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Personal Finance Planning Strategies – Why You Should Treat Your Household Like a Business

09 Sep

Do you treat your household like a business? Maybe you feel that treating your business like a business is quite enough. But think about it for a minute. As someone who owns a small business or a professional practice, you know there are some fundamental ways to operate that group activity so that it is a profitable, expanding endeavor. Read on to discover how you can apply the same rules to your household as well, which will go a long way towards helping you with your personal finance planning.

And not only do the same fundamental rules apply to your household activities, but the more you apply sound business practices to your household, the more financially secure you and your family will be.

But how do you get started?

Why not start your new approach to personal finance planning with a change of terminology? Let’s think of your household as the “parent company”. In business, a parent company owns junior or “subsidiary” companies and other assets. Well, your household owns assets too: a small business or practice or stocks (subsidiary companies), bonds, cars, collectibles, etc. It has money that it owes, called liabilities, such as mortgages, car loans, and personal loans.

The household also has income, whether earned as salary or as dividends from investment activities and it has expenses such as the cost of living and so forth.

The household also has executives that make day-to-day management decisions: you and your spouse. It also has staff: all of the members of the household, each of whom are responsible for certain functions.

Like any other business, your household reports its financial condition every year. The 1040 income tax return is essentially an income statement and balance sheet for the business activity for the year. The household tax identification number is your social security number. The government views you personally and your household as business activities. The sooner you adopt that same viewpoint, the sooner you will act like a business owner and run your “household company” more profitably.

Every business must have certain areas functioning to be viable: These include executive planning, personnel, sales, finance, technical delivery, quality control and public relations. Any one of these functions that are either not done at all or done poorly will make the business activity non-viable and, quite possibly, bankrupt. The household is no different.

If you are an employee of a company, you may think that these functions do not apply to you. They do. If you are employed, you have contracted your services for a salary (not really any different than being self-employed) which is then gross income for the household “corporation”. It is the lack of business perspective that has caused the adverse economic conditions in which we find ourselves.

One of the greatest omissions in the management of household business activity is the lack of a plan. Financial planning is the only way to ensure that the proper things are being done to run the household as an expanding, profitable enterprise. Yet, the vast majority of American households do not have a plan and the results are obvious-a record number of bankruptcies, unsustainable debt, and low income.

But you don’t have to follow in their footsteps — or remain on that losing path. Why not revamp your personal finance planning, apply the basic natural laws of business to your household, and grow your financial resources to achieve your life goals?

Ready to improve your finances? Get a FREE ebook with 87 tips for financial and business success from Christopher Music of Wealth Advisory Associates, LLC. For the legal disclaimer, please click here. Here’s a related article on financial planning.

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Balance Transfer Credit Cards – Opportunity or Danger?

09 Sep

Credit cards can be a wonderful opportunity to do things that would take you several years to achieve, or to help out in an unexpected emergency. However, there is another side to this opportunity, a side that can turn into a true nightmare. Maybe you are already aware of the potential nightmare of swimming in credit card debt. You might believe that balance transfer credit cards are an easy solution. This article is to help guide you from possible dangers and give you the knowledge necessary to find the best balance transfer credit cards available to you.

Danger One – Interest rates

Interest rates can turn into a game of musical chairs (different rates) if you aren’t aware of the following pitfalls. First, answer the following questions: Does the interest rate on your balance transfer credit card stay the same or does it change after a certain time period? Is it the same for new purchases as well? Most importantly, will the interest rate remain the same for the balance transfer loan amount, if it is going to increase to high interest rates in three months you may be better off with your present loan.

Opportunity One – Some interest rates stay the same for term of the loan and you can consolidate higher rate interest loans and pay your balances off quicker and for significantly less interest than by staying with one or several high interest rate loans. What you need to do is to make sure the low interest rates will stay the same by researching the terms of the balance transfer credit cards available.

Danger Two – Oops, I’m late on my payment! Depending on the terms of your contract, this could be catastrophic to your long term budget.

Opportunity Two – Know the triggers in your contract that make the interest rates skyrocket. When you know the terms of your contract, you have control over whether or not you have to pay late fees, penalties, or very high interest rates on your balance transfer credit card in the future.

Danger Three – Look for those hidden fees! There are actually credit cards that will charge you more fees than they are willing to lend you, beware . . . you don’t want to pay fees, but be able to quickly pay off the principal due on your loan. Balance transfer fees, annual fees, loan fees, late fees, over-the-limit fees, miscellaneous add-on fees can make your loan skyrocket.

Opportunity Three – Read the fine print!

Research the different cards available to ensure that you won’t have to pay for hidden fees. Some balance transfer credit cards offer free interest for the term of the loan with no transfer fee. You don’t want to end up with a balance transfer credit card that turns into high interest and charges as much as a four percent fee on the loan amount you are transferring. It is easy to see why checking can save you literally hundreds of dollars for just a few minutes of investigating what is the best balance transfer credit card available.

Danger Four – You pay off one credit card or loan, only to use it again! Ultimately you will be sinking into debt.

Opportunity Four – Pay off that account with your transfer, then CLOSE THE ACCOUNT AND CUT UP THAT CARD! Don’t even have the temptation of having the account or credit card(s) available to use. You have the ability to control your credit, not let it control your life’s future opportunities.

Danger Five – Be careful when you transfer your old loan(s) to your new balance transfer credit cards. You need to ensure that you give the right account number(s) for the balance transfer payment to your new balance transfer credit card company. Also keep making minimum payments until you get a statement in the mail with a zero balance or confirm by phone (make sure you record name/date/amount paid for documentation) that you are paid in full.

Opportunity Five – These extra precautions and follow-up work will save you possible late and penalty fees on your old accounts. Again, you’re taking charge of your credit and ensuring that you have a promising financial future.

Conclusion

Yes, balance transfer credit cards can be a real opportunity to help you clear up debt by consolidating your credit cards and loans and maybe even lower your total payments. However, don’t forget the dangers involved with this type of credit card. Be sure to research and investigate all the possible pitfalls involved by checking the interest rate terms, any triggers that would increase your interest or cause late fees and penalties, also be sure to check for hidden fees by reading all the fine print in your contract, close out and cut-up your old credit card(s) so that you won’t be tempted to run up new charges on the accounts you just paid off. Finally, be sure to follow through with your paperwork and pay the minimum amount due during the transfer of money, so you won’t encounter problems with additional late fees and penaltiesnot to mention the affect it would have on your credit score. If you follow this plan, you too can secure the best transfer credit card for your specific needs and take advantage of the opportunities and stay away from the nightmare of bad credit and overwhelming bills.

For more on balance transfer credit cards, Robert Alan recommends that you visit CreditCardAssist.com

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Posted in business credit

5 Ways How Misuse of Balance Transfer Credit Cards Can Cost you Dearly

06 Sep

0 Intro APR credit cards are used by many people to avoid high interest rates on outstanding balances. As soon as the 0 Intro period expires – they find another credit card with 0 intro offer or low interest offer on balance transfer and switch balances. In the short term it might look as a good strategy, but it has its own drawbacks. Here are few facts, which if overlooked can cost the credit card holder dearly.

1. The credit card companies might stop approving such applications when they find that the applicant has a sustained history of balance transfer misuse.

2. Lenders like people who pay them interest, that’s the main source of their income. So, if the find that when it comes to repaying your debt with interest, you simply cut corners and transfer the balance to a new credit card. They won’t be interested lending to you.

3. With such repeated balance transfers, and closing old credit cards will have an impact on your credit history also. The remarks in your credit report can drive away potential lenders, and you’ll have to face the music even when you apply for other type of loans like auto loan, mortgages, personal loans etc.

4. If a credit card issuer refuses one such request of balance transfer, your entire plans of getting the debt to a low interest rate can be jeopardized and you could be facing high APR’s, which can land you in further trouble.

5. Balance transfer credit cards don’t tolerate late payments, so if you miss out on a particular repayment all the benefit is lost and instantly the high regular APR’s are applied. Again a low rate on balance transfers does not mean the overall APR’s will also be low. There could be different APR’s for purchases, and cash advances.

Though balance transfers are not a bad idea, but excess of everything is bad. Besides, denting your credit history, repeated balance transfers are also a bad financial habit. It is like not facing the eventual reality of repaying your debt. Balance transfers are there for good reasons and should be used as such- in that way they will benefit the credit card holders in a big way.

Continually opening new low interest credit card accounts and shifting money without attacking the overall debt could worry lenders, potentially hurting your chances for borrowing money in the future. Credit card issuers favor customers who pay interest, viewing customers who transfer debts over and over to avoid paying interest as less-than-ideal borrowers.

Such excessive balance transfer behavior can also make it tough to borrow money from other lenders outside of the credit card industry, such when shopping for a home or automobile.

Separately, should you make a misstep — for example, by making a late credit card payment — your credit card’s regular (and undoubtedly much higher) interest rate will get triggered. That could also result in a sudden surge in the APR on your credit card debt.

Another reason to be wary of performing too many balance transfers is that the low interest rate you get with a new balance transfer credit card may just apply to the transferred balance itself. It is important to note whether the low interest rate on balance transfers also applies to purchases.

Should you need to make a new purchase with the card, the interest on your spending could be at the credit card’s regular interest rate. However, certain balance transfer credit cards, like the Discover Platinum Card and the Citi Platinum Select Card, offer low introductory APR’s on both balance transfers and purchases.

Meanwhile, be aware that with a balance transfer credit card, all the payments you make will likely first be applied to the 0% portion of your debt. As a result, any other credit card spending will accumulate interest until the transfer is paid off and you can then tackle the most recent charges.

However, all these warnings do not mean that a credit card balance transfer is always a bad idea. In fact, balance transfer credit cards can really work in your favor if used sparingly. If you don’t go overboard with transferring balances, and pay attention to any balance transfer fees your credit card may carry, transferring your balance to a lower interest credit card can be an excellent way to save yourself some money as you pay down your debt.

Cynthia Stewart an expert author and credit card consultant,provides great Addvanta credit card tips. Read more credit card articles at his credit card website.

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Posted in business credit