Posts Tagged ‘Credit’
I was having this conversation with a business coach colleague yesterday. She deals with a lot of business owners, especially those starting out and those experiencing rapid growth. She’d been doing some research and one article she read suggested that a major reason that businesses fail is because of a lack of capital. This got me thinking about how people fund their ventures and whether they need a lot of capital to start their own business.
To be honest this really depends. If you are a product based business obviously you will need capital to invest in product but, if you were to start a service based business, you can often times get your business started with little or no investment plus time. You will need some capital though and there are some options available to you:
Friends and Family- Many people look to family and friends to fund their business ventures, especially if the funding required is small. Family and friends will generally offer you generous repayment terms on your business loan but make sure everything is done professionally. You don’t want to ruin relationships with friends and family for the sake of a few dollars. Also, if you get money from family and friends, make sure you allow them to share in your business successes.
Business Credit Cards- Business credit cards are another popular option that people look at when they aim to grow their business. Business credit cards can help with cash flow and, if you pick the right card, you can sign up to a rewards program and get points that can be redeemed for flights, accommodation or a variety of other rewards that may be useful to you. These rewards can be a pleasant little bonus for all of your hard work.
Investors- If your business idea is groundbreaking, or if your business plan is solid, you may be able to pitch to investors and get some investment in your company. If you expect rapid growth or you have a ground breaking product, then this may be the option for you. The problem with investors is that you may lose some of your decision making power as you give away part of your business to an investor.
At the end of the day, the most important factors for business success are clearly defined goals, the dedication to achieve them and then a marketing plan that will get your business in front of people. If you do need business finance there are options available to you. I have outlined three of these above.
Whether as a business user or a consumer, choosing the right credit card can be extremely confusing. There are so many options out there and it may be hard to work out which one is best for you. I’m a firm believer in people getting a credit card as soon as they can, as long as it is used properly. If they are regularly paid off, it can do wonders for your credit rating, making it easier to get a home loan or car loan.
The purpose of this article is to help you wade through the confusion and find out which card is best for you if you are only going to use it minimally and in emergencies.
Those credit cards with the best reward offers- If you are only a small user, and you will pay your credit card off each month, then the interest rate on the card you choose should not be too much of a concern. You should look at what other opportunities and offers you can receive for signing up to a credit card- this could be that they have the best rewards program for your life or it could be that a particular credit card offers you discounts or special offers at stores where you often purchase goods. This would be more useful to you.
Those cards with a small limit- You don’t need a big limit on your card if you are only a small user, otherwise the temptation may become too high and you may decide to live beyond your means and purchase things that you do not need. There is nothing wrong with running up the entire limit each month as long as you pay it off at the end of the month. Don’t get a big credit limit unless there is a reason for it and you can afford to easily pay it off each month.
Those cards with the longest repayment period- Male sure you pick a credit card with a long interest free period and leave paying the bill until the last minute. Why pay things back early if you can keep your money in your own pocket? If it is at all possible you want to avoid paying any interest payments.
There are hundreds of options for you when it comes to picking the right card for your personal circumstances. Following the tips that I have mentioned above may enable you to make better choices more easily.
If you read the newspaper or watch TV, you can’t help but feel that everyone in the US is in debt up to their ears. With the economy still struggling to recover, we hear of more and more people becoming mired in more and more debt.
I have heard from many people who are just paying the monthly minimum, but keep on using the card. The result is that the debt just keeps growing and growing and every payday a larger part of their salary is being used to service their debt. These people want a path toward financial freedom, a place where they control their finances, instead of their finances controlling them.
The problem so many of these people have is that they want very badly to gain control of their finances, but they lack the motivation to keep on track, to keep taking the steps they need to take to make that dream happen.
For those people I offer in this article, five steps to financial freedom, steps by which you can seize control of your finances. These steps are based upon the model for self motivation. They serve the dual purpose of not only helping you get back on track, but also keeping you motivated to stay on track.
Step 1: The first thing you need to do is to understand why you want to seize control of your finances. The more valuable a goal is, the more likely you are to achieve it. So write down all the positive reasons for why you want to regain control of your finances. What will you gain? reduced stress? the ability to buy things you need? a feeling of pride at how responsible you are? Also write down what will happen if you fail to make this change. Will you have to file bankruptcy? Will you lose your house? Will you be miserable and depressed and disappointed in yourself?
Step 2: Determine exactly what regaining control of your finances means in your situation. Clarity is motivating, so the clearer you are on exactly what you are moving toward, the more likely you are to get there. Here are some issues you need to get clarity on. How will you know when you have regained control of your finances? Does it mean reducing your debt? Does it mean living below your means so you can be paying off your debt? Write down what will be occurring in your life when you have succeeded. Every success you have will motivate you even more to achieve another success.
Step 3: Write down a clear description of how you are going to make this change happen. Make a plan. Write down all the steps you can think of that will help you make this change. Will you cut up your credit cards? Will you track your spending for a certain period of time? How long? Will you make a budget? Will you set aside a set percent of each pay check to use toward your debt? Will you need to take an additional, part time job for a while to catch up on your debt? Will you contact your creditors to try to work out a payment plan? Step Three provides two very important motivational impacts. Clarity, as we saw in Step Two, is motivating. But also, a big goal, like gaining control of your finances, is less scary when it is broken down into its component tasks. The less scary something is, the more confident you will be that you can succeed. Nothing is more motivating than confidence in your competence. That’s why it’s factor number two in the model for self motivation.
Step 4: Be in charge. Suze Orman says in The 9 Steps to Financial Freedom, “True financial freedom is not only having money, but having power over that money as well.” Make a conscious decision that you control your financial life. You are the boss! Power is motivating. Acting intentionally is motivating. Being a helpless victim of the economy is NOT motivating. Take charge and you will stay in charge.
And last, but by no means least:
Step 5: Find resources that will help you make this change. The worse the economy gets, it seems, the more resources there are for those who need help getting back on their feet.
Looking for bankruptcy? Don’t go for it! Instead, keep bankruptcy as your last option and try out the other options which are available in the market. There are a few debt relief options to consider. The best 3 are mentioned below with brief explanations for each one of them.
Do it yourself – debt management:
This method involves arrangement of the credit cards or other personal unsecured loans in an order. The order will be a descending one with loans having high interest rates getting top priority and then followed by the ones with lower interest rates. In this method, you will have to create a new budget in which, you will have to eliminate some of the unnecessary expenses and then save some extra money. Pool this money with the amount out of your paycheck that you keep aside for loan repayment and start repayments with the one, which has the highest interest rates. This helps in containing the debt due to faster accrual of interests.
Professional or self arbitration – debt settlement:
In the method of settlement, you will have to negotiate with the creditor on your own or you will need to use professional help for doing the same. In either case, the process converges to push the creditor to eliminate the debt by a certain percentage. The amount not forgiven is to be paid in lump sum to the creditor. To force the creditor to eliminate at least 50% of the dues, the use of the bankruptcy threat is essential. Once the remainder is paid, the consumer will get a clean cheat and the debt will be considered as paid in full.
Reducing monthly installments – debt consolidation:
In this method, negotiation with the creditor is carried out by a professional negotiator who negotiates for the reduction in the interest rates and elimination of associated costs like insurance charges, over limit fees, late fees and other. The threat of bankruptcy is used to force the creditors to agree to the above conditions. When the creditors agree, they re-amortize the loans and then the monthly installment burden for the consumer is reduced significantly.
The above mentioned three methods ensure that the credit score of the consumers remain unharmed and that the consumers get back their financial stability and get out of their debts asap. This is not possible in case of bankruptcy filing because, once the consumers go for bankruptcy, the FICO score will be lost completely. This brings in more financial troubles for the consumers. Hence, personal bankruptcy should be avoided.
The great depression of the 1930s is still a powerful memory in the minds of many people. As a result, the present economic situation scared the majority of the people who have directly or indirectly felt the negative effects of the Great Depression. These two episodes are similar to some extent, but we have to admit that there are some aspects that haven’t been present during the economic downturn of the 20th Century. Thus, it is important that we only adopt those measures from the past that might work for the current situation.
One important factor that contributed to the re-balance of the economic situation back in the 30s was the fact that people were willing to change their lifestyles in order to save money and cover their debts. This is a good example that we can follow these days as the current economic recession was determined primarily by the numerous credits that have been registered. If you want to purchase something, you better wait until you raise all the money you need; don’t get a credit unless it is really necessary.
The second measure that helped in the 1930s was the fact that people oriented themselves towards do-it-yourself activities. Nowadays, we have forgotten how inspiring and satisfying it is to create our own food, clothes or even furniture, so there is a lot of money that people waste on products and services that they can very well do themselves. Unleash your hidden talents and you’ll see that you will be able to produce products that are just as good as the ones on the market, yet much more affordable and resistant.
Being a wary consumer will enable you to use less money on food and other commodities. As a matter of fact, during the Great Depression people would reuse materials and objects to create new items. Thus, you should not throw your old clothes or your electrical devices on the window; take the functioning parts and create new objects instead.
Finally, the economic recession is a period of investments, even though this may seem strange to you. As experts have noticed during previous economic downfalls, it is very convenient to invest your money in tangible products that are very likely to become more expensive after the recession. Such is the case of the gold and the oil market which are likely to register an amazing increase in the years to come.