Financial planning early on required each family. This holds true both for young couples as well as married couples for more than 20 years. Make a good plan will help to use funds wisely according to the level of requirements.
Family financial planning doesn’t have to be complicated. You may just have the planning details and neat, but sometimes simple is also planning to succeed.
The following 3 basic principles you need to grasp in making the permanence family:
1. Shopping is less than income
This is the first law obligatory obeyed. Very simple but often violated. Never spending more than your income. Major problems in family finance starting from breaking this. This happens when You spend something it really isn’t you have.
When you start shopping is greater than income, buying goods exceeds capability, then the financial catastrophe began. You will begin to make a hole that continuously deeper. And far more difficult to attempt to get out of the hole rather than try to avoid it at the first opportunity.
So, shopping wisely, don’t exceed income. You will live happier, at home and in the workplace.
2. avoid debt
Frankly the debts so tempting. What can’t you buy can now also owned by debt. But keep in mind, the debt will make you miserable especially if it turns out not to have the ability to restore it.
Thus, is it possible to live without debt? Of course it is possible. If you run the first principle shopping less than income, then you don’t have to owe. Hold all desire to buy something unless you already have the ability.
This way you will learn to conduct only have something if indeed have the capability. Or if you are coveting a neighbor’s things, tabulation on a regular basis until you are able to buy what you want without having to owe.
3. the simple life
Whether it’s a simple life? Whether living with no home or vehicle? In my view, a simple life means living as needed. Not to be all that you want it to be bought. Life according to your needs and for benefits to others in need. This is the living to give meaning.
Simple life could be different for each family. If you are very rich, so the ends meet it’s self with one or two vehicles only. Not necessarily collect all Your vehicle to show your ability.
If you live with financial limitations, thankful for what there is and there lived a potluck. If you don’t have money, there lived without it. Anyway, the world will not be the Apocalypse because of it. You don’t have to have the latest mobile phone, laptop, iPad, watch movies or eating in the restaurant. There are many ways to find bliss in simplicity. Discover how to enjoy the fun with your family at no cost.
any amount of income, if the expenditure is greater than the income, financial position will be a deficit. That means that some needs will be financed by debt. Thus, there is no source of funds that can be used to improve the asset. That there is a gradual decrease in wealth due to asset will be used for debt payments.
Therefore, the level of a person’s true wealth is not measured by the amount of income, but rather depends on the character of earnings management. In short, whatever his little income, it is possible to get rich if you are willing and able to innovate in financial management.
What is financial innovation? Simple it is to do different things in financial management. For example, if most people use credit cards to get into debt, in the corridors of financial innovation, the use of credit cards is to take advantage of grace payments so you can use the funds of others, within a certain time without any cost.
So, if you shop today and then pay it off before maturity, means you can get extra cash flow in this period, which can be used for various things.
Imagine, if you can buy goods at a price of “X”, for example, and then sell it back at a price of “X” plus a profit, you have to do business without capital, and even earn a profit. In other words, debt is used for productive activities is one of financial innovation. Moreover, if the debt itself is obtained without any costs, such as the use of credit cards on top.
What if the debt interest costs rise? It does not matter. Along the interest cost is still lower than the benefits, you still belong to the innovative. So, in sum, develop an asset could be done without capital. Was obtained from the debt capital. Then used to conduct business. And business results are able to provide higher returns than the cost of debt itself.
good debt or bad debt, they remain a burden to be paid, then any person should not be too easy for the debt. Well within the framework of Mother “brake” husband owes habit, Mother can help by inviting him to a mature consideration before deciding to debt. Some tips include:
1. Review the purpose of debt. think again 3-4 times, do not let emotion overcome common sense.
2. Calculate the first total family income and cash flow you both. Ideally, the amount of funds allocated to pay the mortgage debt not exceeding 30% of your total family income. Before you owe, check once again if there were any allocation of funds to pay for it?
3. Know your financing scheme-2, for example, of a loan or mortgage? Note the procedures and fees / interest charged.
4. Where the source of financing, whether individuals or institutions (banks, cooperatives, etc.).
5. Something that you financed with debt should be something that brings income to repay the mortgage debt. Do not let your debt burden the family income.
6. Consider the risks you face in debt, namely default risk because you lose your income or decrease the risk of collateral value, so no longer able to “cover up” the amount of debt remaining in default when
When banks lend money to customers, banks, of course, expect their money back. Therefore, to minimize risk (the money is not returned, for example), in providing bank loans should consider a few things associated with good faith (Willingness to pay) and repayment ability (ability to pay) for customers to pay back the loan with interest. These consist of Character (personality), Capacity (capacity), Capital (capital), Colateral (collateral), and Condition of Economy (economic situation), or often referred to as the 5C (five C).
Character, nature, customs debtor (party who owes) is very influential in the provision of credit. Creditors (the creditor) to examine whether the debtor entered into the Register of the disgraceful (DOT) or not. For that creditors can also be researching his bio and information from their business environment. Information from the business environment can be obtained from the supplier and customer of the debtor. Moreover, it can also be obtained from Central Bank information, but can not be obtained easily by the general public, because such information can only be accessed by employees of the Bank of credit by using the password and the computer connected on-line with the central bank.
Capacity is related to the ability of a debtor to repay the loans. To measure it, the creditor may examine the debtor’s ability in management, finance, marketing, and others.
By looking at the amount of capital owned by the debtor or to see how much capital invested in its business debtors, creditors can assess the debtor’s capital. The more capital invested, the debtor would be viewed more seriously in business.
The debt consolidation implies the withdrawal of a loan in order to pay other lenders off. This is generally done to ensure rate of below average, for the ease of maintenance or to ensure the fixed interest rate.
The debt consolidation usually involves a loan to ensure against assets that serve primarily as collateral; in most cases the houses are involved. In this case, a mortgage is carried out against the house. With the collateralization of the loan, the interest rate lowest is allowed in regard to them box when there is no collateralization of loans. The fact is that with collateralizing, owner of the asset agrees to allow the execution of a mortgage to restore the amount of loan. Therefore, the risks involved with the lender get reduced as eh interest is offering a lowest rate.
In many cases, companies that are based on the concept of debt consolidation can deduct the amount of loan. When the debtor is likely to be achieved ruined the consolidator of debt buy the loan in the discount. The debtors who are prudent in nature can even search for the consolidators that can pass along a proportion of savings. The consolidation can affect the debtor’s ability to download debts to the time of bankruptcy, so the decisions should be taken very carefully take things this. Continue reading