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Monthly Archives: May 2017

Information of Simple Money Matters

We live in times and society where the pressures to buy and to show off the things we have bought (materialism) is enormous. Our inability to afford these things or put money aside for them has pushed us to the direction of buying on credit (getting things now and paying for them over time thereafter). Credit can, if approached with caution and discipline, greatly improve the quality of our lives. It can afford us things that we need now that we do not have cash to buy, for example, we may not afford to buy houses cash but may take a mortgage bond and pay affordable instalments over time, or take out a hire purchase for a car personal or business use. Credit can however become addictive resulting in impulsive buying habits (buying things that you do not need because you can afford them through credit limit). The fact that you can afford something does not necessarily mean that you can have it. If credit is not applied responsibly, it can have tremendous destructive consequences.

We live in a consumer society where people are judged by what they have, rather than who they are. This has developed a culture in which community members compete against each other regarding material possessions. This consumerism behaviour drives people to wear expensive label materials, expensive cars, and expensive houses with top of the notch furniture and equipment leaving them with very little or nothing to save. There is absolutely nothing wrong with acquiring these things if you can afford them. There is definitely everything wrong in acquiring these things at the expense of the provision for your children’s education and your retirement savings. While we may need credit and debt at some point in our lives, it should not be a way of life.

Live within your means

We need to plan now for the things we’ll need in the future. The starting point will be to understand the difference between needs and wants. Needs may be things that you may not live without or things that you must have or do, for example, provision for your children’s education, owning a house, life insurance, food, clothing, provision for your retirement, and transport for your business. Wants may be things that you desire to have and can live without, for example, label clothes, expensive furniture, expensive cell phones, luxury houses, etc. You need to take care of your needs first before looking at wants. Depending on credit is living on borrowed money which is a very expensive option. Try to save money for the things you may need that are not needed urgently or buy them on laybye. When you buy something on credit, you are actually borrowing someone else’s money. Borrowing money costs money. Do not overspend your income and do not over commit yourself with credit purchases. Whenever you are thinking about borrowing money, or buying something on credit, ask them to tell you how much you will be paying in total – including all the interest, administration charges, fees and any assurance premiums. Find ways of reducing your hire purchase debt by for example, paying a bigger deposit than required by the credit lender. The most effective helpful way is to look for ways of making extra money. This should be something that will not require much of your time and should not cost you an arm and a leg.

Financial institutions and credit providers make most of their profits from the interest they charge on the money they lend, for example, if the repo rate (the interest rate at which the Reserve/Federal Bank lends money to the financial institutions) is 5.5% and the prime rate (the interest rate at which banks lend money to customers) is 9% and the bank or furniture store charges you 17% interest, that institution is making 11.5% (3.5% + 8%) profit from you. This excludes the mark-up that the furniture/clothing store has already factored in the selling price of the merchandise. So, you are paying even more. This is not about paying less or more, it is about whether you can afford to repay without sacrificing your immediate needs.

Finding a balance between savings for the future and committing to debt has a lot to do with our need for security and harmony. No one likes to feel exposed and at risk, so we must make sure that we have some money saved for emergencies and irregular expenses. Committing to debt is spending our future income (money we have not earned as yet) now and this puts us in a disadvantaged position. Some people have committed themselves to so much debt that all their monthly income is spent as soon as they receive it. The only way to prevent this from happening is by using a budget and strictly following it.

Overview Online Bill Payment

What is the best reason to choose online bill payments? First of all, you can save time and money when paying late fees and postage. It is also actually safer than paying through mail. Personal information is at risk of falling into the wrong hands when it is printed on paper and goes through the whole postal system. Besides, you can manage your finances more easily when paying bills using your credit card. Furthermore, you can even save cash rewards and airline travel miles whenever you use it.

When you pay your bills online, you will save on the use of paper, doing your share in preserving Mother Earth.

Perhaps the greatest advantage of using online bill payments is getting rid of all the paper sent to your billing address. There will be less mail and envelopes to open and discard. Now, you can receive all your billing statements and reminders in your email inbox. Your service providers and banks will ask if you would like them to email your bills and reminders. They will gladly send your bill through electronic mail. This means less trash in your home and less paper in the landfills. With fewer paper bills, less fuel and energy will be spent on processing, printing, mailing and transporting. When it comes to environmental benefits, online bill payment is a sure winner because of the practical solutions it presents.

Another reason to go for online bill payment is to save money. Since you will no longer mail your checks, you will not spend on stamps. On the other hand, companies also save a lot on online transactions since less money will be spent on processing, printing, mailing, then transporting. This system works more to their advantage and they get more savings, which they would gladly share to their clients, in terms of lower fees.

Paying your bills online allows you to manage your finances and counter in one take. Online bill payment may be a daunting task to some individuals who are not organized or fond of high-tech gadgets. They would rather pay in check or get their paper bills inside the mailbox. However, there is nothing simpler than paying bills on the Internet. Certainly, it may take some time to set up, but afterwards, they are done. Once they get the hang of it, they will no longer go back to the old habit and get worried about late fees or losing their mail in their large pile of trash.

Financial Prudence

Spend money available only on what makes the presents some value for you and your family (educational activities for children, joint family vacation, help parents and so on.).

It is a stupid thing to do to spend more money than you earn. This everyone knows, but only a few do manage to make (every second American family has outstanding loans or even several).

Don’t buy stuff that you use only 1-2 times. Give up such purchases, or rent these things.

Agree on a common understanding in the family – how to spend money, what investments you should make.

Forget about buying costly things spontaneously. It can be a women’s luxury watch for your loved one, which she doesn’t need or the same car as your buddy bought. Set aside a final decision about their purchase for a few weeks. If the desire is still here, then you buy.

Avoid excessive greed. People live in order to get pleasure from life, not to save money on every little thing! Pamper yourself more often (within the family budget agreed in advance).

Learn to calmly – without screams and scandals – discuss and solve inevitably arising financial problems.

Protect Assets From Unexpected Events

Life insurance

This is one of the most fundamental forms of insurance – protection for family members if you or your spouse should die. The consequences of death can be devastating to a family in many ways, not the least of which is financially. Keep in mind that there is a financial impact even if either of you are not earning income outside the home. If you are a stay-at-home spouse or volunteer, the role you play at home will need to be filled should you pass away unexpectedly. It’s recommended to have sufficient life insurance in place to replace the lost income and to cover a lifetime of needs for your family.

Disability income insurance

Many people overlook the financial risk of a disabling injury or illness, assuming their health insurance will cover additional expenses. If you incur an injury or illness that prevents you from earning your regular income, disability income insurance helps replace that income. This coverage is often offered by your employer, and most plans offer several levels of coverage as a percentage of your income. Make certain your coverage is sufficient to truly protect all of your income needs in the event of a protracted illness or injury.

Extended care / Long-term care insurance

Costs for in-home care, assisted living or a nursing home can be substantial, even if you have a healthy amount saved for retirement. Extended care or long-term care insurance can be used to address a significant health event, pay for medication or treatment, and can help secure quality specialized care.

Property / casualty coverage

While you’re likely to have auto and home insurance, it’s important to make sure you have enough coverage. Common underinsured areas:

• Look specifically at the following limits in your car insurance policy: personal injury protection, collision / comprehensive, uninsured / underinsured motorists and roadside assistance, among others.

• For your home, consider if you’re covered for home media and computer equipment, adventure equipment (golf clubs, bikes, fishing equipment, etc.), and high-value items like fine jewelry, art, collections, musical instruments or china.

• Take a look at specialty insurance for big-ticket items like boats, ATVs, RVs, collector cars and motorcycles as well as special circumstances like pet, earthquake or flood insurance.

Health insurance

The law now requires that you have coverage for medical expenses. You may participate in an employer-sponsored health plan, or you may obtain individual coverage. If you’ve reached age 65, Medicare can be an option. Also consider if vision or dental insurance makes sense for your family. To get started, add up your total healthcare costs last year, then estimate the amount you’ll need next year. Talk to potential insurance providers (or your employer if they offer these plans) about how insurance could be applied to services like new contacts, required surgeries and procedures, or your teen’s braces.