Increase net Income & not net Credit

Calculations on take-home Pay

Many common folks in town often faced miscalculations or worse, being misled by financial planners, when it comes to planning for retirement goals. The end result makes most ordinary people afraid and directed into annuities or even unwanted investments that only drives fatter paychecks in commissions and incentives to salesmen. How am I going to tabulate my finances? Firstly, it is better to get an approximate gauge on the fund size for retirement than to entrust your finances to yield-hungry or commission-oriented humans. Search using the Internet for different types of calculators and predict your income today!

Net income VS Net credit

While the central banks and professional financial institutions are trying to stimulate the economy by the help of government officials, accompanied with simplified planning, many individuals are seeking instant gratifications by indulging in cheap credit schemes. Hold on! There is a key difference between net income and net credit. When it comes to credit, unearned cash, the money does not belong to the retail borrower but the respective lenders. In fact, the chances of landing into debts using credit is much more higher than spending cold hard cash. Establishing net income helps to generate more wealth but on the contrary, net credit enables creditors to gain more bigger funding resources to churn out more cash without bothering the lives of fellow individuals who kept on borrowing to finance indulgence. In a matter of time, the entire credit bubble bursts and everyone goes into bad debts zone. By the time, net income will not be able to sustain in the realm of upheaval which detriments the global economy. It is too late to overhaul the financial system that dominates certain key professional institutions which marks the end of monetary value.

Opportunity costs in holding Credit facilities

In any major decisions in life, there are certainly opportunity costs to manage since we don't have authority over most things being laid in front of us. When the matter comes to credit facilities, it is not quite obvious in identifying possible repercussions hence it is crucial to adapt at a slower pace to prevent potential problems from arising. What is the opportunity cost to hold credit then? As the interest rate keeps rolling, debts started to go out of hand, and finally, the creditors are hot on pursuits in the final resort of retrieving massive (snowball) interests instead of the principle amounts. How bad can this situation be? Indeed, the cost of borrowings far surpassed the required payments which ultimately, led to massive downfalls of retail lendees. From then on, learn the lesson of not touching credit facilities ever!

Best way to deal with Credit financing schemes

The one and only way to deal with credit financing corporations is not to have any potential discussions with them. In fact, it is ideal if you could just terminate all sorts of credit functions at all costs. If there is ever a need to leverage on credit, just spend on fulfilling basic needs like mortgage loans or repaying of other credit facilities. In the realm of finance, there are always creditors of higher ratings and they uphold massive positions in the financial world. It is quite difficult to manage credit in the first place if you end up with massive piles of debts hence a prudent thing to do is to just avoid unnecessary troubles and cancel all credit cards and lines. This methods might seem unappealing but the result is definitely commendable in the long run!

Lower your Costs of Borrowings

Cost of Borrowing trend

The first thing to learn when adopting credit lines and cards is to understand how these facilities work as the cash does not belong to the borrower but leveraging on the bank's credit. The current interest rate is pegged to the Inter-bank rates and definitely competitive among professional institutions. The US Federal Chief Ms. Janet Yellen has the authority to control inflationary mobility and interest rate hike in 2014 & 2015 has yet to become a reality. Hence, the cost of borrowing from banks still remain low till date, year on year. In order to escape the harsh punishments, retail borrowers must have an objective to reduce unwanted expenses being incurred especially from interests charged from the respective moneylenders. In this way, they can avoid being penalized or improve on credit rating and credit scores.

Fixed & Variable factors affecting Credit

Credit decisions must be justified based on two main factors; Fixed & Variable. For the Fixed segment, the loan repayments usually in installments cannot be altered after signing the contract and the debtor is liable to repay on a timely basis. Another fixed factor is the loan tenor whereby the borrower has to observe the required duration and stick to it. If the lendee wants to finish outstanding payments earlier, it is possible, of course the bank is more than willing, but may face an early penalty for early settlements. Why is it so? This is due to the lesser interests being charged over the stipulated time frame for creditors to generate income.

There are quite a few variable costs and most of them fall under the uncontrollable realm. The first point to take note is the floating interest rate type. If an individual borrows a personal loan and based it on the current market demand which, at year 2015, might not be as pleasant as the previous term. Another variable factor is valuation of loans. Assuming taking up a mortgage loan, once the economy is not doing well, banks revaluate the current housing prices, saw declines in housing valuations, seek advance cash payments to top up the difference.

Long term Credit costs mitigations

It is going to be a long drag once the borrower is unable to service the loan installments by remitting monthly interests only. This detriments the credit score as well as the financial well-being of an individual through incurring massive debts and bills. In the long run, the costs might add up to consierable sum or even surpass the current loan principle which not many are able to facilitate properly, resulting to poor credit ratings. Before signing on the dotted line, do remember that you have a contingency plan or somewhere that has the powers to clear off. Going forward, terminate credit facilities to prevent such cases from happening again. Once bitten, twice shy, no?

Possible ways to Avoid high Credits

When there is a Will, there is a way. Do your best to clear off high-yielding interest rates as it is going to be insane in servicing loans that exceed the cost of capital. The very first moment is to destroy all existing credit functions. This piece of news come over and over again in avoidance of potential outstanding credits. Another impressive method is to seek funds from good friends or relatives as there is no direct legislations. Based on statistics, those who did not owe money to anyone leads a happy life as well as doing good in their career prospects. The ending phase of working life needs to be peaceful and not hot on wheels.

Escape the path of Debts and Credits

Face with Piles of Credits & Debts

Can anyone imagine waking up and seeing the table filled with letters from lawyers and creditors from various sectors? It is almost unfathomable due to the overwhelming intense pressure and not having the peace of mind when the mobile phone starts ringing non-stop on a persistent basis during working hours. To make matter worst, creditors identify your current workplace and drop by to threaten your position in the firm, tiding more stress and forced to make repayments all the time. When it is time for governments' facilities, usually uilities & water, lawyer letters began to sprung up and your house supply is in jeopardy. It is seemingly impossible to put an end to this crisis and ending life is an easy way out. What would you choose - Death or Deficit?

Cut off All credit Facilities

Upon ending one's life, the financial burdens and mental capacity fall on your immediate family members which is simply disastrous. Make a decision to end off all debts and never look back to being a weak debtor again, powerless from the regiments and magistrates. Firstly, come out with a financial blueprint to evaluate your current situation. A mindmap with the heading of Personal Finance can be started. Next up, branch out to Debts and identify all possible loans upfront. Be frank with yourself! Honesty is an expensive gift, don't expect from cheap people! Figure out which debts incur high interests and pay them off within shortest time. If the situation is bad, proceed to the next guide below.

Seek assistance from Credit Counsels

The matter is so bad that the current wage cannot sustain the pressure of rolling interests. How to savage my situation? Fret not, head straight to Credit Counseling Services for assistance. There will be professional agents at the door to offer certain compensation packages that aim to clear most debts using probable methods. The agent helping you will explore various means and setup meetings with creditors for diplomatic negotiations. In this way, the debtors might have a chance to enter the industry once again with confidence. Based on hardships, there is a need for opportunity cost during the interest-servicing tenor. This uncomfortable feeling is shorter than playing the survival game in reality to heaps of debts.

Stoppage of Luxury expenditures

A moment of folly has led to detrimental in financial health. The belief is not to allow such unfortunate events to happen again in future. Terminate all credit facilities immediately and stop the (snowball) interests rates from rolling into an enormous one. Get rid of some prominent debts by performing sale of liabilities. If the car is giving loan problems, out the car goes and identify cheaper alternatives. Let's say the mortgage installments are getting on the nerves, downgrade to more affordable housing or move to social homes. Lastly, clear off debts, one by one, beginning from the most affordable debt to the costly ones. Credit counselors are here to help debtors to regain a new life.

Avoid vicious Credit recurring Cycles

Cheap Credit on the go

When the US federal chief announces that interest rate hike is postponing, there is a loud cheer from the retail borrowers as well as the professional banking institutions. Hedge fund managers and day traders leverage more on credit to generate better returns with lower borrowing costs incurred. Bulge bracket banks offer personal loans to retail borrowers with attractive interest-servicing schemes. The money supply flows around the economy boosting productivity as more incentives are being given at work. Established firms borrowed larger amount of cash to expand abroad and complete Research & Development (R&D) at satisfactory levels. Almost everyone benefitted from the generous postpones by the Fed's committee. However, there is a group of retail segment that likely detriments from low inflationary environment - Retail Borrowers who leverage on credits.

What is Credit Rolling method?

Based on loaning statistics, retail borrowers who faced troubles repaying the principles, often indulge in unwanted expenditures such as costly holiday trips and speculative activities. These lendees, typically with sizeable wages, tend to loan from another bank to remunerate the current outstanding one. The vicious cycle continues banks after banks, churning interest rates to extremely high levels and finally, pre-destined to defaulting on bank loans. This is widely known as the credit rolling method whereby retail borrowers will leverage on new credits to repay existing facilities. Not only is this ineffective, but also puts the lendee at higher risks of defaults. Never touch this strategy at all!

How to Prevent such cases?

Under normal circumstances, the first thing to do is to cancel all credit functions make available to for individuals. This will prevent itchy hands from drawing unwanted overdrafts on impulse. Another method is to request the respective banks to install messaging functions to warn on further purchases. And also, put a limit to the credit limits in order to mitigate future expenses. All these expenditures added up to crazy costs that hinder one's path to retirement. In general, it is practically impossible to avoid certain big ticket items like mortgage loans and transportation costs.

Alternatives to vicious Credit Cycle

The most vital matter is to source for alternatives or remedy to cut off the vicious credit cycle that clings on the debtors. There are credit bureaus to help clear provisional debts by negotiating with creditors that possessed authoritative powers but it is the last place any borrower will want to go as te credit ratings will be affected in a negative manner. Perhaps, seek help from relatives and friends as they are not likely to be cash-oriented due to the family tree logic. The lendee may request for financial assistance from direct superior like salary advancements or increase wages temporary. Most of the time, your colleagues are likely to chip in. Put an end to this credit lines today.

Investigate & Watch your Finances closely

Check and Check expenses

If retail borrowers want to get out of debts, whether it's credit cards or personal loans, the right thing to do is to be aware of all expenses. When a person is unaware of the current extravangant lifestyle, there is always a possibility to receive a bill shock. Take for an example, a consumer indulge in fixtures & fittings, he merely pays up the interests to prevent outstanding payments from increasing, hoping that his year end bonuses can compensate for the items, received the total bills at the end of the servicing term and got a huge shock. This happened so frequently that credit card companies are scrambling to put an end to most furniture stores in credit terms.

Offer friends in a generous manner

One of the key problems in managing finances is on the generosity of social spendings. Sometimes, do you realize that why some bills just don't tally up after cracking brain juices till dry? All of a sudden, it seems like a habit to keep footing the tab and eventually, the entire finance got trapped and messed up. Keep track of expenses by keeping receipts and any transactional proofs in order to maintain a close vigilancy in indulgence. This is the very least you can do to better manage finances or even put an end to extravagant lifestyle. Being generous is one but staying updated on transactions is the key to successful debt-free lifestyle.

Watch credit facilities like Loans & Credit card Bills

Indulging in borrower's likes is not a bad thing, after all, it's his decision to enjoy life along the way to retirement. Why make the path to financial freedom a bitter one with utmost opportunity costs that turned down many in search of the perfect method? One may leverage on credit facilities offered by banks to fund some impromptu expenses or out for an overseas trip with family members. There is absolutely nothing wrong. However, do keep a close watchout on lavish expenditure such as long-term holiday trips or bank overdrafts incurring higher debts. These amounts can be compounded into an interest-servicing monster! Reduce them by planning out a budget today.

3Rs - Reduce, Reuse & Recycle

What can a person do if there is limitations on current debt-financing lifestyle which he intended to get out of very soon? The head of household wants to bring his family out for a day of rest and relaxation, there are many affordable alternatives instead of expensive holiday tours in Europe or Japan. Plan for beach swim or picnic is a good way to bond. Another way to celebrate is to host an in-house party theme for closed friends. Dinner at casual cafeterias can be an affordable luxury style. All these small scale events can benefit the family in the long run yet keeping costs affordable. A simplistic way of enjoyment can make everyone happy as well as the path to financial freedom.

Acquire Knowledge in Debts

Importance of Product Knowledge in Credit

Some individuals are deemed successful in manipulating finances. Why do they possess the ability to handle things even if matters get complicated or originate from a sophisticated way? One of the vital reasons is on adequate product knowledge in leveraging on credits. The pros and cons are clearly define before them and they too set concise objectives to meet instead of speculating on the next moves. Being in the front line of a borrower's stand, the knowledgeable person might consider adopting the wait-and-see strategy if the situation persists. He'll then try to figure out what are the viable alternatives other than acquiring cheap debts from the low inflationary environment. He knew that low costs don't stay forever and the interest rate hike might kick in without warnings.

What are your Debts?

Firstly, retail borrowers might want to learn more about the debts on hand before requesting for other personal loans. The common financing credits usually go to fulfilling basic needs such as housing needs, insurance schemes and daily expenses. Mortgage loan, typical average debtholder, is unavoidable but there are ways to reduce monthly installments. The easiest way is to buy a house under borrower's means. The next method is to adopt a longer loan tenor to reduce installments albeit the risk of incurring higher interests at the end of service. As for purchasing cars, skip this thought till the necessities are being taken care of.

Benefits in having Credit Cards & Loans

While many faced credit issues with cards and personal loans, there are benefits to using these credit vehicles that might lower your expenses. Yes! Buying goods for daily usage can be further reduce by using certain credit cards that target consumers who are on budget. In addition, take advantage of individual loans with low interests & processing fees to facilitate sudden expenses like hospitalization bills or short term medications. This may free up some cash flow for better uses. It is all about the individual in making life more easier for everyone. Are you using public transportations to commute on a daily basis? Why not take up (special) credit cards that enable fare deductions. This reduces the hassle in frequent topping up which gives convenience. There will be some rebates albeit insignificant.

Funding healthy Debts using Credits

How to fund my lifestyle using debts? This is a common perspective from average households as there is certainly no way to increase revenue in the short run. These individuals will try to meddle with credit cards and lines to perform advance payments using credits. However, the interest rates are likely to snowball and showing the inefficiency of leverage. It is time to find new funding methods while sticking to credits. As borrowers can see, the low interest environment enables one to leverage so use it by clearing off huge debts like car loans or mortgage payments. The lower interest rates will offset the existing loans' interests in a meaningful manner. Don't upgrade to high-end condos if there are still interest-servicing debts on hand. Take things slowly and everything will go smoothly.

Methods to dissolve Credit Card debts

Attractivness of Credit Cards

The beauty of owning credit cards is the perceived value of high income per se. In order to get hold of the first card from mega banks, there is a strict set of criteria to be fulfilled and brings out much discussions in the world of credits. Bulge bracket banks do tie-ups with retailers from time to time, giving promotions, discounts and incentives to new signups and value-added services to existing customer as rewards to loyalty. At times, credit card companies offer irresistable deals like holiday travel packages, fine-dining promotional rates and even vouchers that can instantly buy necessities without forking out cash! Who is to say "I don't want this hot deal"? To make things even more lucrative, signing up is made available online or through hotlines and best of all, free of charge!

Eliminate high Cost of Borrowings

There are risks associated to leveraging on future cash in light of using monthly cash flow to repay the debts on time else facing penalties imposed. A typical credit card has credit limits of up to 4 times the monthly revenue which makes thr borrower hard to pay up due to the shortfall in wages. Firstly, clear off any high-rolling debts such as car loans and mortgages. These are the ones that raise interest rates exponentially as well as detrimenting one's financial healthy. While others argue that credit cards allow them to free up cash flow, being unable to repay is another story should the credit limits burst and left with little savings to sustain. Mandatory debts can be resolved if the current expenses don't carry heavy indulgence or insanely sky high repayments.

Cash is King

Yes, this is a conventional way of being debt free! If an individual doesn't have discipline to save up or possess the ability to pay, why not use Cash? This will eliminate future problems and repercussions in the sense that there is no one but yourself to be accountable for when it comes to managing finances. Statistics have shown that those who only rely on cash payments often missed out better deals but lead a financially healthy lifestyle that propogates him faster to the path of freedom. Of course, not many folks are able to do so as housing needs and necessities had taken up quite a significant portion of savings. Hence, this is why compulsory act of savings and prudent cash management are the keys for survival. Needless to hold extraordinary cash and assets, just obtain a few diversified streams of income to fund monthly expenses will suffice.

Stick to Debit cards

Why are debtors unable to finance massive piles of credits from various aspects such as credit cards, mortgage installments or even basic shoppings? This is mainly due to the lack of discipline in handling finances that are way more than what they are worth. Research studies have proven that those who manage their current lifestyle tend to steer clear of any cards linked to drawing more cash. Why is that so? This is because they knew their limits well and certainly won't overstretch under any circumstances. Stick to debt cards instead! The purpose of debit cards is to directly deduct any payments made to finance purchases on a day to day basis. In this way, users won't need to borrow any cash or undergo the hassles in making credit payments to banks when the time is up. Leverage on your own cash today!