One of the most common types of debt is credit card debt. As such, it’s important to learn how to avoid credit card debt. That will help you a lot in having a strong personal finance. Otherwise, you might never have a healthy financial condition.
Debt related to credit cards is known for its high interest rate. No matter what return you get from your investment, it could easily be wiped out by the interest rate of the debt. So you need to eliminate the debt as soon as possible. Even better, you should avoid the debt in the first place.
The key to avoiding credit card debt is paying your balance in full each month. Some people advocate a radical approach of cutting your credit cards. But I don’t think that’s a good thing. After all, there are still many benefits that you can get from credit cards. Consumer protection and reward programs are examples of them. So keep your credit cards but pay your balance in full every time. This way you can still get the benefits that your card offers without the burden of debt.
To be able to do that, you need to be sure that you spend realistic amount of money each month. You need to live below your means. Just because your credit card limit is high doesn’t mean that you should use it all. To the contrary, you should try to save money whenever possible. Don’t get caught in consumerism. Buy only what you need.
One thing you should pay special attention to is impulse buying. Impulse buying could easily make you spend more than you should. This, of course, is something you should avoid. Many people use the trick of waiting for thirty days before purchasing something. After thirty days, there’s a good chance that you no longer feel the want to buy it unless it’s something that you really need. This is a good trick that many people find useful.
Once you make your spending manageable, it will be much easier for you to avoid credit card debt. Your bill will be under control and you won’t carry a balance on your card.
There are many possible careers someone can choose. One of them that becomes increasingly popular these days is being a freelancer.
Being a freelancer is a good option if you don’t want to work in a company with all its restrictions. By becoming a freelancer, you essentially become your own boss. You can manage your own time instead of having someone else manage your time. You can also work from home. This means you can save money since you don’t need to commute. In addition, you can save money on other work-related expenses such as meals.
Financially, being a freelancer means you don’t depend on your boss for employment. You don’t have the danger of getting fired.
Of course, there are also downsides that you need to consider. One of them is you might miss the social environment that you get at work. Some freelancers find this as a problem especially if they like to meet many people.
You also need to have a way to get clients. It will be helpful if you already have a strong portfolio that you can show to potential clients. Once you get the clients, you need to manage your relationships with them.
At the end of the day, it’s all up to you to choose the your career. You should consider whether or not being a freelancer is for you.
The global financial crisis in 2008 was a great event in the history of world economy. Rare is a crisis of such scale. It’s easily the worst financial crisis the world has ever seen since the Great Depression in 1930s. But what are the causes of the global financial crisis? How could such a crisis happen?
The answer to this question can be summarized in just one word: greed. Greed is the factor behind all the misbehavior that eventually led to the crisis. Greed made people no longer use common sense when it comes to their financial behavior.
This could be seen easily in the subprime mortgage crisis. In normal situation, subprime mortgage shouldn’t be done at all. You need to have enough collateral when lending a mortgage to protect yourself from any possible financial risks if the homeowner defaulted. But people wanted to make more money, and because the normal mortgage market didn’t have enough room for growth anymore, people expanded to the much riskier world of subprime mortgage. They no longer thought that it was a risky business that could easily go wrong. Instead, they saw that everybody did it and they didn’t want to miss the party.
On the other side, people were creating more and more complex financial instruments in order to make more money. No longer were they satisfied with conventional financial instruments. Instead, they created complex mathematical models upon which to create complex financial instruments like derivatives. Many people who traded them didn’t actually understand how the complex instrument worked. As such, they couldn’t take the appropriate actions when things went wrong nor could they anticipate one.
There was a certain degree of irresponsibility that made people do things that they knew shouldn’t be done. Their attitude was that they would no longer be around when the problem arose. They created a dangerous instrument, but when the problem came to the surface they would no longer be involved in the deal. They had reaped their rewards and moved to something else. So who cared if things went wrong? This kind of attitudes opened the way to many irresponsible behavior in the financial world.
So there was a big bubble, a seemingly fast expansion that actually had no strong foundation. When the bubble eventually burst and caused a global financial crisis, people – even economic experts – were surprised.
Do you want to know how to lower interest rates on credit cards? Many people do and for a good reason: lower credit card interest rates can make a big difference on your payments. This is especially true if you carry a relatively big balance on your cards.
There are two ways that you can use to lower the interest rates. The first one is asking for lower rates on your current card issuer. The benefit of this way is you don’t have to go through the troubles of registering a new card or transferring your balance to the new card. The downside is it might be difficult to get a reduced rate from the same issuer.
There’s no hurt in trying though. It will take you only a few minutes to call your credit card company and ask for lower rates. So call them and ask for lower annual percentage rate (APR). To make it easier, you might want to ask them for a hardship program, which is a program designed for those who find it difficult to pay the balance. Your credit card company might give you special interest rates in such a case. But be careful, there’s also a possibility that you can no longer use the card until you pay the balance in full.
Another alternative is to get a new card that has lower interest rates. Then you need to do a balance transfer from your old card to the new one. One important thing to pay attention here is the balance transfer fee. Make sure that the fee is low enough for you to justify the transfer. Also you need to find out about how long the promotion rate of the new card last. Can you get enough benefits to justify a balance transfer? This is something you need to find out before deciding to move to a new card.
The best strategy, of course, is to not carry a balance on your card. In such a case, your annual percentage rate isn’t relevant. You always pay your balance in full so the credit card interest rates simply won’t affect you. This should be something you aim for. However, if you do carry a balance, try to the strategies above to lower interest rates on credit cards.
Having a strong customer value proposition is essential for your business. Why? Because it can make the difference between having a strong, thriving business and a mediocre one. It can make the difference between a successful business and a failing one.
There’s no doubt that customers are the corner stone of any business. No business can thrive without a strong foundation of customers. So you need to make sure that you have the mind and heart of your customers. Doing that not only can increase the loyalty of your existing customers, but also can attract new customers to come to you.
To attract new customers and satisfy existing ones, you need to have a strong customer value proposition. You need to be clear in what you can offer to your customers. What can you give to your customers that other companies can’t? Is there anything that you can do better than your competitors? Or perhaps there’s an unfulfilled need your customers have that you can fill? Your answers to these questions are important because they represent your value proposition. Of course, the questions aren’t easy to answer so take the time you need to answer them.
After you find a compelling proposition, the next thing you should do is communicating it to your customers and prospects. Make sure that they get the message. For this, social media sites like Facebook and Twitter could be helpful so build a presence there. It’s also good to have a blog for your business where you can communicate and interact with your customers.
Of course, you must also make sure that you deliver on your promises. There’s nothing worse than promising a proposition but fail to deliver it. Make a compelling customer value proposition but don’t overpromise because you will only hurt yourself.
One important rule of investing is diversification: you should never put all your money in one basket. You need spread it in different asset classes (such as stock and obligation), and within each asset class you should diversify it further to different kind of investments.
One thing you can do to diversify your portfolio is investing abroad. Why? Because foreign markets have different characteristics than the domestic market. When the domestic market falls, foreign market could actually increase.
It’s true that due to globalization it isn’t one hundred percent true: different financial markets are linked to each other somehow. When one major market falls, the other markets tend to also fall. But at least there are some differences in these other markets that still make them good for diversification.
Just remember that you need to find a foreign market that’s more or less different than the domestic market. If they have similar characteristics, then they aren’t good candidate for diversification. European markets, for instance, are relatively similar to U.S. market. But Asian market tends to be different. So if you lived in the U.S, you might want to consider investing in an Asian market.
Of course, you need to carefully study the market before deciding to invest overseas. Make sure that the market is sound and has strong foundation. Otherwise, you might invest your money there only to get yourself into trouble. Do your homework and you can invest abroad with confidence.
The short answer is yes. But, as with anything valuable in life, it’s not easy to create automatic income.
Automatic income means you can earn money automatically without manual intervention. You don’t have to trade your time with money (this is what most people do to make a living). Some people call it passive income. No matter how you call it, automatic or passive income, the dream is that you can have financial freedom. You don’t need to worry about money because you make money while you sleep. Therefore you are free to pursue other interests in your life.
But how can we achieve it? How can we have that kind of income? Well, you need to create a system. You need to have an automatic income system in place that will make you money automatically over time. The difficulty lies in building the system and make it work.
The difficulty is real. In fact, most people stop before they ever achieve the level of passive income they want. The reason is that they can no longer deal with the difficulty. They can no longer spend the many hours needed to make the system work. Few are the people who eventually have a working system, but they are the ones who enjoy financial freedom while other people still have to trade their time for money.
One of the best automatic income systems is building a network of income-generating web sites. Why? Because, unlike offline stores, web sites can keep selling your stuff for 24 hours a day, 365 days a year. They know no holiday nor do they feel tired. They can make you money while you sleep. They keep working no matter what.
You can start by finding what you can sell. You don’t need to have your own stuff to sell. You can also sell someone else’s stuff. If someone buys it through your web site, you will get a commission. If you sell many items, you can potentially earn big income. This is known as affiliate marketing is a good way to make automatic income.
The competition in business is becoming more and more intense these days. Not only do you need to compete with local companies, but also you need to compete against overseas companies. This is true not only for big businesses but also for the small ones, thanks to the Internet.
In such a situation, it’s very important to find a sustainable competitive advantage for your business. Otherwise, how can you compete against other companies? The earlier you find your competitive advantage, the earlier you can start to work on it and strengthen it.
This isn’t easy, of course. Finding a competitive advantage itself is difficult, let alone finding a sustainable one. But that’s what you need to do if you want to have a lasting business. Finding one helps your business not only to survive but also to thrive in this global landscape.
You can find your competitive advantage by identifying what the market wants and how your competitors deliver value. There might be a gap between what the market wants and what your competitors are offering. In addition, you need to look at your own strengths and weaknesses. Where are you good at? Where are you weak at? Identifying these helps you focus on the right things (that are your strengths) and not waste your time on the wrong things (that are your weaknesses). Of course, this process could be complicated, but here I just want to give a short version of it.
Next, you need to find a way to make the competitive advantage sustainable. One way to do that is by increasing the switching costs. Once you get some customers that are attracted to your competitive advantage, make it difficult for them to switch to your competitors in the future if your competitors eventually offered something similar. You might want to create loyalty programs, build deeper relationships, or simply make it technically difficult to switch.
Finding a sustainable competitive advantage is essential for the success of your business, so make sure you find yours.
There is no doubt that retirement income planning is important. You might live a prosperous life and earn a relatively high income today. But the situation could be different in your retirement. At that time, you would no longer get monthly paycheck from your employer. Add to that the likely rising health costs and it becomes obvious that you need to plan your retirement income.
Don’t take this lightly. Why? Because if you’re late in your retirement planning, it would be difficult for you to fix the situation. If you’re aware of the problem only when you’re already retired, you no longer have the regular income upon which you can create a good retirement plan.
So plan your retirement income today. Personal finance applications usually have a tool to help you plan your retirement. The tool can help you test different scenarios with your retirement. You can simulate different income levels, inflation rate, interest rate, and more. With such a tool you can see whether or not your intended plan would work. It helps you find the best retirement plan for your present situation.
When you come up with a plan, be disciplined to follow it. Normally such a plan includes investing in a retirement fund like 401k or IRA. Check with your employer to see the plan they offer. Many employers offer employer match which will have significant effect on your retirement fund over time. If your employer offered one, take full advantage of it. Another advantage of retirement fund like IRA or 401k is the tax benefits. You will pay way less taxes by investing in these funds than investing in other instruments.
The most important thing, though, is to start early. You can get back lost money but you can’t get back lost time. This is especially important in investing because of compounding effect. If you started late, you won’t get the benefits of compounding effect. So do your retirement income planning as early as possible.
If you want to have a good personal finance, you must learn to save money. Don’t spend money on things that aren’t necessary. Try to find lower price alternatives whenever possible. But now I want to look at the other side of the equation: is buying cheap stuff always a good choice?
Well, if you buy cheap stuff then of course you will spend less amount of money for the item. But I’d argue that it’s not always a good choice. In fact, simply finding the cheapest alternative out there is almost always a bad choice.
How can that be? How can it be that spending less money is bad? The reason is that you need to look at the total cost of ownership (TCO) of the stuff and not just the purchasing price. While you might save money at the time of purchasing by buying cheap stuff, in the long run you could actually spend more money.
Take buying car as an example. If you buy a cheap used car, you may need to spend more on maintenance later on. So you save money once when you buy the car, but you end up spending more in the following occasions. This is especially true if the car had a serious problem which – obviously – is much more like to happen to a cheap used car.
So be careful not to use price as the sole criterion in making your buying decisions. There are many other things you need to consider to decide whether or not something is worth your money. Looking only at one side of the coin is actually a good way to lose money – not to save it.
That’s one thing you need to remember when you’re about to buy something. Buying cheap stuff isn’t always a good choice. More often than not, it’s a bad choice to take.
