Archive for 'Money'
It can be tempting to treat yourself on payday, but in the long run, planning your spending will be more rewarding. Creating a payday routine will help you pay your bills on time and save more money to put aside.
The very first step needs to be completed the night before payday. Transfer any funds you have leftover from the previous payday to your savings account. This will allow you to spend less money you consider ‘extra’ and save it for your long-term goals.
The second thing you need to do is pay as many bills as possible, rather than wait till the ‘due date’. As it is, once money comes into the account, a lot of it is earmarked for bills and payments that need to be made, so rather than holding off on them, you should pay them immediately. This will also give you a clear indication of how much money you have.
Finally, creating a to-do list on the day of your payday is an effective method of viewing or planning your expenses. This will give a clear indication of small and large expenses that need to be paid before your next payday. They will also help identify unnecessary expenses or when extra money is being spent when it shouldn’t be.
These are simple techniques that anyone can apply to get ahead of over-spending on payday.
Reverse mortgages allow you to use the equity in your home as security to borrow money. The following are pros and cons of acquiring a reverse mortgage.
- You will be the owner of your home and can continue to live in it
- Some of the money you gain from it could be used to supplement retirement (especially relevant if your super isn’t covering all expenses
- You could use the lump sum payment for renovations if your home is in a bad condition
- You could put the money aside for emergencies that can arise
- You won’t feel stressed about your living situation
- Over time, your debt will grow while your equity decreases
- Interest and fees will accumulate and contribute significantly to your loan balance
- The interest rate that is charged on a reverse mortgage will be higher than on a standard home loan
- Reverse mortgages could impact whether you receive Age Pension
- Reverse mortgages could inhibit your ability to afford aged care
- If you are the sole owner of your home, then if you move or pass away, the person staying with you may not be able to stay
- If you plan to invest the money from your reverse mortgage, then your home is at risk (not just the portion being invested)
Planning for unforeseeable circumstances is especially important during retirement. Therefore before you choose to opt for a reverse mortgage, make sure you consider your options.
Debt consolidation is a form of refinancing which involves taking one larger loan out to pay off multiple small ones. Although this might make managing repayments easier, you may end up paying more money interest rate or fees.
There will be companies that make offers which are too good to be true. If you feel that an offer is unrealistic and the company is promising that they can get you out of debt no matter what your situation is, you should reevaluate using their services. Don’t trust companies that:
- Are not licensed
- Ask you to sign blank documents
- Refuse to discuss repayments
- Rush the translation process
- Won’t put all loan costs and interest rates in writing before you sign
- Arrange a business loan when you only need a consumer loan
The goal behind the consolidation is to manage your payments, not create more fees and interest for you. Therefore, before signing onto an agreement, check how consolidation compares with your current fees and interest rates altogether. Also, take into account expenses and penalties associated with your existing loans and whether you will have to pay more money for paying off your loan early. If the expenses work out to be more, it might not be worth going through this entire process.
Debt consolidation isn’t the only option if you’re struggling with repayments. Other options may be available which are more suited to you. You should discuss with your mortgage provider, credit provider or financial advisors to determine if there is anything that can be done.
It’s hard to know where to start when you decide to take control of your money. It can be helpful to know exactly how much money is coming in and going out to start this process.
Understand where your money is going
Although it can seem daunting to track every dollar you spend, it will give you a clear view of where you are spending your money. Small things often go missed when you estimate your spending, so taking note of these will help you understand the gap between your estimations and your actual spending.
Track your spending and expenses
You should start tracking your spending every day for a set period of time. This could be a few weeks or a few months. You will begin to notice patterns of spending the longer you track your expenses.
A simple way to track your spending is through a phone app. Certain apps will even allow you to limit your spending and give you an easy-to-understand overview of your expenses.
If you regularly use your card, then your bank statement will contain every translation detail. Views these regularly or at the end of the week.
Alternatively, you can also write down where you spend your money and how much you spent. This is especially useful if you regularly use cash.
Reflect on your tracking
At the end of this tracking period, you should be able to see where you most spend your money. Being aware of this might help reduce your spending but there are also other things you can do.
Take note of where you can save your money. There may be certain items that you regularly buy over time, which you might be able to cut down spending for by buying for the long term.
You should also distinguish between what you ‘need’ and what you ‘want’. This will give you a good estimate of what ‘wants’ you are spending most on and how to best cut down on them.
Test out a budget
Using this information, test out a budget and see if it works. This time, you should aim to set a realistic limit for the next week or month. You should account for some of your wants as well as your needs.
Your budget may require revising, but you should create one which balances your previous spending habits, and your future financial goals.
Banking is often more complicated than you expect it to be with different types of accounts, fees and fine print to take into consideration. You are able to get more out of your bank account if you pay closer attention to certain details.
Re-evaluate your bank
Due to the competitive market space, new offers that might be much better suited to your needs than the 10-year-old bank account you are using may be available. Keep a lookout for these offers so that your bank account is helping you put more money into your pocket.
You should also consider changing accounts if your bank is asking you to pay high fees or requires a high minimum balance. You may find that other banks are offering better options or attempt to renegotiate terms of your account with your current bank.
Don’t assume your bank is giving you the best rate
Your bank may not be giving you competitive rates and assuming that they will do right by you lets them get away with this. Make sure that you keep up to date with different types of rates and what they should be. Discuss these with your bank and how they might be able to give you more competitive rates to the ones you are currently receiving.
Plan interactions with your bank strategically
Other than when it’s regarding an urgent matter, plan interactions with your bank ahead of time. For example, if you need to visit the bank about your mortgage, aim to have a mortgage specialist with you, this will ensure that you get the best out of your visit.
You may be able to resolve your request by calling the bank. In this case, aim to call in off-peak hours to reduce waiting time. Before you call, make sure you’ve checked whether the bank has provided an online method to complete the process.
Don’t forget cards and bank accounts you don’t use
Carrying a spare credit or debit card is okay as long as you aren’t being charged annual fees on it. If you find that you rarely use the card but it has a high annual fee, it might not be worth continuing to pay for it.
The same applies to bank accounts that you may not be using or using rarely. Banks may charge a dormant account fee if there is no activity in the account over a period of time (check details that apply to your bank). However, using your bank account every few months should be enough to prevent dormant account fees from being charged.
Taking care of invoice and billing payments can often be an onerous task for many small businesses. However, very few things are more important in the business industry than getting paid on time, since delays in payments can disrupt a business’s cash flow quite seriously.
Business owners looking for best practice tips to get paid on time should keep in mind that often the most effective solutions are usually the most simple. Owners should make sure that their invoices are accurate, easy to read and include information such as:
- How to pay the invoice
- A clear description of goods or services provided
- The details of any discounts and how they were determined
- Information about any outstanding payments
- Delivery charges if applicable
If any queries should arise about the invoice or payment, owners should handle them fairly and quickly.
Making only a few simple adjustments to invoices can speed payment from customers so owners can focus more of their time on their business than on their bills. Some techniques to speed up payments include:
- Confirming the correct location and contact details so the invoices reach the right person.
- Clearly stating on your invoice that you reserve the right to charge a set late fee for overdue invoices.
- Contacting customers to tell them what corrections or adjustments are being made to their invoice before sending the amended invoice
- Quoting any relevant customer reference number customers have provided.
- Including a credit card or online payment option.
How you spend your money determines how well you can save you money. Spending more than you have or buying unnecessarily can severely impact how efficiently you can save. Sometimes you aren’t even aware of the small habits that are actually limiting your savings capabilities. Here are a few bad money habits that are getting in your way.
Not having a budget:
Spending a substantial amount of money each month on purchases and experiences adds up. Not preparing and sticking to a budget is a common mistake, as many people believe that a budget isn’t necessary for their lifestyle and income. Regardless of how much you earn, individuals need budgets to know where their money goes and what needs to be set aside to achieve their goals.
Dining in restaurants or grabbing take away most nights in the week is a good way to deplete your finances. Save money by eating out one or two nights and cooking the rest of your meals in bulk at home. Preparation of food will help on those nights when you don’t want to cook and stops you from ordering food.
Purchasing items without a second thought is an easy way to lose money. A good way to avoid this can be to ask yourself if you are buying something because you ‘want’ it, rather than if you ‘need’ it? Learn how to recognise when you do the action and force yourself to wait. You can then consider if you have the extra money to spend on that item, giving you time to properly think about your decision.
A credit card is an easy way to spend money you may not have. Living beyond your means is a fast way to fall into debt and is one of the worst things you can do for your finances. Remember, if you don’t pay the card in full each month, every dollar you put on a card will cost you many times more in interest charges. Avoid this problem by thinking of your credit card as an emergency-only option.
As individuals struggle with cash flow through the coronavirus, the Australian Bankers Association records that repayments on almost 500,000 mortgages have been deferred for six months. While repayments can be delayed, they cannot be avoided altogether.
Lenders can send you a default notice the day your repayment is overdue. However, they could also wait until your repayment is overdue by 90 or more days. When you receive a default notice, you are given 30 days to repay the amounts you have missed in addition to the regular repayment on your loan. Individuals who are struggling with their home loan repayments can avoid mortgage default by considering the following.
Contact your lender
Lenders are generally willing to work with you through financial hardship. Don’t be afraid to contact your lender to discuss your situation and find out what options are available for you. Lenders are often willing to negotiate short-term variations to repayment schedules that both parties can agree to. However, make sure that you do not agree to unrealistic repayment conditions that cannot be met.
Many Australian banks are offering a six-month deferral on mortgage repayments (including interest) for customers who are experiencing financial hardship as a result of COVID-19. If this is you, contact your bank to see if this is an option.
Apply for a hardship variation
Mortgage holders may be able to change the terms of their loan or temporarily pause or reduce their repayments under a hardship variation. A hardship variation can still be requested after you receive a mortgage default. To apply for one, contact your lender’s “hardship officer” and tell them that you wish to change your loan repayments due to financial hardship. This will usually require you to explain why you are struggling to make payments and to estimate how long your financial problems will continue to determine how much you can afford to repay.
After submitting a hardship variation request, your lender must contact you within 21 days with the outcome of your request. They may ask you for more details regarding your request; in this case, they must contact you again within 21 days from when you provide the additional information.
Consider selling your home
Selling your home is a tough decision, but in some cases this may be the better option if your circumstances are unlikely to improve. If you get to the point where your lender takes possession of your home and sells it, it’s likely that you won’t make as much as if you sold it yourself. When you sell your house on your own terms, chances are you will get a better price and avoid having to pay the legal fees passed on by your lender. Inform your lender if you decide to sell your home; they may ask for proof, such as a copy of the contract with your real estate agent or property advertisements.
Renting out your home until you can afford to make repayments again may also be an option if you are able to live somewhere else during this period.
Businesses can be heavily impacted by customers who cannot, or simply will not pay when payment is due. A single unpaid invoice can cause issues, and the longer this debt is left uncollected, your chances of getting your money back become slim. Consider these tips to avoid and manage debt recovery to save your business from major losses.
Reduce credit terms
If late payments and managing bad debt is a regular occurrence, consider reducing your credit terms. You may want to remove your credit terms entirely, but it is important to look at your customer base, the services you offer, and whether there is an average credit term that is expected by your clients. If you offer credit terms shorter than your competitors, you may end up losing valuable customers. However, if your credit terms are too spacious, your cash flow will be slow, putting you at financial risk.
Encourage timely payments
Your business might require a set credit term to meet the industry average. In these situations, consider offering discounts on payments made early or within a set date from invoicing. An alternative is to charge a late fee to encourage your clients to pay on time. In these situations, it is necessary to first make your customers aware of the introduction of this policy clearly through your terms and conditions. To maintain good customer relationships, try to limit overdue fees to repeat offenders. You may want to monitor incoming payments to see if these policy changes are reducing your late payments.
Hire a debt collection agency
Efforts to pursue your late-paying customers may not always be successful. If the debt amount is less than $1000, it may not be financially viable to pursue legal action for violation of your credit terms. In such situations, consider outsourcing your debt collection to professional collectors. However, timely involvement is key to getting your money back. Give your clients sufficient time to make a payment, and if over two times the trading terms have passed, hire a collection agency to prompt your clients into making defaulted payments.
Turning an idea into a business requires money, and securing this stable funding is not easy. Businesses have a variety of innovative funding options today, but before you pick one, you may want to consider how well some of these methods fit your business model and if you can really benefit from them.
This is a form of financing that pairs you up with people online that are willing to lend money to your business, without going through a financial institution like a bank. It involves filling in an application on a peer-to-peer lending website, where your risk rating is determined based on your security, creditworthiness and revenue projections. Once approved, other members on this platform can see your request and may decide to lend you money.
If you are looking for a smaller loan, P2P might be ideal for you. Despite the cap on the maximum loan amount, its easy online application and competitive interest rates make P2P a great way to finance your transactions.
More business owners are turning to the internet to grow their business. Crowdfunding is a way to gain finances without going into debt. These platforms involve business owners pitching their business and asking for funds in exchange for some type of reward, like early access to your products or exclusive discounts for investors.
However, crowdfunding is not a long-term financing solution. Your business might benefit more from this if it is an innovative idea, and if you are looking for a one-off financing option that is cost effective. Crowdfunding offers the added bonus of gauging how people feel about your business – which is essentially free product-testing and customer feedback.
Purchase order financing
POF works by converting your incoming orders into collateral. When you engage with a POF company, they directly pay your supplier so the order can be met. The customer then pays the POF company directly, which then deducts its fee before returning the payment to you.
This can be a great option for small businesses that may not be able to financially take on larger orders. However, it is important to note that POF companies limit their services to product-based businesses, and their fees can be quite high.