Category Archives: Financial Planning

Knowing Whether or Not to Loan Money to Someone

At one point or another, most people will find themselves in situations where they asked for a loan. The person making this request may be a relative, close friend, or even a co-worker. Loaning money comes with its own risks and stigmas; what if the borrower takes too long to return the money? What if they can’t afford to pay back the loan? Worst of all, what if they simply choose not to?

Most people feel inclined to provide aid to those who are closest to them. However, there are still certain factors which should be taken into account prior to handing out monetary loans. Keep reading if you’re interested in learning more.

Consider the Qualities of the Person

Not every person who asks for a loan should be told yes. Hence why the qualities and characteristics of the prospective borrower should be taken into account before any funds are exchanged. Integrity, personal responsibility, and even current financial standing each play a role in how likely the individual is to, not only, return the borrowed funds, but also do so in a decent amount of time.

Another point to take into account is whether or not the asker has previously borrowed money from other people. If so, has he or she paid it back in a timely manner? Believe it or not, borrowing history tends to be quite indicative of an individual’s forthcoming habits, as they pertain to money.

Look into Creating a Legal Contract

While amounts of borrowed funds can vary, WikiHow advises lenders to draw up legally binding contracts; this especially comes in handy when hefty sums of money are being loaned. This can be done by having the borrower sign the contract and also ensuring that the document is enforceable via the Uniform Commercial Code (UCC).

Instituting a clear payment plan and eventually getting the contract notarized are also critical steps towards legalizing the form. Although going through the process of creating a legal contract may seem like a bit much to some individuals, it can truly come in handy later on down the line. Moreover, if a prospective borrower is unwilling to sign a legally binding contract, they may not be the best person to loan money to.

Trust Your Instincts

At the end of the day, each person is tasked with the decision of whether or not they want to loan money to a friend or relative who asks. Considering their qualities and characters can be incredibly beneficial, as can creating a legal contract; however, at the end of the day, your instincts should always be the determining factor.

No matter how good or trustworthy someone appears to be on paper, if your gut tells you to turn down their request to borrow money, do so. You are under no obligation to hand out loans; furthermore, you must first help yourself before you can truly help others.

A Final Word

Hopefully, the preceding advice will prove helpful to anyone who is undecided about whether or not they should loan money to someone they know.

 

Authored by Gabrielle Seunagal

How to Pay Off Student Loans

Taking out student loans is a fairly common practice. Many young people do this for the sake of investing in their education or otherwise being able to attend college or university. Initially, being able to take out student loans and attend college may seem like a dream come true. However, this dream can quickly turn into a nightmare when young people are not only billed for the money they borrowed, but also the subsequent interest fees which come along with it.

Virtually everyone has heard of the countless horror stories of young people who spend decades or even lifetimes attempting to pay back their student loans. Thankfully, there are some helpful tips for those who wish to pay off their student loans in a reasonable time period and enjoy the upsides of being debt-free and financially well-off.

Look Into Certain Occupations

Student Loan Hero explains that there are various occupations which offer certain mandates in exchange for forgiveness of borrowed funds. Usually, jobs of this nature fall into the category of teaching or providing some other type of public service. However, taking advantage of such an opportunity requires more than simply applying for the job and being accepted. In most cases, these type of occupations also require work terms in addition to various mandates.

Finally, if an individual is ineligible or otherwise barred from receiving student loan forgiveness, they will have likely incurred additional interest fees during the time they spent towards acquiring forgiveness. For this reason, students should always look into whether or not they are eligible for this opportunity prior to pursuing it.

Make Certain Lifestyle Changes…at Least Temporarily

Rarely does anyone enjoy changing their lifestyle for the sake of having to pay back previously borrowed funds. However, the reality is that student loans must be returned, one way or another. Hence, Nerd Wallet advises young people to look for various ways to reduce their expenses and put the extra money towards paying off their student loans.

This doesn’t mean that individuals who owe student loans can never go to the movies or dine out; however, they would do well to perhaps engage in these activities less frequently or find similar ways to decrease what they owe to the government. This is can be done by either decreasing expenses or increasing income. Ideally, if both changes are successfully implemented, young people will be able to pay off their student loans at a much faster rate and save thousands of dollars, if not more.

A Final Word

The amount of young people who owe student loans is increasing each and every day. For this reason, more and more individuals are questioning whether or not college is truly worth it. Nevertheless, those who have already incurred loans will have to pay them off, one way or another. Many young people make the mistakes of either delaying payments or only paying the minimum amounts. This is not conducive to financial or economic success.

Finally, individuals who believe they can cheat the government out of getting returns on borrowed funds should tread very carefully. People who play this game never really win; the government almost always get their money back — on top of the sky-high interest fees.

 

Authored by Gabrielle Seunagal

How to Financially Prepare to Leave Your Parents’ Home

As the cost of living becomes more and more expensive, many young adults are living at home with their parents or other relatives. However, many people reach a point and time where they wish to live on their own. This is quite understandable and to be expected; however, leaving home and venturing out into the real world requires serious, calculated preparation. This is not something which should be done carelessly or on a whim.

Anyone who is thinking about leaving their parents’ homes will benefit from the following pieces of advice. Not only do they provide insight regarding this particular situation, but the forthcoming tools can also be applied to achieving general, economic success.

Know the Cost of Living

In general, the cost of living greatly varies according to one’s geographical location. Bearing that in mind, young people who wish to leave their parents’ homes should first know how much it will cost them to live on their own, explains Money Crashers.

This means doing research and looking into not only the costs of rent, but also utilities, groceries, transportation, and miscellaneous fees. Many young people may be shocked to learn that independently supporting themselves is more costly than they thought.

Have A Decent Amount of Funds in Savings

Even in the best of situations, unexpected events have a way of popping up. This is why The Balance advises young people to have extra funds put aside in case of emergencies. Car accidents, damage to valuables, and other unforeseen occurrences happen each day and preparation is paramount. Having a few thousand dollars put aside in cases of emergencies is a good idea and will likely pay off sooner or later.

Try to Minimize Use of Credit

One of the biggest financial mistakes people make is overusing credit cards. They continuously swipe their cards and are then unable to pay the bill when it comes due. This leads to subsequent interest charges which quickly pile up on top of the original debt. Before you know it, interest outweighs income and people sink further and further into financial hardship. For this reason, Mint urges young people to minimize their use of credit and reserve credit cards for only emergencies.

Of course, doing this requires a degree of discipline and stable, regular income, but reducing one’s use of credit is much better than the alternative.

A Final Word

In many regards, moving out of your parents’ home and becoming financially independent is a rite of passage. The majority of society also views this milestone as the true beginning of adulthood. By knowing one’s living costs, saving money, and using credit as infrequently as possible, young people will more than likely do well for themselves as they venture into the world of adulthood and independent living.

 

Authored by Gabrielle Renee Seunagal

How to Financially Prepare for a Recession

Nobody likes to think about recessions and all the havoc which they can bring upon a society and to the economy. Nevertheless, many people have lived through and experienced the plights of recessions. Although they take a toll on virtually everyone, members of society who are most vulnerable and least prepared tend to suffer on considerably higher levels. This is what makes financial preparation so absolutely paramount.

Failure to plan is ultimately a plan for failure. However, the following steps will allow people to not only prepare for a recession, but also protect the businesses and funds which they have garnered over the years.

Consistently Save Money

As stated by Money Talks News, constantly putting aside money always make a big difference, but it especially comes in handy during a recession. Financial advisors currently recommend for people to put aside at least six months to one year’s worth of living expenses. This is something which a surprisingly high percentage of people fail to do. Many of them believe that a crisis will not befall them, but a safety net always comes in handy. Consistently saving a certain percentage of funds from each paycheck makes a difference.

Saving money prior to a recession can truly determine the difference between survival and homelessness.

Look Into the Gig Economy

There are many opportunities which exist within the gig economy. Driving for Lyft/Uber, renting out rooms on Airbnb, content writing, graphic design work, and more are all opportunities which people can and should take advantage of. Not only does this allow for individuals to create an additional revenue stream, but funds earned in the gig economy can be put into savings, bills, etc.

Every person will find that money and savings are their greatest economical allies, especially in the face of a pending recession.

Pay off Any Incurred Debts

Another important thing to do in preparation for a recession is paying off debts. No matter the state of the economy, credit card companies will continue to charge interest for unpaid balances. Over time, this can truly chip away at your income; besides, any money which goes towards interest is lost income which could have otherwise gone towards savings or bills. It’s also worth noting that paying interest does not decrease one’s debt, but merely lessens the fees for not paying one’s debt on time.

Money is an incredibly valuable resource; it becomes infinitely more valuable during times when the economy is experiencing a recession. For this reason, everyone should be actively working to become debt-free.

A Final Word

Ideally, people should be saving money, creating additional revenue streams, and paying off debts regardless of whether or not a recession lies in the near future. Being in the strongest financial state is always the best way to set oneself up for success. While economic recessions might prompt stronger precautions, you can never go wrong when you are in good financial health.

 

Authored by Gabrielle Seunagal

How to Purchase a Car

Purchasing a car, especially for the first time, marks a monumental and significant milestone in any person’s life. In many regards, a new car represents freedom and the ability to go wherever one pleases without having to rely on public transportation, rides from friends/family, or rideshare services such as Lyft or Uber. Nevertheless, the freedom associated with car ownership simultaneously comes with responsibility.

Before one can get to the perks and duties of owning a car, they must first make the purchase. In and of itself, this task requires considerable preparation and financial security. Going forth, readers will learn about everything which comes along with purchasing a car.

Work Out the Logistics

Before the soon-to-be car owner goes to the dealership, they need to have the required logistics completely worked out and squared away. In this case, logistics means money. A concrete budget, preference in car make/model, and costs of ownership should all be settled and taken into account, explains Nerd Wallet. The individual getting ready to purchase the car should also remember that ownership costs include gas, maintenance, insurance, and upkeep.

Purchasing a car can be a considerably costly endeavor; hence, some people opt to consult a financial advisor prior to making such a major purchase. However, if one can budget and work out the logistics on their own and without the services of a professional, they’re more than welcome to do so.

Do Your Homework

Aside from budgeting and financial planning, another important step of purchasing a car involves research and ensuring that everything checks out. Therefore, soon-to-be car owners should not only check out the cars they’re thinking of purchasing but also the company or dealership which they are buying from. Virtually everyone is familiar with the stereotypes of snake oil car salespersons, but these type of people are quite real and crafty.

Going online and checking out dealership/company reviews is always helpful; both positive and negative reviews should be considered and taken under advisement. Even after the individual has chosen a dealership and found the car of their choosing, they should always take the vehicle for a test drive.

As Bryant Motors explains, a test drive will truly allow purchasers to get an idea of the car’s quality. Moreover, any dealership who refuses to allow their customers a test drive should be avoided at all costs; prohibited tests are always a huge red flag.

A Final Word

Many soon-to-be car owners bring friends or family with them to dealerships as they prepare to purchase their own vehicles. Not only can this decision be great for moral support, but friends and family can also pick up on red flags which the individual at hand may miss due to their lack of experience.

Happy car hunting!

 

Authored by Gabrielle Seunagal