4Jul2017

5 Basic Personal Finance Facts People Overlook

Are you looking to get off on the right foot with your personal finances? Then you should take a look at 5 Basic Personal Finance Facts People Overlook.

Whether you’re starting your career or you want to get your personal finances in order, knowing basic facts about finances can move you in the right direction.

Often, people are guided by misconceptions or falsehoods, and this can lead to missed opportunities or even bad investments.

To help set you up to succeed, we’ve outlined 5 finance facts people often overlook:

1. Investment Gains

You found a perfect investment, and now it’s time to cash in.

At this point, many people fear withdrawing their money because they’re afraid of the tax penalties that go along with what they’ve earned.

However, there’s a huge misconception over what you are taxed on.

For example, if you invest $50,000 into a stock and over time you end up with $100,000, with tax, you may believe you owe a certain percentage in taxes off the sale of your stock.

That would take a huge bite out of your profits — and luckily, this isn’t how investment gains work, so be careful not to overlook this fact.

Although you will be taxed, you are only taxed on what you made.

That means anything you initially invested isn’t taxed — only the money you will take home at the end of the day.

In the above example, since you made an initial investment of $50,000 and ended up with $100,000, you made $50,000. After tax on what you earned, which was $50,000, you owe $X amount for your gains — a much better price tag than what many people believe.

So although you do have to pay taxes on what you earn when it comes to capital gains, the hit isn’t as bad as it seems.

So go ahead, take a risk and invest.

2. Higher Tax Bracket

If you’re straddling the line to the next highest tax bracket, you may be afraid working a few extra hours of overtime or that holiday bonus will put you over the edge and wipe out all of your hard work.

But this is a personal finance fact people often overlook.

A few extra dollars — even a few extra hundred — won’t hit you very hard when it comes to taxes, because not all of your income is taxed at the higher percentage.

If you bring home a lower salary per year, you’re inside of the tax bracket.

However, what happens if your boss gives you a bonus? If you get a raise to $38,000 per year, is it even worth it?

Many people believe earning an extra $1,500 per year means they would be bumped up into the 25% tax bracket, which means they’d be taxed at 25% of $38,000, which would be $9,500 compared to $5,475 previously.

At those numbers, you would be making $2,525 a year more if you made $36,500 without a raise or bonus. And that’s little incentive.

Luckily, that’s not how the tax structure operates.

If you fall into the 15% tax bracket, the IRS taxes you 10% on the first $9,725 of your income. Anything you make after this, as long as you stay in this bracket, is taxed 15%.

By using this logic, you’ll never end up in a situation where you make less even though you were paid more.

3. The “Tax-Free” 401(k)

Many employees constantly hear the term “tax-free money” when it comes to putting savings into your 401(k).

But as the saying goes, there are two guarantees in life — death and taxes.

And there will come a day when the taxes will need to be paid on the money you’ve placed in your 401(k).

It is true that in the years you contribute to your 401(k), any money you put away is not taxed and your taxable income will actually decrease by the amount you invested.

But when you retire, eventually you will need to withdraw that money — and this is when the “tax-free” notion disappears.

However, when you retire, you normally draw from your 401(k), possibly a pension and maybe Social Security, so your income should be lower than when you were working full-time.

This means you will be in a lower tax bracket, which means you will be paying less taxes — sometimes significantly less — that you would have when you were shielded from paying them when you were contributing to your 401(k) originally.

So while it may not be “tax-free” money, you can consider it “taxed-later” money.

4. Renting vs. Owning Your Home

You may think owning a home means you’ve achieved your dream and you can stop throwing your money away on rent — but this isn’t always the case.

Just because you own a home doesn’t mean you have the ability to cash out and strike it rich.

Although when you rent a property you do have to pay rent and renter’s insurance and this isn’t an investment for you, it is relatively cheap compared to buying a home.

However, if something breaks, leaks or caves in when you’re renting, you aren’t responsible for the damages and repairs.

You also won’t have to come up with the money to fix the problem right away.

Buying a house is more than investing in its equity.

When you make the initial purchase, you need a down payment (which can be as much as 20% in certain areas), closing costs, insurance and other fees. Plus, you’ll be responsible for all of the maintenance and upkeep of your home.

All of this can add up, and if you’re not financially secure, you can end up losing your investment.

However, buying your own home can be the right choice if it’s the right period in your life — if you have a stable career, a nest egg and a great credit score, this could be the right move for you.

5. Big Refund = Big Ripoff

During tax season, many people look forward to their tax returns.

But when the government gives you a payout this time of year, it actually costs you money.

The check you receive from the IRS is money you’ve already made, the government is simply sending it back to you — hence, it’s called a refund.

What’s so bad about getting this back in April every year?

If you have the money available to you throughout the year, you can do more with it.

For example, if you get a $3,000 tax refund, you could have invested that money throughout the year — so it could have been working for you and earning you interest instead of being in the government’s hands.

However, if saving isn’t your strong point, it can be a good idea to use your tax refund as a way to save — just keep in mind you won’t be making any interest off it.

Don’t Overlook Basic Finance Facts

When it comes to your bank account, being knowledgeable about simple facts can go a long way.

Click here for ways to brush up on your personal finance skills.

22Jun2017

Cash vs. Credit: Knowing Which to Choose

Do you have a car time deciding when to choose cash or credit? Here is the information you need to choose with financial certainty.

When you’re about to make a purchase, do you struggle to make a decision whether to pay with cash vs. credit?

If you do, no worries. Deciding between the two is actually pretty tricky business. Both have their perks, and both have their downfalls.

However, consistently making the right choice at checkout when it comes to cash vs. credit can save you some serious bucks in the long run actually.

But, how do you know which one to choose?

If you need some schooling on the benefits of each, read this article. We delve into everything you know so you can make the right decision every time.

When to Say No To Credit:

If the Fee Isn’t the Best Available Deal

Looking to rack up some rewards points on your credit card?

Thinking that using your card to pay your mortgage, health insurance premium, or other recurring bills is the best way to do so?

Well, think again.

First of all, many services don’t even allow credit card payments. And. even if they do, they’ll typically smack you with a huge fee that cancels out the value of the reward points.

If You Haven’t Negotiated With Your Creditor

Rack up any huge expenses lately?

Well, before you bust out the credit card, you’ll want to contact the company’s billing department. There’s a chance that they offer a payment plan or that you can get some of the balance reduced.

It’s best to look into all of your options before dropping a huge amount on your credit card.

If You Are in the Process of Obtaining a Mortgage

A big change in your credit activity is a huge red flag to mortgage underwriters.

From the time you apply for a loan to the time it closes, it’s best not to drop any major charges on your credit card that could affect your credit score in any way. A hit to your credit score could potentially disqualify you for the loan, which obviously is the last thing you want.

Use the mortgage process as a time to take a break from the credit card and from any major shopping sprees.

If You Want Something You Can’t Afford

We’d like to think this one would seem obvious, but seeing as the average credit card debt in Australia is $3,083, maybe it isn’t.

No matter how tempting it is to purchase this luxury item, if you don’t need it, don’t buy it.

We realize this is most definitely easier said than done. So, if you struggle to put down the plastic, consider implementing the envelope system.

With the envelope system, you take out a certain portion of your paycheck out and divide it into envelopes based on your spending needs. For example, one envelope can be for rent, the other for groceries, the other for gas, etc. You are allowed to transfer money between the envelopes, but once you run out, that’s it for the month.

If You Already Have a Balance

Again, to some people, this is an obvious one. But to others, not so much.

Piling on more debt to an already existing balance is a bad idea. This is exactly what leads to a never-ending cycle of debt.

Instead, make it a habit of paying off your credit card immediately after making a purchase. This will help ensure that you get an awesome credit score.

If you already have a balance that needs paying off, then cash definitely wins int cash vs. credit card debate.

When to Say Yes to Credit:

If You Want Additional Warranty Protection

If you’re about to make a major purchase and want some extra protection, then your credit card is the way to go.

Almost all card issuers offer purchase protection as well as an extended warranty for the purchase made with the card.

For example, Visa and MasterCard both double the warranty. MasterCard even ensures the purchase against theft or damage for 90 days.

If You Want Stronger Fraud Protection

Every one is liable to fraud. And at some point, most people have to deal with a stolen or lost card.

In fact, in just 2015 alone, more than 770,000 Australians were victims of identity theft.

There are a lot of preventative measures you can take to securing your identity. However, in the event someone gets a hold of your information, credit card protection is much stronger than debit.

If a loss is reported after unauthorized use occurs, you are usually only liable for up to $50. With debit cards, you can be held liable for an unlimited amount if you don’t report the fraud in time (usually it’s a 60-day window).

If You Want to Take Advantage of Benefits

Pick a credit card that is co-branded, and you’ll be offered some pretty sweet deals that are hard to pass up on.

For example, if your credit card is co-branded with an airline and you buy your flight with that card, you can often times get a free checked bag.

Hotels tend to get in on this action as well. Many offer special amenities or free upgrades to customers who pay with a partnering credit card.

If You Want To Take Advantage of a Rewards Program

Almost every credit card these days has a rewards program.

Taking advantage of yours can actually save you some serious money. Some offer cash back, while others offer points, allowing you to earn hundreds, maybe even thousands of dollars back each year.

If You Want Security While Traveling

Traveling tends to put you at greater risk for fraud.

Lost cash or a lost debit card is next to impossible to recover anywhere, especially in a foreign country. However, losing your credit card abroad requires the same simple protocol as back home. All you need to do is call your bank to cancel.

Cash Vs. Credit Conclusion

If you never have a problem immediately paying off your credit card, then choosing it over cash will probably be most beneficial to you.

If, however, you tend to succumb to debt easily, it’s best to avoid using your credit card save for emergency situations and special circumstances.

Got any questions about the cash vs. credit decision process? Drop us a comment below!

19Jun2017

Lean Living: How to Become a Minimalist with Your Budget

Financial Security: Principles of Minimalist Budgeting

As of December 2016, the average Australian household is thousands of dollars in debt.

And, on top of that, one in three Australians don’t have savings for retirement.

The good news though is if you fall into one (or both) of these figures, you can get out on top.

Yes, it will take discipline. And it will take time to form new financial habits.

But, it is possible.

In order to undertake this, you’ll need to learn how to become a minimalist.

Read on to learn how to become one and, in doing so, regain your financial freedom.

Practice the 50/20/30 rule

Basically, the 50/20/30 rule tells you what percentage of income goes into what pile: necessary expenses, savings, and personal expenses.

Necessary expenses: 50%

50% of your income goes to the necessary expenses pile. When we say necessary expenses, we mean the minimum living expenses needed to survive.

Which are food, shelter, utilities, transportation, and health insurance.

No, cable TV does not count. Nor does your expensive cell phone bill.

Savings: 20%

You’ll then want to put 20% of your income to your savings pile. This pile isn’t strictly for retirement; it includes paying off outstanding debt as well as money for your emergency fund.

When it comes to emergency funds, ideally aim for three to six months of your necessary living expenses.

That way, should you get let go or need to quit your job to take care of a sick parent—emergencies—you’ll have a financial cushion during that time.

Personal expenses: 30%

And lastly, 30% of your incomes goes to your personal expenses. This includes cell phone bill, cable TV, gym membership, concert tickets, restaurants, you name it.

Pretty much, anything that increases the quality of your life.

However, should you find yourself in a financial predicament, this is the first pile to cut. (Your necessary expenses is the last. In which case, we’d assume you’re living with a relative or friend.)

Exceptions to the 50/20/30 rule

This rule may not nicely fit into every household’s or individual’s financial situation. But it’s worth following.

Like we said, if you’re in a financial bind, you’ll want to start decreasing your personal expenses pile.

If you haven’t saved for retirement and are approaching your mid-forties to fifties, you may want to put a higher percentage of your income into your savings pile.

And, if you’re in your twenties and thirties, it’s a good mentality that you don’t exceed 30% in personal expenses.

The type of financial habits you form now will likely map out your finances for a good portion of your life. (Not that you can’t change them if they turn out to be unhealthy.)

But a higher percentage of my income goes to necessary living expenses. 50% is not enough.

With a mortgage, car payment, car insurance, hefty grocery expenses, utility bills, and your child’s college tuition, 50% may not seem like enough.

If you’re making $50,000 per year, $25,000 sounds hard to live off of, if not unrealistic.

However, it is possible. It just means you have to downsize your necessary living expenses to the minimum.

Especially in western society, we believe we need that $40,000 car, and that our cell phone is our lifeline. Plus, who lives without WiFi in their homes?

The thing is, when you think about it, your $40,000 car and cell phone and WiFi bills are extra.

You can trade your car in and get something cheaper. Or, if your work is close by and the area is safe, why not bike to work?

Like with your car, trade in your phone for a cheaper one.

And, for WiFi, go to the library or a cafe that has it.

If these ideas don’t sound good to you and you absolutely need these things in your life, look into ways to earn some extra money.

So that you raise your income, increasing the dollar amount that goes into your necessary living expenses pile. (Still, keep the percentage at 50%.)

Ask yourself this question

Besides the 50/30/20 rule, how to become a minimalist requires you to ask the hard questions.

An important (if not the most important) question is this…

Is this insert-item/service-you-want-to-buy worth insert-number-of-hours of work?

So, let’s say you’re considering buying a frappuccino with two-three add-ons. The drink is going to come out to $8.

Suppose you make $16 an hour.

You’d ask yourself, is this frappuccino worth half an hour of work?

Or, you want to buy concert tickets. The tickets cost $60 per ticket, which then comes out to $120 (two tickets).

You’d say, are these concert tickets worth seven and a half hours of work? (That’s almost a standard full day of work.)

Perhaps they are. Perhaps they aren’t.

Make sure you ask this question every time you’re considering buying something.

Why is it important to ask this question?

By making a habit of asking this question, you’re becoming conscious of your spending.

Also, you’re evaluating a product or service not based on dollar amount but on the amount of time you spend earning that dollar amount.

This forces your mind to reflect on the hard work you did last week. And it starts to get personal. Because you’re remembering last Monday, where you spent all day writing that report. Are those concert tickets worth that experience?

Essentially, you’re taking it from the impersonal (dollar amount) to personal (your valuable time).

Cut your credit cards

This is an age-old practice. But since the average American has roughly 4 credit cards, many people aren’t adhering to it.

(Before you do cut your cards, look into if not using your credit cards at all will hurt your credit score.)

(If it does affect your score, really make it a point to consciously ask that important question we mentioned earlier.) If it doesn’t, get those scissors out and cut away.

Doing this will physically force you to not rack up more credit card debt.

After reading this article, you should now know how to become a minimalist. And be on your way to getting there.

Do you know how to become a minimalist?

Let us know! Plus, if you have further questions on how to become a minimalist, contact us.

And, while you’re at it, learn how to create an emergency cash fund by visiting our blog.

14Jun2017

7 Tricks, Tools and Tidbits for Your Financial Budget

Do you feel like you’re always living paycheck to paycheck? Is your money spread thin? Here are 7 tools you should employ for your financial budget.

Are you running out of money before your monthly bills are paid? Or just scraping buy? Are you ready to take charge of your finances? Want to make today the first day of the rest of your financial life?

Make a Permanent Decision to Take Charge

If you said yes to any of the questions above, congratulate yourself. Seriously, many folks find it easier to avoid dealing with this stuff.

Education is a critical tool. Being proactive will give you a much better chance at future happiness than being reactive.

Now that you have made this important decision, here is how to make your financial budget successful.

Outline Your Financial Budget

The word “budget” unfortunately sounds unpleasant. It sounds like “restriction” or “buzz kill.”

If the words “financial budget” seem scary, think of it as a “spending plan” instead. You decide how much money to spend and in what category, depending on your priorities. Then you get to spend as much as you want to in certain categories, depending on what you decided.

The categories you will mainly need are: (1) Housing (2) Food (3) Transportation (4) Clothing (5) Entertainment and (6) Savings.

Housing includes your rent, mortgage, real estate taxes if they apply, insurance…anything associated with keeping a roof over your head. It would also include what you spend for heat, air-conditioning, water, etc.

Track Your Actual Spending to Create a Realistic Financial Budget

Coming up with a financial budget involves trial and error. It’s one thing to aspire to spend $100/month. But it’s not going to happen if you think you spend $75 when you actually spend $200.

Spend at least a full month writing down everything you spend money on. Whether it was a $1 candy bar purchase, a $50 ticket to a ball game or an $800 unexpected expense that hopefully, you were able to use your emergency cash fund to pay, write it down.

There is power in the pen. Writing down what you purchase can be a powerful tool (as old-fashioned as it may sound). For under a dollar, you can purchase a small notebook that is reserved for this purpose.

The most important thing is to track, however. So if you prefer, you can certainly create your budget with the help of an online tool.

Consider what is most important to you by allocating a percentage to each of your categories. Your percentages should add up to 100%.

If your income fluctuates, you can allocate percentages of your income instead of fixed dollar amounts.

You will also need to incorporate any debt repayment into your budget instead of hoping it will somehow get paid otherwise.

Decide How to Incorporate Debt Obligations Into Your Financial Budget

How much debt do you have? Are there some debts that you are delinquent on? Are there any you are in default on?

Your first step in dealing with debt might be to contact creditors to negotiate a monthly payment amount. Debts that get ignored tend to snowball into much larger financial problems.

You will need to have a strategy for dealing with unsecured debt. “Unsecured” means any debt that is not attached to a tangible item that can be repossessed if you don’t pay.

Once you have listed and totaled your debts, use a debt calculator to give you an idea of how long it will take you to be free from unsecured debt if you continue making minimum monthly payments.

Include at least the minimum monthly payment on all unsecured accounts in your financial budget. Then add as much extra as you can to pay on the smallest debt. Once the smallest debt is paid off apply that bill’s payment to the next smallest debt.

From this point forward it is important to borrow responsibly.

Execute Your Financial Budget

You have tracked, analyzed and planned. Here is where the rubber meets the road.

You will need to have a system for maintaining your financial budget. There are multiple ways of doing this and the best one is the one that you will use.

One way is to maintain multiple bank accounts with different names for different purposes. A main “operating” account acts as a clearinghouse into which you would deposit all earnings. You then automatically transfer whatever percentage or fixed amount of your earnings into the accounts designated for a particular purpose. This is especially useful when making sure you have or are maintaining the emergency cash account.

You can also install a smartphone app that enables you to set up your financial budget and savings goals, as well as connecting to your bank accounts. Choose an app that lets you know what you can spend each month, week and day based on your goals.

You will always want to know how much you have left to spend to stay on track and be alerted when you are off-track.

Consider Ways of Pocketing Some Extra Money

With all of this spending and debt talk, we can’t overlook the issue of income. In some cases, you can slash spending, but it is not going to help the financial budget if there is simply not enough income.

Consider whether you could ask your employer for a raise (after documenting some achievements you have made since your last).

Is there a class you could take to become certified in a new skill that would entitle you to a pay raise? Is there a hobby you enjoy that you could convert into a money-making venture?

There is definitely more to life than work. But perhaps if you are in a particularly tight bind you could pick up a temporary part-time job.

Don’t Let Money Stress You Out

Having a financial budget should be empowering and not limiting. Your financial budget should serve you, and not the other way around.

Having negative feelings around money does not serve your financial well-being. Respect money, appreciate it, and don’t let it see you sweat.

If you find that you have chronic problems with debt and keeping money in your pocket, it may be time to seek help from a counselor about what negative programming you are holding about money.

Please share your favorite tools for your financial budget below!

24Apr2017

The Ultimate Guide to Creating an Emergency Cash Fund

Life is expensive.

First, you need to get a job or start a profitable business to secure monetary income.

Then you need to spend that income on rent or a mortgage to ensure you have shelter.

And, of course, you need to buy food to make sure you don’t go hungry.

But what if you get sick? Well, you better spend some of your monthly earnings on health insurance.

Oh, you need to be able to get to and from your job in order to continue earning money, too.

If you choose not to use public transportation, you’ll need a bicycle or an automobile (which also costs money).

Then you’ll need to spend your hard earned dollars on insurance, gas, routine maintenance, etc.

So what’s left? In the event of an emergency, there might not be much of anything left if you haven’t set aside a cache of emergency cash to help get you by.

In this post, we’ll discuss the importance of having emergency funds available in the event of an emergency, as well as how to go about creating an emergency cash fund.

Reasons to Build Your Emergency Fund

Why should you set aside a portion of your earnings for unforeseen events and emergencies?

Because money doesn’t grow on trees, and financial emergencies can happen anywhere and anytime.

Even for people who are otherwise financially responsible and thrifty, a sudden financial emergency can push them into poverty.

Whether the unforeseen circumstance comes in the form of a car accident, health crisis, or something else entirely, having emergency cash set aside will help protect you (as well as your investments).

An emergency cash supply is like having a savings account. But instead of making a withdrawal once a goal is reached, the emergency fund is left untouched.

Emergency funds are ONLY for unexpected circumstances.

Furthermore, having an emergency fund will ensure you don’t get penalized for taking an early withdraw from accounts such as your superannuation or federal pension funds.

Additionally, having an emergency cash fund ensures you won’t have to sell long-term investments such as stocks and bonds at below their value.

An emergency fund should allow you to cover basic monthly expenses in the event that all other income is unavailable.

Doing so will provide you and your loved ones with a financial safety net that offers protection from events like a layoff or medical emergency.

How to Save for Emergencies

Saving up money for the unexpected doesn’t have to be difficult.

A person simply needs to be diligent about putting away their earnings and keeping this fund separate from other savings accounts.

For example, it’s recommended that half of your income should be devoted to your regular and essential expenses. Meanwhile, about a third should go towards savings. The remainder should be reserved for

Meanwhile, about a third should go towards savings. The remainder should be reserved for enhancing your quality of life.

It’s important to note here that of the part of your income which you are putting away into savings, part of that sum includes creating your emergency cash fund.

Some experts will even argue that you should create your emergency fund before you even begin putting money away in other savings plans such as for retirement.

Doing so will help ensure your financial situation is secure enough to protect yourself against unforeseen events which only hinder your savings progress.

Especially if an emergency would only result in taking a premature withdrawal from a retirement account.

So how do you go about creating an emergency cash fund? Check out the tips below!

1. Don’t Take on More Debt

First and foremost, avoid taking on more debt.

If you have outstanding debts, pay them off as quickly as possible to avoid paying more than the original balance due to interest.

Without having to pay off debt, you will be better able to build your emergency fund quickly.

Furthermore, avoid taking on any more debt as a means to create your emergency fund.

If you’re a homeowner, DO NOT borrow against your home’s equity.

2. Keep Emergency Cash in a Safe But Easily Accessible Place

Your emergency cash fund doesn’t necessarily need to be kept in a bank, especially if the account is tied up in stock investments.

The funds need to be available immediately in the event of an emergency, so storing it in a hard to get to place (like a retirement savings account) is discouraged.

If you do keep it in the bank, open a basic savings account with little to no withdrawal limits or stipulations.

Remember, though, this account is separate from your other savings accounts.

If you opt to keep your cash with you in your home, take some creative steps to hide it effectively.

Just don’t hide it in your sock drawer or under the mattress!

3. How Much Cash Is Recommended?

So how will you know when you can stop putting money into your emergency cash fund?

To begin, you should set enough aside to cover at least one month’s expenses.

However, as you build your savings your emergency fund should grow to cover a few month’s expenses or even a year.

4. Money Saving Tips

Saving money can be as simple as throwing spare change into a jar for later use.

The trick here is to save your money, not spend it.

When shopping, try carrying only cash, and only bring the amount you plan to spend.

Doing so will help you avoid impulse buys.

Also, if you haven’t already, create a monthly budget. Keep track of your spending and eliminate anything unnecessary.

5. Building Emergency Funds While in Debt

As previously mentioned, avoid taking on new debt as a means to build your emergency fund.

The importance of an emergency fund, however, can’t be downplayed.

If you’re working to reduce the amount of debt you owe but still want to start building your own emergency fund, contact your lenders.

Many creditors are willing to work with your current situation and will offer a repayment plan.

Alternatively, if you’re ready to settle, many creditors are willing to broker a deal when the balance is paid in full.

Furthermore, be mindful of your spending while taking advantage of sales and coupons.

Conclusion

Building yourself an emergency fund isn’t difficult, it just takes time and effort.

In the unfortunate event you need to use it, you’ll be grateful you did.

In the event you never use it, treat yourself to something nice, or invest that money into something else.

Do you have an emergency fund story you’d like to share? Tell us about it in the space below!

7Apr2017

Financial Habits to Break Today if You Have Bad Credit

We all have the best of intentions when it comes to our credit.

If you notice that everyone else seems to have their credit under control, while you’re spiraling deeper, you aren’t alone. Nearly a third of Americans have bad credit. How do you keep getting into this?

The answer might lie in your financial habits. In the past, we gave you finance skills you should have. But what about the financial habits you shouldn’t?

Here are ten financial habits you should break if you want to improve your credit.

Not keeping track of charges

It’s easy to lose track of what you charge to your credit card. $5 here, $10 there. It seems so harmless, in the moment.

But at the deadline, these charges add up. And if you’re trying to budget, you’ll be caught by surprise when your bill winds up being much higher than you expected. It will be harder to pay on time if you don’t know what to expect.

Keep track of every expense you have — whether it’s $50 or $5. That way, you’ll know exactly how much you have left to pay when the time comes.

Ignoring due dates

This may seem obvious. But it’s something that 1 in 4 Americans has trouble with.

Don’t let due dates catch you off-guard. Failing to pay them on time is one of the quickest ways to mess up your credit score, so it’s important to know when they’re coming up.

Staying on top of your due dates is one of the first steps you can take in improving your credit.

Spending recklessly

There are many tricks that stores will use to get you to spend. That’s their job, after all. But you can’t fall for them.

Be incredibly wary of any feeling in your gut that tells you that a sale is a “once in a lifetime opportunity.” There will always be more sales. No matter how much you feel like you need the thing they’re selling, you should not buy it unless you have the money to spend.

You’re allowed to indulge occasionally, of course. Just make sure you think it through, and avoid spending recklessly.

Not preparing for disaster

Even when you have your budget under control, it’s easy for things to spiral. A car crash or an unexpected doctor’s appointment can be all it takes to set you back to square one.

You need to start setting aside savings if you want to keep on top of your budget. Even $10 a month will add up if you keep at it for long enough.

That way, when disaster strikes, you’ll be prepared. Even if the worst happens, you won’t have to worry about your finances.

Thinking short term

It’s easy to look at something you want to buy, and think, “I deserve this.” And that’s probably true. But how useful will it be to you in the long term?

You need to be honest with yourself about the value of your possessions. That $60 blouse might make you really happy when you take it home, but what if you throw it out two months later after never wearing it? Is that television worth it if you stop watching it after a week?

The novelty of new items will often wear off quicker than you think. Focusing on the long term is a good way to remember that.

Not writing down your budget

It’s easy to imagine that we’ll be able to remember things on our own. But that’s often not true.

It’s been proven that we remember things better when we write them down. And, more importantly, writing things down makes it harder to cheat. If you keep your budget in your head, you’ll be able to tell yourself, “Well, what I really meant was …”

Avoid this by writing down a clear, concise budget.

Keeping things to yourself

Trying to improve your financial habits is no easy task. And like most difficult things, it’s even harder to do alone.

People are 33% more likely to reach their goals when they have someone holding them accountable. So pick a partner or a friend to hold weekly meetings with to discuss your project! You can even pick someone else with bad credit who you can help.

Turning this into a partnership helps take some of the weight off of your shoulders.

Relying on loans

Obviously, sometimes loans are unavoidable. When you’re going to college, or under similar circumstances, you might have to.

But taking them out frivolously — or as anything other than an absolute necessity — can do more harm than good. A lot of them have fees that are easy to overlook. Plus, you don’t know what your financial situation will be when it comes time to pay them.

Try to use loans only when absolutely necessary, and do your best to pay them off as promptly as possible.

Not understanding your credit

This can be one of the financial habits that you don’t even realize you have.

When your credit card bill comes each month, what do you do? Do you simply pay it off? Or do you take the time to look over it and see how your spending affects your credit each cycle?

If you aren’t doing the latter, now is the time to start. Your credit score is never going to improve unless you know exactly what’s making it bad in the first place.

Giving up

You might feel like you’re trapped in a cycle. You constantly tell yourself that you’re going to get better, but the next time your bill rolls around, it just gets worse.

Saving money is hard. And if we don’t admit that to ourselves, it’s easy to give up.

This is one of those financial habits that requires a change of mindset, not just action. You need to stop thinking that this is going to be easy. It isn’t easy for everyone else, even though it looks that way. It’s not going to be easy for you, either, but that doesn’t mean you should stop trying.

And if you ever need motivation when it comes to breaking bad financial habits, you can always come to us.

24Mar2017

10 Personal Finance Skills You Should Be Using

Do you ever find yourself running out of cash before your next payday?

If you do, then you probably aren’t good in managing your personal finances. If it’s any consolation, you are not alone.

The simple truth is many people in Australia, the United States, and several other countries live paycheck to paycheck, often with little to no money in their rainy day and retirement funds.

But, the reason many people survive on paychecks isn’t because the money they’re making is genuinely insufficient. The real reason is they lack solid personal finance skills.

In this post, we’re sharing the 10 personal finance skills you need to take control of your personal finances and attain financial freedom.

Let’s get into it.

1. Budgeting

To be a prudent money manager, you need a budget.

Regardless of the amount of money you pull in every month, you need to draw up a spending plan. Without one, you risk blowing your money on things that aren’t essential to you.

To create a budget, start by calculating how much money remains in your account after taxes and other mandatory deductions.

Next, calculate your monthly expenses. This includes the cost of housing, utility services such as water, cable television, electricity, food and commuting. Also, include luxury expenses (anything that you can do without), such as dinner outs and movie tickets.

After adding up your total expenses, assess how they stack up against your disposable income. Do they exceed income? Close match?

Set a monthly spending target, and start cutting down your expenses until you hit the target. That’s how you end up with a budget that works for you!

2. Financial-Service Hunting

What influenced you into opening a personal finance account with your current bank?

If you chose the bank simply because it has a ‘cool factor’ or someone close to you recommended it, you could have made the wrong choice.

Knowing how to hunt for the best products in the finance services market is one of the most important personal finance skills to have. You must evaluate interest rates, transaction charges, maintenance fees and other costs before settling on a bank.

3. Negotiation

Negotiation doubles up as a business and personal finance skill.

While being savvy with your own money is crucial to financial freedom, the amount of income you earn is a major player.

Here’s how negotiation comes in.

Whether you are looking for a job, getting a promotion or hunting for a business contract, you must know how to negotiate for better financial terms.

A salary raise or a bigger business contract will no doubt improve your personal disposable income. This means you can start saving more money for retirement!

4. Personal Investment

No one wants to rely on employment until you can’t physically work anymore. In fact, about 70 percent of millennials want to start a small business.

Making personal investments is the best way to get out of employment and take charge of your financial destiny.

However, investing your personal money is a lot riskier. Get it wrong and you risk spiraling into debt. Therefore, you must have the skills to study various investment markets and pick out excellent opportunities before making a move.

5. Debt Management

Even though debt is undesirable, sometimes it’s the only way to make it through the month. Thousands of people also borrow to start a business.

Whether you borrow from family or friends, payday loan providers or banks, it’s essential to master the skill of debt management.

Don’t borrow more than you need, hunt for the lowest interest rates, consolidate credit card debts when you can, and pay off your loans on time to avoid unnecessary charges.

6. Going Frugal

Being frugal means being economical with your money.

Sure, you don’t have to adopt a frugal lifestyle for good, but foregoing the little (or big) things that make your life fun and worthwhile can help you save money.

If you are movie addict, for instance, you don’t have to buy a movie ticket every weekend. You can surely do with one or two in a month. Can’t you?

Instead of going to the mall over the weekend, how about spending time in the park where you have little chance of making an impulse purchase?

7. Reading Financial Statements

Banks, credit card companies and other financial institutions that handle your money usually issue various financial statements.

Knowing how to read and interpret these financial statements is also one of the most useful personal finance skills.

You will be able to track how money flows in and out of your account and spot any suspicious transactions in the statements.

8. Building Your Credit Score

As we said, sometimes you may need to secure a loan for various reasons.

However, getting approved for a loan is not that easy. You must prove to prospective lenders that you’re able to repay the loan with interest in a specified timeframe.

If you’ve a poor credit history, lenders, especially banks, will turn you down. But having a good credit score improves your chances.

Therefore, you must know how to build your score. Pay bills on time, clear existing loans, and clear credit card balances.

9. Getting Insured

Life is uncertain.

Your employer could go out of business in a few years, your own business could sink or the economy could crash.

Insurance protects you from such uncertainties. With good personal finance skills, you will easily know which type of insurance cover you need most.

If you’re uncertain about your job, then you need unemployment insurance cover. Life, medical and disability insurance policies are also essential.

10. Estate Planning

What happens to your wealth after you are gone?

Estate planning is the process of arranging how your physical assets (like houses) and financial assets (like money in a retirement fund) will be managed.

Even though conversations around estate planning are often difficult, planning ahead is the best way to protect your hard-earned assets and safeguard the future of your loved ones.

Closing Thoughts on Personal Finance Skills

Personal finance skills are a must-have if you want to lead a successful and fulfilling life.

To this end, we hope that you’ve learned about the skills you need to make the out of your own money. Apply them in your everyday life.

And if you need a cash advance to take care of short-term needs as you make adjustments to your personal finances, talk to us today.

7Mar2017

The Complete Guide to Avoiding Payday Loan Scams

Have you ever pinched pennies until your next check? Is your paycheck spent before you even get it?

Listen, you aren’t the only one. Plenty of people have scrambled for dough and ate packaged noodles to get by until their bank account goes back to the positive.

It’s tough when money is tight and your credit is less than par – getting a regular loan takes time and good credit.

You may have been tempted to use a payday loan service. Payday loan services are perfect for people who need instant cash without dealing with a credit check.

They entice you with their shiny, brightly lit storefronts and promises for money regardless of your poor experience with other lenders.

Don’t be fooled – some of these services are known as payday loan scams. And they can potentially harm you if used.

If you’re in need of a paycheck advance, take a look at this guide to ensure you’re avoiding these scams:

Is the payday loan service legit?

You know a sketchy website when you see one – pop-ups that make you fear for your computer’s life, constant begging for money throughout the page, and an overall bad vibe.

This works exactly the same for loan companies.

When it comes to payday loans, always go with your gut instinct and make sure they’re a legit operation.

You can do this by making sure they have a license.

Any legitimate lender will have a license or certification – period. These licenses prove they’re regulated by the government and therefore have to follow rules.

A license also ensures that you’re protected – and when you’re playing with money, it’s best to be protected in case something goes awry.

If a lender doesn’t have a license, well, we can pretty much assume they don’t like playing by the rules.

That’s a huge problem; payday loan scams won’t have certification.

Don’t pay the payer

You’re in a pinch and need money.

You’re breaking your piggy banks to get any change you can get your hands on.

The last thing you need is another payout.

Watch out for these sneaky tactics payday loan scams use to get money from you:

Asking for money upfront

Believe it or not, some payday loan scams will ask you for a percentage up front in order to secure your cash.

People actually pay the service to give them money.

Don’t be one of those people. A legitimate lender will not ask you for any money up front.

Hiding fees in the fine print

Ah, yes, the fine print.

This isn’t an Apple privacy policy you’re signing – you actually have to read it.

Make sure you fully understand what you will be expected to pay back and at what percentage. Don’t let the thought of having money quick cloud your judgment when you read the contract.

Dependent on where you’re located, government laws prevent borrowers from having to pay over a set amount on the amount they’re borrowing – this prevents you from being tricked by predatory loan services. Make sure you’re aware of this number before you borrow.

Always keep in mind that the right lender isn’t going to fool you with trickery.

Do some stalking

Stalking your ex-boyfriend is frowned upon.

Stalking your payday loan service to make sure they are not one of the many payday loan scams is not.

You want to make sure no one else has been scammed previously. Chances are, if someone has been burnt by the service, you’ll read about it.

Do all the digging you can on the lender before signing your name on the dotted line. You’ll be able to find the payday loan scams with minimal research.

Here are a couple ways to find the dirt:

BBB

The Better Business Bureau is a tried and true test to check for payday loan scams. If someone has been scammed before, the company’s reviews will light up with complaints from those scorned.

Take a quick search through their reviews page to see if any complaints have been filed.

The BBB gives you a rundown of their rating system so you know what to look out for. The website will also provide you with reviews from previous users who have been scammed.

Google

Google can also be your best friend in this situation. Type in the company’s name or phone number and if it’s a payday loan scam, you’ll see within the first several search results.

Seriously, people who have been wronged by payday loan scams will spread the news like wildfire.

If it is a legitimate loan specialist, there will be more good than bad results.

Can you call them collect?

Have you ever needed to get in contact with someone and realized you didn’t have their number?

If it was 1988 you probably checked the phone book, and if it was recent you probably just found their Facebook page.

The same policy applies for payday loan specialists. You should be able to find them and contact them.

No legitimate company works without a website in this day of technology. Scour it for the contact page.

Can’t find one? You can bet it’s a payday loan scam.

What if you had an issue, or question to ask? If someone isn’t readily available online, via phone or in person – your best bet is to walk away.

Think it over: Avoid a payday loan scam

If you’re in a pinch, and payday seems like light years away, you’re probably searching like crazy for a way to make ends meet. Searching the internet for payday loan servicers may seem like a great idea.

But don’t lose your common sense over the idea of extra money until payday.

Think of all the important information you will be providing the lender: your social security number, your address, and your bank account information.

If you’re not careful, you’ll be serving that information on a silver platter – right into the wrong hands.

Instead of taking the risk of running into one of the payday loan scams, take a look at some other loan lenders that will be a more reliable option.

Let us know, have you been wronged by payday loan scams before? Drop a comment below and tell us about your experience!

24Feb2017

How to Get More Value From Your Paycheck Advance

This just in: Australian household debt is at a record high.

The report also mentioned that 30% of Australian households are in some sort of financial stress and that the country is going to go through a debt hangover according to the Financial Counselling Australia.

To say that it’s not looking good for a lot of Australians when it comes to managing finances is an understatement. But it’s not so hopeless that people can’t do anything about it.

If you’re facing certain financial challenges, a paycheck advance may be the solution you’re looking for. It can tide you over until your next payday and help you in case of an emergency or in the event of an unexpected expenditure.

Of course, like any other loan, a paycheck advance needs to be repaid, which is why you should know how to make full use of it. To maximize your payday loan, here are some tips on how to use it responsibly:

Use your paycheck advance as intended.

You’re borrowing money for a reason.

Whether it’s for an emergency medical situation or your child needs funds for tuition or you need to pay a utility company, use your paycheck advance for its intended purpose.

Pay whatever or whomever you need to pay as soon as you receive the money. There’s always temptation to give in to an impulse purchase since payday is just a few days or weeks away. And if you happen to borrow from an unscrupulous lender, you would have to repay that short-term loan with substantial interest.

Remember, too that a paycheck advance may not be the best option for settling living expenses or monthly bills. There’s a higher risk of defaulting since payday loans are supposed to work as short-term solutions to a sudden financial difficulty. It’s also advisable that you do not take out further loans until you’ve paid the first one so you don’t get sucked into a vicious debt cycle.

Make sure you have enough funds.

To repay your loan, that is.

If your main source of income doesn’t provide you with enough funds to pay back your cash advance, as well as cover the costs of your usual expenses, consider getting another job or finding other sources of income. It might be difficult but it’s better than not being able to pay your debt on time.

Plus, you’ll be comforted by the thought that you’re on the way to having a better credit history and inching closer to financial freedom.

Do your research.

Not all payday lenders operate because they seriously want to help people in dire financial straits.

It’s a good thing then that the government is cracking down on unscrupulous payday lenders.

Of course, even with new laws to protect borrowers, you still need to be vigilant. Before you take out a loan – any loan – always do your research. See if the company you have chosen has a good reputation.

Check customer reviews and complaints. A quick online search should let you know if a payday lender is worth borrowing from.

Only borrow what you need.

Sometimes, payday loan companies will offer you a higher loan amount than what you’re initially going for.

This usually happens when your monthly salary is more than the required threshold set by payday lenders.

It’s an attractive offer but you would do well to stick to your original plan. You don’t want to put yourself in more debt than you need to be. Borrowing the exact amount you need puts you in a better position to repay the loan on time and helps you not incur additional fees and interest.

Be sure you know what you’re getting into.

Read the loan agreement thoroughly. If there are things you’re not so sure about, ask, don’t guess.

Because payday loans are typically done online or over the phone, you might miss important details such as the amount you have to repay. Come next payday, you might get the surprise of your life when you see a huge debit from your account.

Always review the loan agreement and make sure the repayment amount is included in your monthly budget.

Don’t panic if you can’t repay your paycheck advance.

If for any reason, you can’t pay back your paycheck advance, don’t panic and shut yourself off from the world.

Let your payday lender know as soon as possible. Here at Cigno, for example, we encourage our borrowers to contact us if there’s a chance they will fail to make payment.

We know that sometimes unexpected things happen and we’d rather hear from you directly then refer your case to an external debt collector.

Bonus: Tips to get out of debt

In an ideal world, no one will have debts and everyone will have enough money for their wants and needs.

But it’s not a perfect world. And some of us just can’t seem to get out of debt. If this sounds like you, here are some tips to start you on the debt-free path:

Track your spending. Knowing where every cent is going will help you identify where you can cut expenses. If you find you’re spending too much on eating out, start packing lunches. Use coupon codes for online purchases and stop paying for things you’re not using (like that gym membership for example).
Get the support of family and friends. Tell them you have a debt repayment plan and you’re sticking to it. This way, they’ll know why certain activities might be difficult on your budget. And they’ll be more inclined to suggest potlucks and other events that don’t cost a lot.
Prepare to sacrifice. Whether it’s taking a second job or letting go of personal treats such as spa days or shopping sprees, you have to be prepared to make sacrifices if you want to be debt-free. It’s going to be hard but never getting out of debt is harder.

Need help?

Our cash loan products can help you if you’re in need of a short-term financial boost.

If you need more info on our quick, easy, and non-invasive application process, give us a call at 1300 88 23 24 or email us at info@cignoloans.com.au.

13Feb2017

In Debt? Here’s How to Take Control of Your Credit Cards

Being in debt sucks, plain and simple. Australia alone has a substantially shocking margin of household debt at nearly 125.2%.

Your credit, financial opportunities, and general financial standing take a big hit when you fall into debt – and it is very easy to do.

But being in debt doesn’t have to define you, and you can actually get out of debt pretty quickly.

We put together a guide to getting out of debt quickly and properly as well as how to manage your debt without being completely broke.

Ready for some handy knowledge and to get in control of your debt? Check out our awesome guide!

Being In Debt And How To Get Control

This guide can help you prevent, fix, and manage your debt.

Prevention Is Key

If you need cash quickly and are considering payday loans or credit cards, consider some alternatives before you potential get in debt.

There are a ton of things you can do to get cash quickly without the need for a lender:

Sell your stuff on Craigslist, eBay, or DePop. Look through your closet, garage, attic, and other places in your home for the junk you never use anymore and purge your life of garbage while simultaneously making money.

Pick up a side gig like driving for Uber, freelance writing or blogging, or housekeeping.

Use your savings. The key to this is to replenish your savings as quickly as you can after taking out the money. Saving is hard, but there are

Saving is hard, but there are a ton of resources out there that are ready to help you learn how to save.

Before you try to get approved for a loan or credit card, try these steps first.

Recognize When Things Are Getting Bad

It can often be very clear when your debt has spiraled out of control, but other times it can sneak up on you – and other people will notice before you do.

When credit card or loan debt gets to be overwhelming, it is easy to go straight to denial.

Do you ignore calls from unknown numbers, ignore your bills, and avoid conversations about finances with your partner or family? You might be in denial about the gravity of your debt.

Ignoring debt may seem to work for a while, but it isn’t going anywhere. Your accounts will rack up interest and late payment fees.

You need to snap out of that denial in order to give your debt attention it needs to disappear.

Just as well, if you have a super vague payoff deadline, you may be setting yourself up for disaster too.

Saying you will pay off your debts “eventually” is on any calendar. Make a solid but reasonable deadline for your debts to be paid off and work towards that goal.

Take Action With Little Steps First

Get control first and foremost by looking at all of your balance statements. Make a list of each individual debt you have plus their due dates, minimum payments, and their individual current interest rates.

Pay all of those minimum payments now.

Organize all of your debts starting with the one with the biggest interest rate. With any spare money you might have, try to pay addition money towards your highest interest debt.

As you earn income, reserve a significant amount of your paycheck to paying more and more of that highest interest loan off until the balance goes to zero.

Then, move on to the next ones. This will take a lot of time depending on how many debts you have, but it will work.

In addition to keeping track of your debts, also keep track of your incomes and expenses. Deduct how much money you have to spare monthly and dedicate that money to paying off your debts.

Balance Transfers

Credit card balance transfers are credit accounts with 0% APRs (usually introductory) that are used to reduce the burden of other credit card interest rates. With the balance from this low-interest card, you can pay off your more aggressive debts and combine them into one low-interest account.

Balance transfers can absolutely be helpful. However, it is easy to get stuck in the cycle of using balance transfer after balance transfer to avoid the later higher APR.

This also can apply to payday loans. Payday loans can be a fantastic solution to very short-term issues, but one can get stuck in the cycle of rollovers and high-interest rates if they are not careful.

Remember that moving a balance isn’t the same as getting rid of it. Use this formula for balance transfer card repayment:

Total balance transfer balance / # of months until the 0% introductory APR expires

The result of this calculation is your new monthly payment. If you stick to these payments, you’ll be debt free in no time without having to pay an aggressive APR on top of the debt.

Save, Save, Save!

Saving your money is how you will be able to pay off that debt. There are many ways to save money out there, and you should do your best to making a savings plan that works for you.

On top of saving money to use for debt repayments, try to save additional money on top of that to bulk up your savings account.

It doesn’t have to be a lot of money at all. Start with a couple dollars here and there, then gradually add more money to your savings account and do not spend that money on anything.

The security net of having a savings count and nurturing it until it can hold a substantial amount of money will make you feel safer and proud of yourself as well. When an emergency comes around, you will be both debt-free and prepared.

When an emergency comes around, you will be both debt-free and prepared. No need for a loan or a credit card.

Get Out Of Debt The Right Way

Was our guide to being in debt and getting out quickly and properly helpful to you?

Tell us your thoughts, along with your favorite tips for being in debt and getting out quickly, in the comments below!

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