible for a whopping $90,000 after two years because of his ignorance.

If he had known better (he really wouldn’t have started this project) could have simply opened up a line of credit and saved him self a whopping $16,000!

Granted it is easier to get access to the plastic than a line of credit, however if your credit rating and monthly income is enough to get you $75,000 you can be sure that the bank will lend you at least $50, 000 in the form of a line of credit.

So, if you are looking for some borrowed money to open your restaurant or do some renovations or any other project, don’t be like the man in the before mentioned story. Apply for a line of credit before swiping that card and save thousands of dollars of interest in the process. It may not be easier to obtain but it is easier to manage and also easier to pay back, so make the right choice.

Are You Giving Your Future Away?

How to Build Your Life as a Business Shark Loans – Why you’re keeping yourself poor by giving away your future wealth.

Today is the day you come to find the reasons why many people stay poor. As a part of Building Your Life as a Business, you have to understand this fundamental truth. That no matter what you do with your money, there is and will always be someone who is more than willing to liberate you of the burden of weight keeping it in your wallet.

Because of this truth, you need to be just as wary of the opposite. Which is anyone who is willing to lend you money. As borrowing money is one of the easiest ways for you to keep yourself poor as you continuously give away your future wealth for something nice now.

This profession of giving money to people to buy things they don’t need or can’t afford has been around for ages and still exists today. These Lenders are called sharks and the loans they give are shark loans. They are given such a name because of their predatory nature. Because the loans have too high of interest rates and other bad terms that take advantage of you and your ability to pay.

Let’s go over two bad examples of people who give shark loans:

Shark Loan One: (Based off a true story.)

You need a car.

You need one as soon as possible.

You walk onto a Used Car Lot.

You walk away with a $12,000 loan and a Used Car.

You have a 4 year loan at $400 dollars a month.

Which means you will pay $4,800 dollars per year for 4 years.

Coming out to $19,200 for a car that is only worth $12,000.

Even worse, you drive it off the lot and it immediately loses $3,000 dollars in value. (As most cars do.)

So if you ran into money trouble and couldn’t make your car payment, you couldn’t even sell the car to cover the original loan amount.

You pay your car off for 2 years, and then something expensive breaks in the car. You have to pay it off because if you don’t you can’t go to work so you can keep making payments.

The extra expense ultimately affects your ability to pay your car payments, and you miss a few.

Your car is then repossessed and they demand all your past car payments plus current ones to get it back.

But you don’t have the money and even worse you need the car to get to work.

Because you can’t get to work, you lose your job, and the loan company sells your car to someone else. However the amount they sell it for isn’t enough to cover the loan and they still demand that you pay the rest of the loan. Even though you will no longer have a car and have no job. You are still legally liable to pay the loan back.

Shark Loan Two: (Based off a true story.)

You go to college for an education.

You take out $100,000 for a degree that isn’t in high demand.

You get out of college and can’t find work.

You end up taking a job offering low pay and is far below your education level.

You still can’t make the extremely high payments of a $100,000 shark loan and get a second low paying job.

You work 80 hours a week and still can barely make ends meet.

Because you have conventional loans, the bank won’t let you consolidate your loans or lower your payments without charging high interest and fees.

Even worse, your parents co-signed on the loan. Because you have been missing payments, you have ruined their credit. They cannot get refinanced when they hit hard times and need to lower their monthly payments. This causes them to not be able to make their payments a few months down the road and they end up losing the house.

The house becomes the exact same situation as the car loan. And they are still liable for any leftover loan.

In both these situations, you have loans that were given without concern of whether what you were buying would actually help you pay back the loans. No consideration was given to see if this decision would benefit you in the future. It was simply made to take your future wealth from your current income with no thought about the risk of you losing your job, having money trouble because a big expense came up, or another one of life’s little reminders that she hates you.

What does this mean to you?

It means don’t go to college unless you know it is a valuable investment that will increase your income potential by 10x. That means researching to see that the job you want is in high demand and pays very, very well. The idea here is not that you go for your passion. The idea is to get work that pays, and once you’re financially sound, you pursue your passion.

DON’T PURSUE YOUR PASSION USING SHARK LOANS UNLESS YOU KNOW THE MONEY IS THERE.

It means don’t buy nicer things now if you can’t afford it. Don’t buy a $20,000 car and make $500 payments a month when you only make $1000 a month. You’re creating a situation where your finances can be easily stressed if you have even one bump in the road.

DON’T SACRIFICE YOUR FUTURE FOR A SHORT-TERM PLEASURE SUCH AS A NICE CAR, HOUSE, OR ANYTHING THAT SHARKS WILL LEND YOU MONEY FOR.

In the end, ensure that any money you’re borrowing is an investment that will pay for itself.

For example:

Buy a $150,000, 4 bedroom house with a mortgage payment of $850.

Live in one of the rooms and rent out the other 3 for $400 each.

Pay off the mortgage with the $1200 and enjoy your extra $350 a month.

Knowing that not only are you saving thousands a year by not paying rent, your making money as well as paying into a house you can resell for much, much more.

This is your life and you have to treat it like a business.

How to Get Finance With Unusual Employment

An increasing number of people are choosing flexible working opportunities with their employers, as it enables them to successfully combine both their lifestyle arrangements and their family commitments.

However, many have found that when it comes to visiting their local bank branches while looking for a home loan, car and truck loan or even equipment finance, their local bank is still apprehensive towards them. And, it is because of their irregular working hours:

1. They don’t seem to fit into the strict lending guidelines set out by banks; and

2. They are not seen by banks as holding down a stable job with a regular income.

What the Common Unusual Employment Types?

Here are some of the common unusual employment types:

1. PAYG (pay-as- you- go) contractors

2. Casual workers

3. Part-time workers

4. Self-employed individuals

5. Sub-contractors

6. People with other forms of income

Type 1 – PAYG Contractors

PAYG contractors are normally employed via an agency or directly via their employer. This form of employment is now common in a variety of fields such as:

>> Medical;

>> Engineering;

>> IT (Information Technology);

>> Mining;

>> Project Management;

>> Construction; and

>> Government.

So, if you are a PAYG contractor and you are looking for finance, here is a list of things that lenders/credit providers will require you to provide:

1. You will be required to provide a copy of your most recent “Employment Contract”, with income details listed;

2. You will need to provide evidence that you have a minimum of 12 months employment in the same industry and that you have a good track record in your chosen industry; and

3. You will need to provide evidence that your employer or employment agency takes care of your income tax and superannuation contributions for you.

Note: If you are not on the direct payroll of an employer or employment agency, you may be treated as being self-employed.

Type 2 – Casual Workers

This type of employment applies to people working on a casual basis in the following industries:

1. Restaurants;

2. Retail;

3. Teaching and Tutoring;

4. Nursing;

5. Childcare;

6. Trades;

7. Drivers; and

8. Cleaning.

If you are a casual employee, you will need to provide evidence that you have been employed at the same place for at least 6 months.

Lenders/credit providers will calculate your average earnings over a set period, and count this as your income. However, if you want to work out your own average earnings, then you can use an income annualisation calculator to calculate your own average earnings.

Type 3 – Part-Time Employees

If you are employed on a part-time basis, you will find that lenders/credit providers will generally require you to:

1. Provide evidence that you have been employed at your current place of employment for at least 6 months: and

2. Provide copies of the following documents:

>> Current computerised pay-slip covering a minimum of two (2) pay cycles in order to confirm details of your base income; and

>> PAYG Summaries; or

>> A signed letter of employment from your employer listing details of your current base-remuneration.

Type 4 – Self-Employed Individuals

You are self-employed if you run your own business. You are categorised as self-employed individual even when you are conducting freelance work as a journalist, photographer, tour guide, etc. In such a situation, you will find that most lenders/credit providers will require you to provide evidence that you have a regular income to sustain a loan. This includes providing evidence that:

1. You are a business owner or partner;

2. You have been trading in your current business for at least 24 months;

3. Your business provides a steady income; and

4. You will be required to provide copies of:

>> Your most recent Personal and Business Income Tax Returns, and

>> One set of the business financial statements, reflecting two (2) years trading activity

Note: If you conduct freelance work with an employer, you may find that lenders/credit providers may require you to provide a copy of the written agreement between you and the employer that outlines your pay and conditions.

Type 5 – Sub-Contractors

Sub-contractors have specialized skills and they are generally employed by a primary contractor to provide specialized services in a variety of fields such as:

1. Building and Construction;

2. Mining;

3. Civil Engineering; and

4. IT (Information Technology).

Note: Many sub-contractors have little to no overheads and no staff and most are typically self-employed. In a sense they are similar to PAYG contractors.

Type 6 – Other Forms of Income

If you receive any other form of income and you are unsure if it is acceptable to lenders/credit providers, you should seek help from a qualified and licensed finance broker or a mortgage broker. You can even seek financial and legal advice from your accountant and solicitor. These other forms of income can include:

1. Centrelink payments;

2. Commissions and Bonuses income;

3. Trust Distributions income;

4. Car Allowances;

5. Annuity Income from Superannuation;

6. Director’s fees;

7. Second Job income;

8. Investment income (i.e. Dividends received from publicly listed companies); or

9. Court Ordered Maintenance payments.

Seek Expert and Professional Advice

If you still have doubts regarding your employment status and want to obtain finance, you can seek help of a finance broker. You should opt for a professional qualified finance broker because he/she will have experience of dealing with many lenders/credit providers on a regular daily basis. Also, he/she will be familiar with the lending guidelines and credit policy requirements of a number of lenders/credit providers.

Factors To Consider Before Getting A Car Loan

Unless you will be paying full for the car you are considering of buying, you will surely need a car loan. However, with plenty of competing auto loan products in the market today, how will you choose the best? Well, experts have indeed provides some tips so you can get the best auto loan.

Things To Consider Before Making Your Final Choice

Interest rates for every car loan product – Basically, there are 2 types of interest rates applied for car loans. First is the fixed interest rate wherein rates are calculated every month depending on the total amount the client borrowed. Second is the reducing balance interest rate wherein rates are computed monthly basing it from the amount the client currently owes the bank. In some other banks, profit rate usually is computed by dividing the markup profit by the purchase cost.

Payment plan in every loan product – It is very crucial for a possible borrower to evaluate such payment plan as this allows the borrower to plan financially during the duration of the loan. In some countries, the maximum period for a loan is fixed at 6 years. There are also other banks offering borrowers the option to pay lesser amounts monthly and settle the remainder in bulk.

Inquire about the processing fees up front – As a possible borrower, it is very crucial for you to ask about such so that you will be aware of all of the cost associated with the car loan. Lots of banks indeed allow borrowers to extend the duration of the loan. But in case you want to settle your loan as soon as possible, ask if you must pay an early settlement fee.

Necessary documents that must be submitted – Potential borrowers are oftentimes required to submit salary certificates, copies of their passports, and banks statements. Some banks might even require them to submit at least 3 local references with or without a copy of a utility bill. Be reminded that documentation as well as vetting requirements varies from one bank to the other. If you have all of these documents and requirements at hand, your loan application might become a lot easier and faster.

Perks included in the loan product – To entice as many potential borrowers as possible, there are lots of banks that offer added benefits – from credit and debit cards to free registration and extended warranties. Although some of these bundled offers might seem very appealing to you, be cautious about the possible added costs attached to it.

Modern Financial Advising For Beginners

The Internet is a testament to the fact that there are DIY approaches to practically every need for which one might have traditionally requested another’s assistance. Financial planning is no exception. Those looking to start investing in careers often tend to believe they are capable of creating their own success. While individual success is not completely unheard of, it is rare. Services to expand financial gain are no longer exclusively for the wealthy. In fact, according to many experts, hiring help could drastically improve one’s chances of coming out on top financially in the long run. Still, many find it difficult to initiate the process. Here are some tips from a seasoned financial advisor for beginners.

Admitting It Is The First Step

Like with any significant self-improvement, determining whether or not you need assistance is the key to financial success. Unless you are a natural at portfolio management, you probably could benefit from the help of an expert. Deciding to allow someone to help create your monetary triumph is crucial. There is no shame in needing their expertise, especially when it has become so easy to do so affordably. Many modern companies have significantly lower minimum account requirements than previously held by traditional firms. Financial advisors have never been more accessible to new investors.

Decide to Invest

According to a seasoned financial advisor, the heart of financial planning can be summed up pretty simply: “You either have a plan, or you don’t.” Those without a specific approach often fail. After recruiting assistance, dedication to investment is crucial. Realize that attention to the status of your current portfolio is an investment into the status of your future portfolio. Decide that you are going to take a guided, methodical path to a more comfortable financial end. Sporadic, overly passive investment approaches are common pitfalls of individual investors who fail when attempting to go it alone. A solid strategist will encourage your desires by motivating you to remain dedicated to your plan. Remember-the sooner you begin planning, the longer your plan has to succeed.

Focus On The Future; Be Aware of The Present

The end goal of investment is the future increase. Trends in finance are constantly changing. A financial advisor can be of great assistance in this area, being more knowledgeable of these changes in a way that will increase the probability of multiplying your returns. Vigilant monitoring of the current climate is vital. Be sure that you have enlisted the assistance of someone who is dedicated to such surveillance. While your strategy might not necessarily always be comfortable, keep in mind that your future will be.

With the widened availability of financial advisors, it is more realistic than ever to begin investing. Regardless of the account size bracket into which you fall, there is undoubtedly a service for you. Realize that hiring a partner and having a plan are ways of presently managing your future. In the wise words of an experienced CFP, “The first step in planning is deciding to have one.”