Tips To Avoid Financial Woes

At some point in your life, you may fall under hard financial times. This happens to many people and does not mean the end of the world for your bank account or credit score. There are ways to come back from financial hardship and be prepared to avoid them in the future. This article will talk about some common financial woes and how to avoid them.

 

Create a Budget

 

Most people think they have a good understanding of where their money goes. Taking a closer look at your monthly spending may surprise you. Where your money is going may not match up to what you thought you were spending. A good way to avoid financial hardships and even dig yourself out of one is to set a budget for yourself. Take your monthly analysis of your spending and formulate a budget that will keep you in the green each month. Make sure your budget is tangible. Try not to guess at what you spend on certain items, be precise and you will be more likely to stick to your budget.

 

Impulse Buying

 

A common mistake among consumers is to purchase something on impulse. If you come across an item and immediately think “I need to have this!” Take a step back and evaluate the reasoning behind the purchase. Is this going to get me to my financial goals? Is this item necessary for me to buy? These questions will help control your impulses and ultimately keep you connected with your budget. If after a month you are still yearning for that item then save up enough money to get it for yourself.

 

Alternatives To Spending

 

Instead of going out to a fancy bar or restaurant, aim for a day packed with homemade sandwiches and a hike near your local trail. Any alternative you can find to spending money on miscellaneous things like a bar or restaurant should be pursued to help you save money and maybe even find your new favorite activity.

 

Medical Insurance

 

Nothing can help you dampen the blow of a medical emergency like medical insurance can. Without insurance, you are at risk of paying high fees for medical procedures that can plunge you into financial hardship for a long time. Medical emergencies are unpredictable, and it is better to be insured no matter your financial situation to avoid destroying your financial credibility for good.

What To Look For In A Financial Advisor

Finding a financial advisor is an important task in anyone’s life. Your financial advisor will walk you through your financial goals and then formulate a plan to help you reach them. Before you make a decision on who your financial advisor will be, consider the points listed in this article to ensure you are making the right choice.

 

Experience and Education

 

When looking for a financial advisor consider what kind of qualifications they have. Look for a Certified Financial Planner (CFP) before making your decision. Conduct an online search for your potential financial advisor and refer to any and all articles and websites about them. Follow up on previous or current clients to gather more information about their practices. It is one thing to state that a financial advisor has the proper qualifications but if they cannot correctly apply good methods than it is not worth the investment.

 

Pay Structure

 

The way a financial advisor sets up their payment structure speaks to their intentions in being your financial advisor. There are a few ways advisors can set up their payment structure. One way is commission based. Commission based advisors could be biased about what kind of investments you should consider because they are ultimately getting a cut of that investment. This could lead to investments that may not be working towards your financial goals. Another payment structure is fee-based. A fee-based advisor could give you advice that will benefit them in the long-run causing you to potentially stray away from your financial goals. Consider a financial advisor who charges by the hour. An hourly payment structure does not allow the advisor to be biased towards any financial decisions.

 

Contact

 

Make sure you understand how often you and your financial advisor will be meeting. Some advisors will have an initial meeting then only have scheduled meetings once a year from then on. If you are new to having a financial advisor, recommend that you and your advisor meet quarterly or more often than that if needed.

 

Outcome

 

You want to find a financial advisor who will point you in the right direction to achieve your goals. Eventually, you should be armed with enough knowledge to take over the reigns and conduct your own financial plan. Avoid getting stuck with an advisor who suggests that you need to stay with them to reach your goals. That kind of financial advisor may not have your best interests at heart.

Avoid These Things That Can Harm Your Credit Score

Your credit score is incredibly important when it comes to making any big purchases. If you are thinking about purchasing a car or your first home, then banks are going to look into your credit score to determine what kind of loan you will receive. There is plenty of information on how to keep a good credit score, but it is equally as important to know what will drive your credit score down.

 

Missing Payments

 

Your payment history accounts for thirty-five percent of your credit score. Missing a payment over thirty days could drop your credit score one hundred points. Credit card companies may not report a late payment until sixty days after it is due. By the sixty day mark, your credit score may have suffered severe damage. Set reminders for yourself about when payments are due on your credit card. Never miss a payment, and your credit score will be just fine.

 

Cancelling Credit Cards

 

If you have a credit card that you do not use anymore, do not cancel it. Cancelling a credit card with a zero balance eliminates all the credit history you have associated with that card. Say you have had a credit card for four years and then cancel it one day. Those four years of purchasing items on that credit card disappear, making your credit history seem shorter than it actually is. Keep your old credit cards open to showcase your extensive credit history!

 

Collections

 

When a payment is overdue for an extended period of time, credit card companies will either sell or hire a third party to collect the payment. A collection usually occurs after six months of no payments. A collection can drastically reduce your credit score by one hundred points, sometimes more. A collection can stay in your credit history for up to seven years, affecting any future purchases or loans you apply for.

 

Settling Debt

 

If you settle a debt with a creditor and it is less than the amount you originally owed this can dramatically affect your credit score. People who have settles a debt with a creditor saw drops in their score ranging from forty-five to one hundred points.

 

Bankruptcy

 

Declaring bankruptcy has the most detrimental effect on your credit score. Filing for bankruptcy can stay on your credit report for almost ten years. A credit score can suffer up to a two hundred and forty point reduction from declaring bankruptcy.

Why Corporate Philanthropy is Important

Why Corporate Philanthropy Is Important Tom Leydiker

Corporate philanthropy has become the norm in today’s businesses. There are several well-known companies who have made it their mission to give back to people whenever a customer buys from them. TOMS is an excellent example of a company that does this. There are significant benefits to why corporations should give back to their community.

Public Perspective

Besides the fact that giving back is morally right, the efforts put forth by a company to do so makes them look good to customers. Customers gravitate towards companies that take the initiative to help other people. Long-lasting and potential customers will pass along the good word of your business if they see you are taking steps to help others. Your efforts will give you a competitive edge over your competition. Companies who do not participate in corporate philanthropy generally see fewer customers compared to companies that do participate. Ensure that you are giving back for the right reasons and not just for financial gain or customers will look past it and disregard any efforts going forward.

Company Morale

Companies who participate in corporate philanthropy typically see a boost in company morale. Employees who value philanthropy on the personal level will appreciate and respect you for giving back. Even for employees who have no interest in philanthropy could bond with their coworkers over volunteer events. On either side of the spectrum for employees will benefit from this kind of philanthropy. The improvement of morale and relationships in the office could have a direct impact on productivity. An increase of teamwork and cooperation could be a direct link to volunteer outings and community service.

Community Benefits

The type of philanthropy you participate in matters. Whether its locally or globally, philanthropy helps people have acc3ess to things that they usually would not have the ability to have. Local philanthropy could benefit a company in a variety of ways. If your local philanthropic efforts include giving money to schools, then you could potentially receive direct feedback in innovation. Research institutions could conduct studies to help benefit your organization. Giving back to schools gives you a direct line into recruiting knowledgeable students from that university for your company.

Corporate philanthropy benefits a wide array of people. As a company, you should consider ways to give back to your community. This effort will help you with customers, employees, and appease a sense of fulfillment which otherwise would have been left unoccupied.

 

What You Need To Know About The Stock Market In Order To Make Money

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Investing in the stock market might seem scary, especially watching movies like Wolf of Wall Street.

However, the world of investing isn’t actually that terrifying and can, in fact, be an effective way to set yourself up for a comfortable financial future. Yet younger Americans are not investing as much as older generations. Waiting to invest is a pretty poor money move.

While investing can be a risky game, it isn’t nearly as complicated as one would think. Here is what you should know if you want to make money off of stocks:

Think about your timeline.

The longer you wait to save and invest, the more you’re going to lose, and the less you’re going to make. Making money in the stock market is all about maximizing the benefit of compound interest. The trick is to keep saving and investing. The more time your money has to grow, the more you’ll have at the end of the day.  

Think about how much you’re investing.

The amount you earn is partially based on how much you end up investing. You don’t have to invest a lot to earn a lot. It’s simple enough to start by contributing as little as 5 percent into a 401(k) or IRA. If you’re concerned that you’ll lose your money if you do end up investing, then fret not. NerdWallet recently released an analysis of 40 years of historical returns, and discovered something pretty interesting: stock market investors had over a 99 percent chance of maintaining at least of their initial investment, the same as a traditional savings account.  

Think about the return rate.

Investors had a 95 percent chance of earning nearly 3x your initial investment, compared to a less than 3 percent chance of tripling your investment as a traditional saver. While these are some pretty nice-looking odds, the ultimate rate of your money growing is out of your control. As long as your investment outpaces inflation, you’ll do well. That’s not going to happen if your money is in a bank account with low interest rates.

Think about diversity.

Putting all of your eggs in one basket is seldom a good idea, particularly in the world of the stock market. While buying a lot of stock from Blockbuster made good business sense 20 years ago, you’d be kicking yourself now. To make sure that something like this doesn’t happen to you, invest across different types of companies, industries, and companies. Start by investing in a low-cost index fund that diversifies for you, or robo-advisors that use algorithms to build and manage your portfolio.

Telltale Signs When It’s Okay To Borrow Money

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If you have ever consulted with a financial advisor, you know that borrowing money is one of the last things you should do, especially if you are trying to build up a strong credit history or investment portfolio.

However, there are certain exceptions to this rule. If you encounter a drastic or detrimental life event, are responsible for aiding your extended family in times of trouble, or suddenly find yourself inundated with bills, you should not feel as though you have no options or means of receiving help.

With that in mind, let us take a look at some telltale signs of when it is okay to borrow money:

When you cannot afford moving costs.

If you recently purchased a home, you may be faced with a plethora of expenses you had not even taken into consideration (i.e., storage, transportation, sudden repairs or renovations, etc.). Borrowing money in this scenario can give you great peace of mind while you are getting moved and settled into your new space.

When you are hit with large medical bills.

Unfortunately, no matter how young or healthy you are, facing medical expenses is an inevitability. Thankfully, there are ways to ease the burden of big medical expenses.

Now, credit bureaus allow patients 180 days to address their medical expenses prior to putting them on their credit reports. This gives individuals enough time to sort through their options and make the most educated decision possible – all without feeling rushed or uncertain of their financial standing.

When your car requires major repairs.

A lack of reliable transportation puts a major wrench in your plan to consistently earn and save money. However, if you are in a financial bind and require assistance to get your car back in working order, borrowing money is likely your best option. This will ensure you are still able to work and will even allow you to pay off your expenses at your own pace – a definite win-win scenario.

Regardless of your reason for borrowing money, it is imperative that you remember the importance of paying off your debt in a timely manner. Otherwise, you may end up paying more due to accrued interest than you would have if you budgeted your finances to make the largest payments you could manage – within the realm of feasibility, of course.

Personal Finance Checklist: How Much You Should Save at Every Stage of Life

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The best way to build your personal wealth is to save your money as early and as often as you can. Having an account with compound interest will allow your money to begin making you more money. The bestselling author David Bach lays out a saving plan for each stage of your life in his book “The Automatic Millionaire.” The exact amount that is saved will differ from person to person depending on lifestyles and personal goals, however, Bach’s plan is a good rule of thumb to refer to.

The first decade you should start seriously saving is in your twenties. In your twenties you should be saving 10% of your gross income to your retirement savings and your emergency savings should be at least three months of expenses. If your company offers a 401 K plan and matches your contributions up to a certain percent, often somewhere between 3-5%, saving that 10% of your gross income just became much easier.

In your thirties, it can be expected that you’re not only providing for yourself anymore. You may have gotten married, may have had children, or may have bought a house. This is where you thank yourself for beginning to save at an earlier age. At this stage of life, 12.5% of your gross income should be saved for retirement and your emergency savings should cover your expenses for at least six months.

Your forties will be your peak earning years. This stage of life is going to be the most profitable time to take advantage of your increasing salary and save as much as you can. You should be saving 15-20% of your gross income to your retirement fund, and your emergency savings should be able to cover you for at least year or two of expenses. If you set yourself up with an account early on, you’ll truly start to notice your compound interest making money for you.

Once you’re in your fifties, you should be getting close to your retirement goal. Don’t stop saving once you reach this goal. You should be saving up until the day of your retirement. By this time, your emergency savings should be able to cover at least three years worth of expenses. It’s important to have this much in emergency savings because “the older you get the more you earn and spend. And if you lose your job it can take longer to find a job that replaces that income” explains Bach.

During your sixties and into retirement, you should still manage your money carefully. If you’ve followed the plan outlined above, you should be set to enjoy your money. Your emergency savings account should contain roughly five years of expenses.

How Collections Can Affect Your Credit

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Debt collectors, according to both the Federal Trade Commission and Consumer Financial Protection Bureau, are one of the most complained-about businesses. When you hear about “debt collectors,” the first image to come to mind is an aggressive loan shark. Even a “nice” debt collector can be a pain – yet they aren’t going anywhere anytime soon.  

debt collection is a type of financial account that’s been sent to a third-party debt collector. Hiring a debt collector is usually more cost-effective for a company than to keep spending their resources pursuing payment. Most credit card accounts get sent to a collection agency after six months of non-payment, while other businesses send them out even sooner – it varies business by business.

Debt collectors will call you and your friends, send letters, and even show up at your home to collect money – all of which is perfectly legal. If a debt collector doesn’t have your phone number or correct address, however, you may never receive notice of the debt until you see it listed on your credit report.  

How does this all affect your credit?

Whenever an account is sent to a collection agency, the original creditor or the collector updates the account on your credit report. A debt collection is one of the worst types of credit report accounts. It reveals that you have become seriously delinquent on an account. This will cause your credit score to plummet, causing you to be denied for credit cards and loans in the future, particularly if it’s recent or remains unpaid.  

These accounts can stay on your credit report for as long as seven years, meaning that their negative effects can haunt you for a long time. One of the best ways to lessen the harm of a collection account is to pay off the debt so that it will affect your collection less over time.  Another way is to continue to pay all of your additional bills on time.

A Stock-Trading App That Wants To Take On Wall Street

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Millennials tend to prefer their services condensed into an easily digestible experience. They crave this experience, just as they romanticize sleek, streamlined innovation, and they swarm to whichever service best captures such sentiments in a fast-gratifying, affordable package. Today’s industry shakers capitalize on the millennial demographic by trimming unnecessary costs and accessories; companies such as Netflix and Uber allow their service to speak its own merit by framing it as no more or less than what it is, no-strings.

Robinhood, an experimental finance app, seeks to reproduce the success of its predecessors by offering features which follow a similar pattern of simple affordability. The app was created in 2013, a passion project of Vladimir Tenev and Baiju Bhatt, who sought to spread their enthusiasm for technology and the stock market by building a service that eases millennials into the trading game.

What separates Robinhood from the likes of ETrade, Charles Schwab, and other online brokerage services is its $0 commission policy. Once users pass an initial application process, they can buy and sell stocks free of any additional fees, which “allows all those people who were underserved by the previous generation of products to get started much sooner and with smaller amounts of money,” according to Tenev. This idea of uninhibited trading appeals to younger investors who might be dissuaded from rival services due to heavy fees.

Robinhood’s stripped down, accessible interface poses another attractive perk to novice investors. With the touch of a screen, users buy or sell stocks at market value; through Robinhood’s ultra-navigable interface, they can also make stop-loss orders, limit orders, and stop limit orders. By omitting more complex trading tools and sanding down the basics, Robinhood attempts to curb the stock market’s intimidation factor and paint trading as a hobby that is not only lucrative, but entertaining.  

Boasting a net worth of $1.3 billion, $176 million raised in funding, and over two million users, Robinhood appears to have cornered the previously untapped millennial demographic. Despite its breakaway success, the app still faces challenge on the bottom line. Providing a valuable service at no user cost is done at the expense of profits, which could compromise Robinhood’s ability to expand its functionality in the future.

“With ultra cheap trades comes insanely thin margins, if any at all,” comments Blain Reinkensmeyer, Head of Broker Research at StockBrokers.com, “which means compromises will have to be made somewhere, whether it is customer service, tools, or research. There is a reason why traditional brokerages all charge high rates but combined house tens of millions of overall ‘happy’ clients.”

Robinhood’s answer to its profitability pitfalls is a $10-per-month paid subscription service called Robinhood Gold. It offers additional features, such as the ability to trade before and after hours. Equipped with this business model, Tenev believes his app now walks “a clear path to profitability.”

Financial Security: Preparing For The Unexpected

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As you plan for your financial future, you are anticipating all of the monumental milestones that will occur as you continue along the trajectory of your life. These milestones are intimidating because they often require you to make very serious decisions that are financially demanding. Some of these milestones include choosing the college you want to attend, committing to signing a mortgage for a new home, starting your own family, diversifying your investment portfolio, saving up for retirement, etc.

But the one area that not many think to plan for, mainly because it is not a very pleasant topic to dwell on, is what to do in the event that a spouse passes away unexpectedly. There are resources available to help plan for this (e.g. life insurance), but it’s also good practice to be prepared for an emergency by having a plan-of-action set in place to ensure everything is organized and accounted for so that you aren’t scouring through a disarray of documents.

Here are a few of the most imperative areas that you should prepare for in case of an emergency:

Estate Plan And End-Of-Life Care

One important conversation that need to happen is what will happen to that person’s physical and monetary elements after they pass away. These documents should be readily available for review once this happens so that everything can be carried out appropriately. Some other information that falls into this category are documents such as: your will, your end-of-life care, your power of attorney, etc. You will also want to make sure that your estate plan is as up-to-date as possible.

Securing Essential Documents

These are documents that have compiled up throughout your life, starting with your birth certificate and including any important paperwork you’ve received since. You will also want to organize all of your most important financial documents, from bank account information to any pertinent investment material.

Obtaining All Passwords

Now that there has been a push for more paperless transactions, there are going to be quite a few accounts that can only be accessed online. Nothing would be more time-consuming and aggravating than trying to relocate passwords or having to go through the process of updating them once you can’t find the original passwords. Put them all in one, easily accessible document.

Seeking Aid For Future Financial Planning

If you were not the one in charge of handling your finances, it may be beneficial to look into hiring a financial advisor to help you bear this new responsibility you are now being forced to take on.

Life is unpredictable. And while no one wants to dote on the possibility of an expected death, it is worth developing a plan-of-action in case a dire situation would occur. If you are prepared for the unexpected, you won’t be left trying to grieve while also trying to get your finances in order.

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