Is Money Your Problem?

From my experience money is THE number one cause of PROBLEMS in people's lives. That's right, over and above everything else in life because most of those other things are caused by not having money. For instance, people get divorced, have fights, can't pay their bills, lose their houses and go to court over not having enough money or not managing it correctly.

Why do we pay money for things?

Did you ever ask yourself that question? Why do we have to have money? Why do we have to put so much emphasis on money and why do we care?

Most of those questions you can answer for yourself, but I want to give you a different view on this whole thing, lets address this question.

Why pay money for things?

Because somebody, at some point in time wanted something that somebody else had. They had a cow and wanted some chickens; they traded one for the other and they got what they wanted. At some point somebody realized that they didn't always have a cow to trade with and wanted more. They developed a way of making nifty looking coins that someone said was worth something, then they invented the almighty dollar. Now I don't know about you, but a green piece of paper that has $100 on it, doesn't seem right to exchange for a DVD player or game system. How can that piece of paper be of the same value? Because somebody said so, that's how.

So now that I answered my version of this question, is your answer the same as it was before I addressed it?

The bottom line here is that we have to have money because somebody at some point wanted something and didn't have anything to exchange for it. Emphasis is placed so heavily on it because we need it for almost everything that we do. Since we don't have a farm anymore to make our own food, or cows grazing in the pasture, we're limited in our means and have to rely on the almighty buck to get us by.

Now that I put this into a different perspective for you, maybe you can realize the real value of money, which is just a means to exchange for something you want and not a big stupid problem that absorbs your life.

How to handle money problems

Wouldn't it be nice to be free of money problems and be able to do anything that you want to do? I thought so! Here are some helpful hints on how to handle your money, so that you don't have to ever worry about money again!

Are you ready? GREAT!!

1. Understand how much you make and spend.

2. Put together a plan on how to handle your debt.

3. STOP concentrating on money all the time and concentrate on production!

4. Produce, Produce, Produce

5. Make more money

6. Take a ride to the beach and look at a sunset

7. Relax

8. Smile

9. Enjoy life

Once you've purchased a house on home loan, you will then have several years to repay the amount, which will also include the interest charged on the home loan. One possible way of tackling high interest rates is switching to new lender that's offering better rates. This is known as balance transfer and it includes two aspects:

1. Processing fee

2. Prepayment Penalty

A new lender usually charges up to 50% as processing fee on the total loan amount to take over the loan. And your current bank will usually charge up to 2% on the outstanding loan amount as a prepayment penalty. Given these penalty charges is it worth switching lenders? While banks do offer a lower rate of interest to new customers as against existing ones, will it be beneficial given the twin slaps of prepayment penalty charged by your current bank and the processing fee charged by the new one? Let's find out with the help of an example:

Suppose you took a home loan at 8.5% interest in 2004 from Bank X. Since then the bank increased has the interest rate to 14%. However, another consumer applied to same bank (X) for a home loan and was offered one at an interest rate of 12%. You now have the option of switching to a new bank if you're offered a similarly low rate of interest by them. In a nutshell, it makes sense to switch to a new lender only if you're offered an interest rebate of at least 2%. However, there're a few more points that you need to keep in mind before trying to make the switch:

Approach Several Banks

Approach as many banks as possible and see which one offers you the lowest rate of interest and charges the lowest processing fee. Moreover, you'll need to inform your current bank about your decision to transfer the loan.

Negotiate

Your current bank will insist for a round of negotiations before allowing you to make the switch. This will be a good time to transfer let them know why you're discontent with their present terms and conditions. There's a chance that they may reduce your interest rates and you won't have to make the switch.

Transfer

However, if that doesn't happen your lender will offer you an NOC for switching to a new lender. The certificate will mention details like the total loan amount and the prepayment charge. Once you have received the NOC you can approach a new bank for a loan transfer. In order to successfully transfer the home loan to a new bank and please make sure to keep all original documents pertaining to loan transfer.

Personal finance refers to the financial decisions which an individual or a family unit is required to make in order to obtain, budget, save, and spend monetary resources over time, taking into account various financial risks and future life events.

In this article, we shall examine the basic rules of Personal Finance that will guide in making financial decisions.

Live Below Your Income

This is the most important rule of all. Any person desirous of achieving financial success must develop a culture of spending less than he earns. This can be achieved by working on either sides of income and expenditure. Either we work to increase our income or we work to reduce our expenses or both. As we work hard on either spending less or earning more, our disposable income will increase. In turn, the later will accelerate our ability to achieve our financial dreams.

Enhance Your Income

As noted above, it is important that we work hard at enhancing our income as a strategy for increasing our disposable income. As people who are working hard at achieving a financially stable life, we must have a clear strategy of improving our income in the short and the long term.

Above can be achieved through getting a better education, establishing streams of passive income, starting a side business, working hard at our current job and other related efforts. As we move from one stage in life to another, our financial obligations will increase. Therefore, it is important that we towards increasing our income in the same progression.

Live a Frugal Lifestyle

Like many other rules in Personal Finance, this rule derives from the rule of living below your income. Not that we really have much choice about living below our income but in credit driven economies, it is very easy for our personal finance to get out of control as a result of borrowings.

Living a frugal life does not mean living a miserable life. Instead, it means living within your means thereby ensuring that you are in control of your finances and not the creditors. It is a deliberate and conscious effort to live within your income with a view to creating an enabling environment for wealth accumulation. A frugal lifestyle enables us to go beyond immediate gratification to having the big picture in mind.

This habit urges us to save as much as possible without making ourselves miserable. It enables us to avoid regrettable expenditures by applying the ten seconds rule. This rule says that every time we want to make a purchase, we should spend ten seconds to ask ourselves if we really need what we are about to purchase. Very often, this simple rule will point us in the direction of spending less money.

Learning to Manage Money

Having gone through the above steps, it is very likely that you will begin to have an excess of income over expenditure. The savings so accumulated is your ticket to financial freedom. At this point, you must learn to channel the excess funds into profitable investments. Money begins to work for you and not against you. As this stage, you must also begin to know the difference between asset and liability. Invest more in assets and pay off your liabilities.

Be in Control

Personal Finance is not about being rich, it is about being free. Freedom from debt. Freedom from stress and worries. It's about being in control of your finances. And so, the final rule is be in control.

In conclusion, most people spend most of their lives earning money but rarely spend enough time planning the efficient use of same. This leads to a lot of financial regrets. The result is that at age 65, most people are flat broke.

It is therefore very important that we take the issue of Personal Finance very seriously. Our financial well-being is worth some time and effort. If we observe the above rules, it would lead to fuller and happier life.

The Rules Of Personal Finance

Personal finance refers to the financial decisions which an individual or a family unit is required to make in order to obtain, budget, save, and spend monetary resources over time, taking into account various financial risks and future life events.

In this article, we shall examine the basic rules of Personal Finance that will guide in making financial decisions.

Live Below Your Income

This is the most important rule of all. Any person desirous of achieving financial success must develop a culture of spending less than he earns. This can be achieved by working on either sides of income and expenditure. Either we work to increase our income or we work to reduce our expenses or both. As we work hard on either spending less or earning more, our disposable income will increase. In turn, the later will accelerate our ability to achieve our financial dreams.

Enhance Your Income

As noted above, it is important that we work hard at enhancing our income as a strategy for increasing our disposable income. As people who are working hard at achieving a financially stable life, we must have a clear strategy of improving our income in the short and the long term.

Above can be achieved through getting a better education, establishing streams of passive income, starting a side business, working hard at our current job and other related efforts. As we move from one stage in life to another, our financial obligations will increase. Therefore, it is important that we towards increasing our income in the same progression.

Live a Frugal Lifestyle

Like many other rules in Personal Finance, this rule derives from the rule of living below your income. Not that we really have much choice about living below our income but in credit driven economies, it is very easy for our personal finance to get out of control as a result of borrowings.

Living a frugal life does not mean living a miserable life. Instead, it means living within your means thereby ensuring that you are in control of your finances and not the creditors. It is a deliberate and conscious effort to live within your income with a view to creating an enabling environment for wealth accumulation. A frugal lifestyle enables us to go beyond immediate gratification to having the big picture in mind.

This habit urges us to save as much as possible without making ourselves miserable. It enables us to avoid regrettable expenditures by applying the ten seconds rule. This rule says that every time we want to make a purchase, we should spend ten seconds to ask ourselves if we really need what we are about to purchase. Very often, this simple rule will point us in the direction of spending less money.

Learning to Manage Money

Having gone through the above steps, it is very likely that you will begin to have an excess of income over expenditure. The savings so accumulated is your ticket to financial freedom. At this point, you must learn to channel the excess funds into profitable investments. Money begins to work for you and not against you. As this stage, you must also begin to know the difference between asset and liability. Invest more in assets and pay off your liabilities.

Be in Control

Personal Finance is not about being rich, it is about being free. Freedom from debt. Freedom from stress and worries. It's about being in control of your finances. And so, the final rule is be in control.

In conclusion, most people spend most of their lives earning money but rarely spend enough time planning the efficient use of same. This leads to a lot of financial regrets. The result is that at age 65, most people are flat broke.

It is therefore very important that we take the issue of Personal Finance very seriously. Our financial well-being is worth some time and effort. If we observe the above rules, it would lead to fuller and happier life.