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Debt Consolidation – How it Works

Debt Consolidation

Debt Consolidation

Every day I hear ads for debt consolidation. I was always curious how these loans are able to take existing interest debt and turn it into a lower payment. The primary way debt consolidation programs work is by transferring unsecured debt into secured debt. Which brings up the next question, what are the difference between the two? An unsecured debt does not have an underlying asset associated with it. A good example is a credit card. Usually, there isn’t a specific asset that you own tied to the credit card. An example of a secured debt is a home mortgage. If you don’t pay back the mortgage the bank can take possession of the home (secured asset).

Lenders are usually able to offer a lower rates since the debt is now secured with an asset. There is less risk to the lender.

Additionally, programs can do things like extend the term of your loans to increase the payback period and decrease the monthly payment. This makes it easier to meet your monthly payment. Many debt consolidation experts have the ability to work with multiple lenders. This can save a great deal of time and frustration as these agents are experts and can navigate the maze of creditors while minimizing payment.

How to Manage Finance, Work-Life Balance, and Sales-Marketing Activities of Your Home Business

Work-life BalanceMany, if not all, home businesses are Sole Proprietor – They handle everything themselves or with the help of family members.

With many responsibilities in running such business, home business owners need to keep control in their home intact.

Three of the controls that home business owners’ often having troubles are:

  1. Separating business from personal finance (and vice versa.)
  2. Managing work-life balance.
  3. Managing sales and marketing activities to grow the business.

Mastering the three controls is essential in mastering in other controls – You can say that those three are prerequisites. The following are some tips and ideas on maintaining control on all three.

How to separate business from personal finance – and vice versa

Separating personal and business finance is important. Not only the business’ revenue to grow itself, you also need to control your personal finance so that it will not get carried away and infusing every penny you have into your home business.

You can basically start with separating bank account, so that your business and personal finance each has an account on itself. In book keeping, you need to localise your income-expense: Your business account only deals with any income and expense related to your business, and your personal account only deals with any income and expense related to your daily activities.

How to manage work-life balance

This is the trickiest of all – You more often than not, got carried away with your business venture, in such a way that your personal life is sliding away from you. All of a sudden, you feel that your entire day is devoted to your business.

Having a good work ethic is important, but over-do work will only leave negative results – You might be stressed out, you could be anti-social, you could damage your relationship with your spouse, kids or other people important to you.

The surest way to maintain (or regain) control in your work-life balance is to have a written schedule to be placed in prominent places, as well as setting up reminders and to do lists for day-to-day business activities.

The critical part in maintaining control in your work-life balance: Stick to your schedule, no matter what!

How to manage sales and marketing activities to grow the business

This is often neglected, simply due to the nature of Sole Proprietorship itself – You handle everything yourself, and this means you will prioritize things. From experience, prioritisation is done the wrong way.

Usually, you first priority is to finish projects on time, before deadline. And, unfortunately, one of the neglected ones are your sales activities, including managing leads.

Your decision to outsource some of your business functions, in this case, sales and marketing functions can make or break your home business.

You can use CRM software for your sales and lead management.

In fact, sales management software not only can help you to control your sales and marketing activities, but also can help you increase close rate.

The key: having the right mindset

Your mindset rules your decision in everything, logical or not. In this case, no matter how much you know about gaining control in your business and personal life (especially finance), your mindset determine your success.

So, first, regain control of your mindset and learn to apply the principle of kaizen or continuous improvement for the benefit of your money and mind.

image by eyeliam.

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How Living Cheap, Looking Rich Can Help Your Personal Finance and Career in Recession

Live Cheap, Look RichLiving below your means doesn’t seem a desirable decision to survive today’s recession.

There are better ways, and although living below your means are the next logical step when you are in financial strain, your sense of achievement must be maintained.

Why is that?

In order to keep yourself on track in navigating through the economic storm, you need to stay focus. Staying focus can be achieved through the fulfillment of your need for achievement – and living below your mean is not the way to fulfill yours.

Live cheap, look rich

Living cheap is not living below your means. Living cheap means living within a closely controlled budget to achieve the living standard that anybody else has on a higher budget.

The main idea of living cheap, looking rich is to aim to get the best deal in every way, including clothing, entertainment, etc. in such a way that nobody would know that you spend less for the look you have right now.

‘Look’ here is not only clothing, accessories, or any other apparel and fashion related products – ‘look’ is your lifestyle, in a standard that can’t be achieved by living below your means.

‘Look’ is going to Starbucks occasionally, and socialise with your friends and colleagues. ‘Look’ is how people perceive of you, no matter you achieve ‘it’ by bootstrapping. You shouldn’t overdo them, though.

The key in living cheap is total control of your budget.

Why living cheap, looking rich is smart

We live in a society that value physical appearance, lifestyle and charisma. Enhancing yours will actually help you land better job, secure more business, or socialise with more people (which can present you with more opportunities) – all in all will affect your bottom line: your personal finance, in a positive way.

You deal with people, and most of them don’t really care how much you make – what they care is what they see, and how they preceive of you. For example, in a meeting with business prospect, you need a professional look that commands confidence, charisma, and trustworthy. You don’t want to meet your future client in your t-shirt, don’t you.

How to live cheap, look rich

There are ways you can consider to live cheap but look rich:

  • If you are into fashion and business as well, purchase your clothing needs with a wholesaler. While hard to find, wholesale clothes can save you a lot of money. The problem is, they usually only allow you to buy in bulk (usually in half-dozen or dozen).
  • Alternatively, you can shop in consignment and/or discount stores.
  • Shop for everything on the web – groceries, clothing, accessories, electronics, travel deals, etc. You can always receive a lower price for the same item you want.
  • Attend charity events and/or be volunteer. Charity events – the large one – are where socialites and celebrities. Attending the events, as an attendee or a volunteer will help you raise your profile.
  • Purchase used car – no body is really care how much you pay for the car, as long as its condition is top-notch.

Remember, don’t live below your means – Live cheap, look rich. That is good for your economics and, in effect, your personal finance endeavour.

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The Power of Money, Endorsement and Identity Theft: Jeremy Schoemaker vs. Google Money Tree Case

IdentityJeremy Schoemaker, known for his Shoemoney.com is one of the authoritative bloggers on the Net today. His company and personal branding is so powerful, that every marketer wants to capitalise on them – even doing it illegally.

This is a classic case of identity theft for the purpose of making more money through the power of endorsement.

The case study

One of Jeremy Schoemaker’s favourite photos is him holding a cheque of a large sum – thanks to his successful make money online business ventures.

Unfortunately for him, this photo is allegedly used by an advertiser to promote Google Money Tree, a ‘system’ to make money online through Google, which later found to be a scam.

Stolen identity to promote a scam program

That’s where the problem lies: Unauthorised use of images to endorse a product without any permissions is already considered illegal and unethical. In this case, the image is used to scam people.

The impact toward Jeremy’s brand images is devastating: People assume he endorses the Google Money Tree, so that many people join the program simply due to the fact that Jeremy, the Shoemoney, ‘endorses’ the system. When the system is deemed to be a scam, so does Jeremy!

He is, of course, not happy with the stolen identity and false endorsement.

Endorsement and mind game: Why advertisers pay big bucks (some steal endorsees’ property as freebies) to get ‘celebrities’ to endorse their products.

Although Jeremy Schoemaker is not your typical celebrities – he is one of the blogging celebrities that is made famous for his financial achievement through blogging and building businesses surrounding it.

The main reason advertisers splash a large sum of money on endorsers that always are public figure is this: to get into prospects’ mind.

Jeremy is a public figure – he build his business and personal branding relentlessly. In blogging world, Jeremy Schoemaker means make money online, blogging celebrity, and branding powerhouse.

Many advertisers want to touch the corner of Jeremy’s robe so that Jeremy’s positive attributes, such as charisma, authority, mindset, and knowledge, are transferred to their products, or at least related to their products.

This way, advertisers get into prospects mind, by saying “Jeremy uses this system to make money,” “Jeremy believe this product is excellent,” and any other assumption.

Obviously, the more authoritative your endorsees are, the stronger visual and emotional bait your product has.

How would this affect the endorsee? He/she could be related to the product, and as the product is successful, his/her image and personal branding will be enhanced, too. Of course, this also applies to the contrary.

Stolen identity that is used to scam: a devastating negative ripple effect

In his Shoemoney.com blog, Jeremy wrote a clarification post that clearly stated that he has nothing to do with the Google Money Tree scam, and indicated that he will pursue a lawsuit against the owner of Google Money Tree system.

Jeremy did the clarification to stop the negative ripple effect that could bring his businesses down altoghether. Clearing his name will take a lot of resources, including money and time.

I respect Jeremy Schoemaker and would like to look forward for a positive outcome of this.

Image by fotologic.

Tools to Increase Your Sense of Financial Security: Financial Products Review Sites

Finance Product ReviewIn my previous post I talked about improving your sense of security by exposing yourself more toward facts and less toward assumptions.

This article is about a tool that can help you gain more facts: financial products review site.

The pros and cons of financial products review sites

Review sites are those websites that offer you comparisons among a selection in a certain category. In financial products, for instance, there are review sites that compare credit cards – their plans, benefits for cardholders, and such.

With plenty of sites doing reviews on various financial products, you are faced with a multitude of things to ponder before deciding one financial product to take.

Like everything in life, there are pros and cons of financial review sites.

Pros:

  • Reviews help you decide which financial products are the most beneficial for your need.
  • You can access plenty of key information on products highlighted – all in one place.
  • You can learn as much as you can about a financial product, without the fear of being chased around by financial product salesperson.

Cons:

  • Reviews could be non-genuine ones, or even fake, to drive you to a limited choice that bring the review sites the most revenue for recommending you.
  • The review sites themselves could be scammers – Their aim is to lure you to provide private information for them to take advantage of.
  • Non user-generated review sites can be subjective in their recommendations.

The key is to find reputable financial products review sites that offer you legitimate reviews and unbiased recommendations on multiple financial products, such as the Australia-based Good With Money.

How to make the most of financial product review sites for your benefit

First of all, you should seek a reputable review sites that can offer you more details in user’s review, not only a star rating system. This is important, because it is imperative that taking loans will need more effort from you to minimise risks.

Secondly, you should visit the recommended third party sites to learn whether the financial products reviewed are claiming the same features and benefits. This is also useful to see whether the information found in the review sites still relevant with the information found in the provider or issuer sites.

Good luck on your endeavour in increasing your sense of financial security.

How to Improve Your Sense of Security in Uncertain Economy

Sense of Financial SecurityPeople are often being overly reactive when it goes to bad situations.

The recession itself is happening largely due to global public reaction toward financial crisis, that is more often than not, doesn’t actually affect them directly whatsoever.

Negative outlook on financial issues cost the community lost productivity, thus worsening the effect of the financial crisis.

As a major part of your community, you, in whatever way possible, need to feel secure about your financial stature.

Why? Because if you feel secure about your financials and your life in general, you will be able to affect the community surrounding you.

Sense of security

Improving personal sense of security has never been this important in the past decades.

Sense of security is driven by facts and assumptions. The more you assume, the more insecure you will be. The more you identify facts, the more secure you will be.

Sense of security = know more facts and less assumptions.

Assumptions can be ‘altered’ into and identified as facts – no matter they are right or wrong – if you increase your knowledge through learning from reliable sources.

Facts also related to control. If you want to feel secure, you need to gain (and regain) more control on your life based on a set or series of facts.

Financial sense of security

In term of finance, assumptions leave you unguarded.

For example, consider these statements: “Stock A will go up in 10 minutes.” “Real estate B will increase in value.” etc.

The problem in the above example, is due to the fact that nobody can guarantee the above statement. Any guarantees on such would be classified as misleading, even illegal.

On the other hands, facts can secure your personal finance and help you see things from the right perspective.

For example, consider these statements: “I’m getting a 10% rate of return on my investment.” “The foreclosure houses I bought make me $150 positive cashflow per month.”

Warren Buffet, the maestro of investment, do all of his investment based on intrinsic value – the facts – not based on the floating stock value on stock exchanges – the assumptions.

Again, it is all about control. “Sure things” improve control, hence reducing investment risks.

How to improve your financial sense of security these days

You need to get more facts about personal finance. You will eventually find out that there is a certain consensus between personal finance experts about some of the best practices in managing your finances.

Such knowledge you acquire should be enhanced with tools that can help you with a more exact (and measurable) facts. For example, the use of Savings Calculator to learn how much you would receive within a period of time can provide you with a measurable fact that allow you to decide what’s best for your personal finance – finding savings account that yield you more, finding new investment that can increase the speed of your money, and so on.

Nevertheless, your diligence in increasing your financial knowledge will determine how secure you feel about your personal finance, and how well you cope (and thrive) in today’s economic crisis.

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Faxless Payday Loan: Helping Hand or Quick Sand?

Helping HandWhen we talk about loans in any forms, they are always related to debts.

Taking loans can offer you two things: good debts and bad debts – good debts put money in your pocket, bad debts lose money from your pocket.

Your financial needs, situation and knowledge play important roles in making the loan bad debt or good debt.

Loans come in many flavours – One of the most talk about, in my opinion, is payday loans. Why is that?

Faxless payday loan – offering you financial solution, fast – a bit too fast to handle

Payday loan is a small amount, short-term loan that is intended to cover borrower’s financial need until his/her next paycheck received.

With the advent of the Internet, payday loans are becoming more and more accessible. The term “faxless payday loan” refers to payday loan which application is processed online, thanks to the Internet.

While in essence payday loan aims to help people regardless of their credit score, many accuse payday loan as the culprit that drown many people deeper in debt.

Not quite.

In my opinion, people inherit a common weakness. They want more for less, and they want it fast.

People are always looking for fast and instant remedies for their problems, including financial problems. Just like everything in life, such as fast food, instant means immediate gratification first and quality second.

Payday loan offers fast solution. Faxless payday loan even does things faster, due to online application processing and instant approval. The drawback, as always, is the sky-high interest rate.

Those bring interesting relationship: No matter how negative the reputation of payday loan is, it seems that more and more people need payday loan these days, and payday loan providers are thriving these days. Some sort of love-hate relationship between lenders and borrowers.

Reality check: Stop blaming payday loans – have you ever look things from the eye of payday loan providers?

I am appalled to know people are blaming payday loan. Although I’m not offering any payday loans or similar things and not involving in one either, I think there are too much bad apples thrown at lenders, accusing them as scammers.

Have you ever thought that it is borrower’s responsibility to keep him/her-self well-informed regarding what type of loans he/she is about to take? It is borrower’s responsibility to know what question to ask and when to take payday loans.

Many payday loan providers I know are trying hard to offer a solution. They bear huge risks – they lend to borrowers with no regard of their credit scores. That is why payday loans charge huge interest rate: to supplement the high risks of lending to borrowers with bad credit ratings.

The right borrowers do regard payday loans as the life-savers. do help people – the right one and the well-informed one, that is – getting out of debt.

How to use payday loan to your benefit

First thing first – learn everything you can about payday loan. It is your responsibility to learn about payday loan, about the providers, and about what to expect and when.

Always plan everything – You need to know how much will you get from the lenders, the amount of the interest you owe to the lenders, and most importantly, how the short-term loans can help you getting out of debt, and for how long. You can actually ask the payday loan providers to provide you with a calculation on how much would you pay in the end of the loan period.

If the plan looks positive, go for it. If not, run away from it.

One, last advice: Never, ever take any form of loans without the right knowledge about the loans. That only makes payday loan quick sand, not helping hands.

Image by toolfan.hess.

Government Grants to Pay-Off Your Credit Card Debt: Blessings in Disguise

National Debt CountIf you are hoping for a miracle in clearing your credit card debts, you will probably wasting your time.

But if you are diligent enough in looking for information in the right places, you might found something that could be very well your small miracle.

One of the small miracles in today’s recession is Federal grants for credit card debt.

What is Federal grants for credit card debt?

In essence, the Federal grants for credit card debt is Government grants that allow you to pay off all your credit card debts, should you meet the criteria and requirements.

The main purposes of this grant are:

  • To stop you from drowning deeper into debt by taking new loans to pay off your previously taken loans.
  • To help you sustain your credit ratings and reputation.

The best thing of Federal grants is obvious – It doesn’t require to be paid back.

However, there are certain criteria and requirements to be met to be eligible – the first and foremost criteria, you have to be a US citizen, as this grants only apply in the United States.

Federal grants can have tax implications so consult your tax preparer before you file the 1040EZ.

First of all, you need to know how to apply for one.

How to get Federal grants for credit card debt

In general, the requirements to apply for the grants are as follow:

  1. Find the right Government Agencies and seek the information about the Government grants and funding programs – You can find such information from these Government’s sites: CFDA.gov and Grants.gov.
  2. Have the needed information ready: proof of income, your loan monthly payments information, and your total amount of loan taken.
  3. Along with the information the Government Agencies gather about your financial status, your application is then assessed to determine whether you qualify or not.
  4. You will be informed regarding your eligibility, and if you are judged to be eligible, your debt will be cleared as the government pays off the debt on your behalf.

Beware of scams

Just like anything that involves money, there are some organisations and companies that claim to help you getting the grant you’ve always wanted. They are too smart to know that, these days, people are often acting irrationally to get out of debt as soon as possible, by any means.

You homework is to keep your head cool and rational, while focusing your effort to find the right information. Again, the good places to start are these Government’s sites: CFDA.gov and Grants.gov.

Hopefully this post will help you with an opportunity to have a fresh start and build your personal finance the right way.

Image by Kevin Krejci.

Where to Invest Your Money during Recession: Real Estate

Real Estate InvestingWhen you heard about real estate investing in today’s recession, the majority would react by saying, “avoid at all cost.”

The sub-prime mortgages, the sky-high interest rates, and the sharp decline in value – all seem against real estate investing.

However, I encourage you to have a surfer’s mindset that I have occasionally mentioned in my previous posts.

The surfer mindset

Surfer loves challenges. In fact, challenges are what make a surfer perform.

For example, in a surfing competition, weak tides can be a huge, single, factor that will fail the surfer to win the competition. The stronger the tides, the more challenging they will become and the better the surfers showcase their surfing skills.

However, take heed – if your surfing skills are somewhat low, strong tides will swallow you; The key is utilising the right skill sets on the right opportunities.

In your personal finance, you need to increase your financial knowledge in order to ride the right waves, with the right skill sets. Playing too safe will hinder you from achieving the financial milestones you have set. Exposing yourself to risks too much will put you into financial difficulties, even personal bankruptcy.

One of the waves in today’s tide of recession: real estate investing

Real estate is one of the hardest hit sector that causes property owners and brokers alike struggling financially.

If you thought about investing in real estate during recession, it wouldn’t be the right decision to invest your money.

Or, is it?

Many real estates are losing their value – how can they be a good place to invest your money?

Robert Kiyosaki, the best seller writer of Rich Dad Poor Dad series, stated controversially that a house is not an asset, because it is not putting money in your pocket.

General public and many experts are slamming him for such controversial statement, but his statement proves true in today’s recession.

Homes are losing value, the interest rates are high, and the demand is low – the dreaded sub-prime mortgage.

However, as everything in life, there is always a good thing in every bad thing.

Today is probably the best time to invest in real estate, for one reason: Higher mortgage interest rate = Lower real estate demand = lower price tag.

As the real estate business crashes, property prices are in decline, too. Foreclosures are everywhere – this means, opportunities are everywhere, at a discounted price tag. Of course, your eyes for real estate values and prospects play an important role.

One last advice: never invest in real estate with an expectation that your property’s value will go up – it’s not always the case. Instead, invest with cash flow comes first in mind – your property as a rental property.

Image by terren in Virginia.

New Year, New Hope: Plan Your Finance to Yield the Best Return

Finance InstitutionForget what some people said about how bleak the year 2009 is. The truth is, all we need right now is financial planning.

The premise – plan your finance well, and it will deliver you from financial woes that hit many who unprepared in 2007 and 2008.

The significance of financial planning in 2009

Financial planning has always been important.

Unfortunately, not all people believe the fact, until they were hit by financial problems. ‘Thanks’ to recession, the financial problems are magnified – due to the recession, financial planning has never been this important in the history of the mankind!

Particularly in 2009, financial planning is probably your most important task to do, either for your business finances or personal finances.

Creating a form of safety net or save haven for your money and finance will not only help you survive the recession, but also triumph over it.

Even better, you need to find a way to utilise all financial knowledge and tools you have to yield the best return for every penny or cent you have.

Here’s several plan ‘items’ you should consider thinking about.

Plan #1: Saving and deposit account – forget about it! Says hello to precious metals

As we know, banking and financial institutions are one of the hardest hit in today’s recession. In the US, the Fed squeezes record-amount of fund to keep those institutions afloat. Why? One of their fear: People rush to close their accounts.

However, in my opinion, that’s what you suppose to do – forget your saving and deposit account.

I’m not suggesting you to close your saving and deposit accounts – they are important parts in diversification. What I’m suggesting you is NOT to put too much money in them.

With the rising inflation in every part of the world, your saving and deposit accounts interest rates are becoming more and more insignificant.

You need to get back to what all the money in the world should base upon – gold and the other precious metals. Although the price of the metals are sky high, they are one of the safest investment forms today.

Plan #2: Utilise your credit cards better

Unlike most financial planners suggest, I suggest you not to cut your credit cards.

Instead, I recommend you to consolidate your credit cards – transfer your existing credit cards to lower APR ones or to credit card issuers that offer the most perks and rewards.

How to know which ones you should transfer balance to or apply for, invest some time to browse the Net for reviews and recommendations on credit cards issuer. Credit card sites offer alternatives you can consider, including which credit cards are good for what purposes.

My favourite credit cards story is that of my colleague’s – he shop for his business needs with his business credit cards. With tens of thousands dollar month after month business spending made on his credit cards, he is enabled to vacationing regularly and staying in luxury hotels, courtesy of his business credit card issuers – a win-win situation for credit card issuers and holders.

Plan #3: Cut bad debts, utilise good debts

When I say ‘utilise your credit card better’ in plan #2 above, I think credit cards as your ‘bridging’ in your financial planning. That being said, avoid using credit cards for loan purposes, as the interest rates are high.

Instead, cut any debts related to credit cards. In fact, cut any debts that are aimed to people with low credit scores, such as payday loan. Not that payday loan is not useful – it does in certain circumstances – but you should consider a lower interest loans that brings positive cash flow to your pocket.

Happy holiday and happy planning!

You need a break somehow, and be prepared for the coming 2009. Remember the butterfly effect I mentioned in my previous articles – what you do and think about your finances will affect your community – being positive is contagious, and it will eventually end the recession somehow.

I wish you have a happy holiday and happy planning!

Image by Zach Alexander.

Stock Market Crash in 2008 – Will It Recover by 2010?

Economic RecoveryNobody can really predict when the stock market turmoil will peak, including the recession, but a chart and article from the Daily Kos gives us a quite legitimate starting point to guesstimate on when the economy is prospering (again.)

The S&P Market Index Chart

sp_from_1825From this chart, the block represents a year and the columns represent a range of return on the S&P index.

We can learn that in the middle column, those are the typical years where the market has risen from 0 to 10%. This bell-shaped chart looks ‘normal’ in economic situation, but have a look at the left-side of the bell chart – yes, there goes the year 2008, at -50% S&P market index change.

A certainly lackluster year, 2008 is as bad as the worst stock market crash in the history of S&P, back in 1931.

What does it mean? Welcome to one of the worst years in stock market history! Hopefully, the 2009 will not be the worst year of the stock market history. But, even if the record breaking happened, I still believe somehow that economic recovery is right on the corner.

How well do the government react to the fact?

The US government, through the Fed, are trying to do what they think will save the US economy – record breaking funding to save banking and financial institutions, such as AIG, from collapsing.

Although not the best possible solution, as I think doing so will eventually bury US economy deeper into recession – perhaps not today, but most probably in the near future, what the Fed did is arguably give much needed friction to slow down not only the US recession, but also global recession.

Are there still hope?

Well, the 1931 crash did followed by a big rebound in 1933, where the stock market achieved a 60% return. Will this also be the case, that the crash in 2008 will be followed by similar improvement in 2010?

Although highly inaccurate, hopefully such assumption will become a reality – the sooner, the better.

As I already stated in my previous posts, I think that the negative sentiments make global economic recovery slow, as financially and psychologically distressed people will likely to react in skepticism toward any efforts to recover the global economy.

So, I conclude that all is coming back to the media – what the media preach will affect the recovery process, as people will ‘blindly’ count on the media (including on the experts), rather than their own common sense and financial knowledge, to seek ways to quit recession.

Hopefully the media (including this blog) can affect the recovery in a positive way.

Image by Alan_D.

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