Volatility Can Be Your Friend

Posted on February 9, 2012 by Rick

Over the past year we have seen much market volatility, causing many investors to feel anything but settled. So why would we suggest that market volatility can be your friend? It’s simple: fear and panic leads to a dislocation between the price of equities and the true value of businesses.

In many cases lower equity prices resulting from panicked investors, margin calls and economic events have little impact on businesses. These same businesses that you use to buy gas, groceries, and do your banking will be around next year and for many years to come. The market has temporarily miss-priced these businesses based on the fear factor. A dollar’s worth of value can now be bought for maybe 70-cents or less. This is the opportunity.

Let’s look at it from a different angle. The current market price is a method to predict future expectations of corporate profits. If everybody thinks the same thing about future prospects, then the price will either rise or fall based on these expectations. It’s the savvy investor who can look beyond the current negative market conditions and see the potential for the future.

Speaking of savvy investors, we cannot avoid mentioning Warren Buffett and his recent $5 billion investment in a major US bank. This is an industry that has been severely beaten down by current market sentiment. Nobody wants to own anything related to US banking. The world hates US banks. Buffett, however, sees beyond the current sentiment and has great confidence in the future of this business.

Investing in equities is not a trip to the casino. The market is an efficient way for investors to trade ownership of businesses. For this system to work for you, you must have confidence in the system and the future. While the current economic backdrop is highly uncertain, we believe that in due time, most of these issues will subside and companies will once again be priced more favourably.

Many retail investors do not have the fortitude to stomach the day-to-day market gyrations. It takes a special type of person who will not panic and will actually invest more when prices fall. And then, of course, you must have the same discipline to sell when prices become full or overvalued. One option for the retail investor is to offload the responsibility to a third party. They can hire professional money managers to make these day-to-day decisions and then attempt to ignore the volatility of the market. This is their secret of how to accept volatility as their friend.

The foregoing is for general information purposes and is the opinion of the writer. This information is not intended to provide personal advice including, without limitation, investment, financial, legal, accounting or tax advice. Please call or write to Rick Sutherland CLU, CFP, FDS, R.F.P., to discuss your particular circumstances or suggest a topic for future articles at 613-798-2421 or E-mail rick@invested-interest.ca. Mutual Funds provided through FundEX Investments Inc.

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5 Great Ways to Save on College Textbooks

Posted on October 27, 2011 by Erinn Stam

Tuition isn’t the only cost of a college education that is rapidly rising. Textbooks can cost the average student several hundred dollars per semester. Students enrolled in a specialty or graduate program can easily spend over $1,000. Unlike tuition, there are several ways that students can save money on textbooks. Here are 5 easy ways to save money on this recurring college expense:

Share Books

Everyone is required to take the same core classes during the first two years of a typical four-year college program, and students enrolled in the same major start to know one another after taking many of the same topical classes. Take advantage of these relationships and the shared curriculum by forming a book-share program with classmates. Students can agree to split the cost of books purchased up front and then agree to a shared schedule, or they can make a sort of lending library in which old books are added and made available for sharing.

Use an Older Version

Many textbooks are updated every year, and most are updated every couple of years. Usually, minimal information is changed. However, some page numbers may differ or some supplements may not be available in an older version. Students can typically use an older version (especially one that was the immediate predecessor) with little or no hardship in keeping up with the reading assignments or the material. Because the older version becomes “obsolete” once a new version is adopted by a professor, students can buy the older version for far less.

Go Green

More and more books are becoming available online – some for free! Classic literature can often be found on an open-source site (though these books cost far less than traditional textbooks). Electronic versions that require purchase are often less expensive and choosing an electronic version is always better for the environment. Here is a discussion of print vs. e-textbooks.

Buy Used

Of course, the easiest way to save money on textbooks is to buy them used. However, the college bookstore is no longer the only place to buy these discounted books. Online vendors such as eBay, Amazon, Craig’s List, and other textbook sellers offer new and used versions of textbooks – with a substantial savings potential. Consider buying from friends, classmates, and students who post on message boards, as well. You may even be able to buy an electronic version of a textbook from a classmate for a discounted rate.

Sell Your Old Books

This strategy is more about making money to spend less money later. Selling your books can often net you a significant return on your investment. Be sure to sell books as soon as the semester is over, as waiting can jeopardize your sales potential if a new version is released or another book is chosen for the class. In addition to your college bookstore, you can sell books through online vendors that sell used textbooks, or you can post an ad on student forums or bulletin boards. Often, selling the books directly will net more of a sales return. Websites such as Chegg can help you sell your textbooks online.

Textbooks can represent a significant expense for college students, but there are many ways to minimize the cost through smart buying strategies. With so many vendors and formats available, there are many options to help students save. Using these strategies over all four years of college can turn into savings of thousands of dollars.

Posted in budget, saving | 1 Comment

Having Confidence in Equities

Posted on October 19, 2011 by Rick

Recent market weakness is causing concern for many. Are we seeing the beginning of the dreaded double dip in equity prices that has been widely predicted by the popular media since the “meltdown” of 2008-2009?

But before we get emotionally involved and make financial mistakes we must first gain perspective. From March 2009 many equity markets around the world have doubled in value. This happened in a relatively short time frame. It must not become the expectation for the way things will be going forward. Equity markets just don’t double every two years. That’s not normal. And there will always be setbacks from time to time.

The weakness that began in the spring of 2011 must be looked at as another opportunity to pick up bargains in the equity market. We are not even going to talk about the extra special bargains that existed in March 2009. It would be just too painful.

But let’s look back at what happened between spring 2009 and today. Yes we witnessed an almost doubling in equity values. But this did not happen in a straight line. There were no less than four occasions when the media had an opportunity to stress us about the double dip in equities. They happened between June and July 2009, January and February 2010, April and July 2010 and we are in one right now.

Currently equities are down about 5 to 6% from April depending on which side of the border you are looking. However, in the time frames mentioned above, equities were down as much as 16% in the US and 8.5% in Canada. So at 5 or 6% there could still be room for more weakness, and as we like to point out, opportunity for bargain hunters.

“Faith in our system” is the take away from this short essay. No doubt the system is not perfect but it’s the best we have to work with. And work with it we must. A recent report from the Standard & Poor’s, Bureau of Economic Analysis shows us that US corporate profits are recovering and out pacing the economic recovery by more than twelve times. This is the widest margin it’s been in over 60 years. Corporate America is alive and well, yet this fact is not being recognized in equity prices.

Furthermore, there is a mountain of liquidity sitting on the sidelines in the US. Currently US households are hoarding $7.9 trillion in cash equivalents and there is another $2.3 trillion in business liquid assets. This money is going to find a new home some time in the future and if it works its way into the equity market then we haven’t seen anything yet.

Stop worrying about politics and the macro economy. Other than discussion at cocktail parties there is nothing an individual can do to impact these issues. Focus on business ownership and their ability to create wealth. Understand how companies make money and reward shareholders. Realize that equity ownership has historically provided the highest return on investment over time and have faith that this trend will continue.

If you are having trouble making a decision on your own then you should seek the services of an advisor. The advisor’s role is to coach you to remove the emotional side of your decision making and create sound financial strategies that are designed to meet your short- and long-term financial goals.

The foregoing is for general information purposes and is the opinion of the writer. This information is not intended to provide personal advice including, without limitation, investment, financial, legal, accounting or tax advice. Please call or write to Rick Sutherland CLU, CFP, FDS, R.F.P., to discuss your particular circumstances or suggest a topic for future articles at 613-798-2421 or E-mail rick@invested-interest.ca. Mutual Funds provided through FundEX Investments Inc.

Posted in investing, security, world | Comments Off

Car Sharing: Is It Worth It?

Posted on August 27, 2011 by Alban Smith

A car is a significant expense for most people and takes up a large portion of the monthly budget, not far behind the rent or mortgage repayments. However, for most of us, the thought of going without a car makes our blood run cold – colder even than standing at a breezy bus stop in the middle of winter. That is why in between public transport and going without a car altogether is a middle option: car sharing.

Car sharing allows people who only need to use a vehicle occasionally to do so without incurring the costs of the vehicle sitting idle in their garage the rest of the time. It Access to a shared vehicle means your family can save on the costs of a second car for those rare times you and your partner both need the car at the same time, or you can have access to a business vehicle when you need to pick up clients without worrying about the business expenses for the rest of the time.

Car sharing is managed by independent programs around the world. Programs generally offer features such as the following:
•    Well maintained vehicles, usually no more than three years old
•    A range of vehicles to choose from
•    A range of locations close to your home or office
•    A charge per use, so you are only paying when you use the vehicle
•    Insurance is included in the membership cost
•    Petrol, maintenance and all other costs are paid by the car sharing program
•    Break-down coverage and 24/7 roadside assistance.
•    A paid petrol card if you need to refill the tank while you are using the vehicle.

Benefits of Car Sharing

Joining a car sharing program can help you do your bit towards reducing the congestion on the roads and minimizing the ever-increasing amounts of land occupied by cars, roads and parking spaces. Plus, greenhouse gas emissions from transport are second only to the stationary energy sector. Other environmental benefits of car sharing include:
•    Newer and well maintained vehicles. This means that the vehicles in a car sharing program are producing fewer harmful emissions and running more cleanly because they are new and well looked after. On average, vehicles in a car sharing program are more than 4 km/L more efficient than privately-owned vehicles.
•    Government support. Car sharing programs often garner government support, which encourages innovative technologies such as public electric car charging stations powered by green power.
•    Driving less. When you have a car sitting in your driveway day in and day out, you automatically jump in it whenever you need to go somewhere. But when you don’t have a car, you think about other transportation methods such as walking or riding a bike. As a result, there are fewer cars on the road.
•    Lower demand for cars. With more people sharing a car, there is a lower demand for new cars, which reduces the amount of energy and resources used in car production. On average, producing a car creates the same amount of emissions as those produced by the car over its entire lifetime. As a result, each car in a sharing program removes between 8 and 13 privately owned vehicles from the road.

Plus, most bookings for a shared car are made less than two hours in advance, meaning that the level of convenience is high. So if you are heading out to an important meeting but see that the weather forecast predicts rain, the car will likely be available, so you’re not caught out.

As part of a car sharing program you’ll also save money in the following ways:
•    If you drive less than 7,000 kilometres per year, being part of a car sharing program is cheaper than owning your own car.
•    Businesses that only need a company car can occasionally save money by using a shared car. It may also allow them to locate themselves in areas with little or no parking availability, which can reinvigorate the economy of local areas.
•    There is no need to buy a second car for your family if you can share a car when you need one.
•    Some programs run through universities allow students to take out co-op memberships for car sharing. This can provide transportation for students on a low income who rarely need a car except on certain occasions, such as moving, for example.

Disadvantages of Car Sharing

Each car sharing program operates differently, but there some common drawbacks to be aware of as you decide whether or not to become a member and forego your own car or secondary vehicle. These disadvantages to watch out for include:
•    Damage to the vehicle. If the vehicle you borrow is found to be damaged when you return it, you are liable to pay for the repairs. The car sharing program will usually debit the amount for the repairs from your credit card and then conduct an investigation if you dispute causing the damage. Unfortunately, in many cases, when you return the car to its parking location, it sits in a public car park, and no one from the agency inspects it before and after you return it. Therefore, if the car is damaged while in the car park, if you were the last person to drive it, you can be held liable for the damage.
•    Higher demand. Due to the recent economic downturn, car sharing programs are being inundated with new users who can no longer afford their own cars, but who still wish to use a vehicle every now and then. So there is a risk of joining an agency that has a low stock of cars available.
•    Reservations. Shared cars must be reserved in advance to ensure they are there when you need them. But many people will reserve a vehicle even when they know they may not use it. As a result, there may be no vehicles available for you because they are all reserved.
•    Shared vehicle. If you’ve ever let someone else drive your car you know how annoying it can be to adjust the seat and the mirrors and clean out their rubbish the next time you get in. Therefore, imagine doing this every time you get into a car because you are sharing it with a number of strangers, some of whom smoke or have other dirty habits.

Alban has been writing for personal finance blogs for the last 2 years, offering opinions and advice on various financial topics. When he is not contributing, Alban writes on personal loans.

Posted in budget, saving | 8 Comments

Gold, Anyone?

Posted on August 20, 2011 by Rick

Yes, the price of this shinny yellow metal has been going almost straight up since 1999. Yet we coach our loyal clients to “stay away.” Why would we be doing this? It’s simple: gold, like all other commodities, is speculative. It provides no income and minimal inflation hedge. And when the price begins to fall, and it will, you can only set yourself up for losses by purchasing now.

The last time the price of gold peaked was in 1980. I remember it clearly. The evening news broadcast stories of people lining up to plunk down hard-earned cash to buy gold. “The price was going to the moon.” Well, since 1980, when gold hit a high price of $850 an ounce, gold’s price drifted downward to a low of $250 in 1999. There never was a follow-up news story about those poor souls who lined up to buy gold in 1980.

At a recent price of $1,500 an ounce, gold has once again caught the attention of average Canadians. But the reality is that even at current prices, gold has not kept pace with a 3% inflation rate. At 3% inflation you must have 2.5 times your initial investment after 30 years just to maintain your purchasing power. Well, to keep pace with 3% inflation since 1980, gold would have to be worth $2,150 an ounce today. It isn’t there yet.

There will be those who argue that on a short-term basis, over the past eleven years or so, that gold has significantly outperformed the rate of inflation and provided a noteworthy return on investment. We don’t dispute this fact. If you had placed your money into gold investments eleven years ago, then you certainly have done well. All we are saying is that now may not be the most prudent time to be looking at gold as a good long-term investment.

Now let’s look at another investment, the S&P index. We choose this index as it is the most diversified index of actively managed businesses in the world. It has gone from approximately 125 in 1980 to approximately 1,350 today. This is many times the rate of inflation. On a short-term basis, over the past eleven years or so, this index has not provided any return at all and is being shunned by many investors.

So which do you feel is a good long-term investment right now? Gold, which has increased many times over the past ten years, or well managed businesses, many of which pay annual dividends but have provided little to no growth in value over the past ten years?

If you, like many, are considering plunking down your hard-earned cash to purchase gold, we ask that you remember these three words: “Don’t do it.” It may be detrimental to your long-term financial health.

The foregoing is for general information purposes and is the opinion of the writer. This information is not intended to provide personal advice including, without limitation, investment, financial, legal, accounting or tax advice. Please call or write to Rick Sutherland CLU, CFP, FDS, R.F.P., to discuss your particular circumstances or suggest a topic for future articles at 613-798-2421 or E-mail rick@invested-interest.ca. Mutual Funds provided through FundEX Investments Inc.

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Fun Ways to Spend Your Tax Refund as a Couple

Posted on April 24, 2011 by Alban Smith

When you are part of a working couple, it can be hard to find time to spend together and put the fun back into your life. Unlike when you were dating, it seems that now many things stand in the way of your frivolity. Most boil down to time and money, or the lack thereof. The harder you work, the more money you seem to spend – on your corporate wardrobe, bought lunches and lattes, and conveniences and services to do the things you don’t have time for.

While you may not usually associate a trip to see your accountant with a fun afternoon, it’s time you looked at your tax refund a little differently. While you may consider investing your refund or paying some bills, it’s time to realise that investing in your relationship is just as important.

As long as you are not drowning in debt, it may just be a good time to combine your couple’s tax refund and spend some decadent, indulgent and fun time together. Why not reconnect, relax after a long year, and recharge for the year ahead? Here are some ideas to get you thinking:

1 – Have a massage as a couple

If you’re going to invest in relaxation, why not go all the way and plan a couples’ massage. You and your partner will be worked on separately, and if you book into a fully equipped day spa, you can then make your way to the spa or sauna to have a body scrub or hot stone treatment, with some champagne and chocolate to enjoy at the end.

2 – A night on the town

Clear your schedule for a weekend and plan a night out on the town to enjoy an expensive dinner, good wine and the best champagne. You and your partner can indulge in the ultimate date night with your tax refund and take a late taxi home, or book into a hotel for the night.

3 – Save for a romantic holiday

If your holiday fund doesn’t seem to be getting you any closer to that romantic escape, give it a boost by depositing your tax refund money into it. By topping up your balance you’ll be able to earn more interest income thanks to compounding interest and you may be able to take your dream holiday a few months earlier.

4 – Go on holiday

If you just can’t wait to get away, why not sink your tax refund into a fun couples’ holiday. You don’t have to travel a long way to feel like you’ve been on holiday; you can book into a hotel in the city, or a beach-side shack away from town. If you spend your holiday sleeping in, taking walks together, or enjoying the sand and the sea, your tax refund will become a fun and relaxing way to reconnect with your partner.

5 – Give yourselves a makeover

If you’ve ever watched any of the myriad makeover shows on television, you will have seen the elation, inspiration and the new lease on life the chosen person enjoys for that week. If you and your partner are feeling a bit tired or outdated, refresh your looks and your attitude. Head to the hairdresser and ask for a new colour or style, then hit your favourite department store makeup counter and have your skin assessed for the best type of moisturiser and cleansing regime. The girls can then have their makeup professionally done and purchase their favourite products from the experience.

You and your partner are now ready to hit the change rooms, so look for new clothes that will reflect the current styles and trends while also allowing you to express who you are. Normally when you’re shopping on a budget, you buy for function. Now you can look for clothes, shoes and accessories that are really you.

6 – Upgrade at home

You don’t have to spend your tax refund on yourselves to have fun as a couple. Why not look at adding some fun to your home? What is it that you’ve always wanted your home to have, but could never afford? Do you wish to add a pool or a spa? Do you want to bring a little hotel luxury and romance into your home by buying a waterbed? Do you want your family to be able to have the best movie nights on the block with a professional home theatre system, or do you love to cook for your family and friends with upgraded, modern (and beautiful) appliances?

By looking at your tax refund a little differently, you can spice up your life while still remaining fiscally responsible the rest of the year.

Alban is a regular contributor to personal finance blogs.

Posted in budget, financial planning, investing | 5 Comments

How Does Your Retirement Look?

Posted on April 24, 2011 by Rick

In this example we will illustrate how to develop an investment and savings strategy to meet your retirement income objective. If you are comfortable with calculations and computer software you can do this yourself. Many financial planners have access to retirement income planning software.

The first thing to do is come up with a planning time horizon. Decide when you would like to retire and make an assumption for how long you will live. Due to modern medicine and healthy lifestyles an estimate into your nineties is not unreasonable. You may find that you will need to fund your retirement income for thirty years or longer.

The next step is to come up with a retirement income objective. This is the lifestyle you want after retirement. Most people say they are comfortable living a similar lifestyle as they had before retirement. Look at your current expenses and decide how they may change at retirement. For example, if you currently pay on a mortgage and you expect to be mortgage free at retirement then this will reduce your income need. On the other hand, if you expect to do more travel or take on new hobbies then this may increase your income need at retirement. Go through your current spending on a monthly and annual basis and draw up a workable estimate of your income need at retirement. Do it as if today is the first day of retirement. Don’t concern yourself with inflation yet.

Itemize your savings accounts that will be used to fund this objective. These could be RRSPs, TFSAs or non-registered accounts. Plug in the value of your current savings and add in an estimate for monthly or annual savings. Decide on a reasonable rate of return based on your investment policy. Add in an estimate for pensions if applicable. You can also include the government pensions of Canada Pension Plan and Old Age Security if you feel confident that you can count on these income sources.

Inflation will be your most fierce enemy in all these calculations. You will want to make an estimate for the rate of inflation. Appreciate that the same basket of goods and services that you buy today for a $1.00 will cost you close to $2.50 in thirty years at 3% inflation. That’s no change in lifestyle. It’s just maintaining your current lifestyle.

At this point it’s time to run the calculations and see how close or far you are from meeting your objective. Hopefully you are on track and only minor adjustments will be needed to meet your goal. If there is a shortfall you may have to change some of your assumptions such as working longer, or saving more. You could strive for a higher return however that may mean taking on more risk.

Once you have completed this process and have a working document it should be kept and reviewed on a regular basis. When changes occur you will want to review and update your plan.

If you find this exercise too daunting you may want to consult with a professional. Many financial planners provide this service for their clients. Some will charge a fee and others will provide it free of charge for their clients.

The foregoing is for general information purposes and is the opinion of the writer. This information is not intended to provide personal advice including, without limitation, investment, financial, legal, accounting or tax advice. Please call or write to Rick Sutherland CLU, CFP, FDS, R.F.P., to discuss your particular circumstances or suggest a topic for future articles at 613-798-2421 or E-mail rick@invested-interest.ca. Mutual Funds provided through FundEX Investments Inc.

Posted in budget, financial goals, financial planning, investing, retirement, saving, security | 2 Comments

The Value of Advice

Posted on April 24, 2011 by Rick

The Investment Funds Institute of Canada (IFIC) released a report in July 2010 called The Value of Advice. This report is designed to set the record straight for public policy debate in the area of retirement savings for Canadians. Certain stakeholders have claimed that public plans are preferable to private plans as they cost less. However the value of advice has been largely ignored in these claims. The report used fact-based, independent, third-party research available from credible published sources to illustrate what advice means to the financial well-being of Canadians and their confidence in the future.

Statistics Canada reports that there are 288,000 Canadians employed in the financial and investment advisory business. Most Canadians say that they lack the financial knowledge or the time required to research all the options available to them. The role of the financial advisor is to assist Canadians with setting goals, selecting the right investment vehicles to meet those goals and recommending an asset allocation matched to client needs.

Ipsos Reid surveyed 1030 households who worked with an advisor and 1371 households who didn’t. The data showed that advised households had more savings, 5 times more in certain categories, than non-advised households. This finding was proven in all age and income levels.

Advised households had double the participation in tax assisted programs such as Registered Retirement Savings Plans, (RRSPs) and Tax Free Savings Accounts, (TFSAs). This number almost tripled with participation in Registered Retirement Income Funds (RRIFs) and Registered Educations Savings Plans, (RESPs).

Advised households are coached to include the right asset mix suitable for an individual’s circumstance, objectives and risk tolerance. Without advice Canadians are easily swayed by the mass media to be over-cautious or under-cautious and very often at precisely the wrong times.

Advised households were more confident about their financial future than non-advised households. They were more secure about a comfortable retirement; they were more satisfied about their current financial situation; they were more comfortable about their debt situation; and they felt they would be financially better off a year from now than they are today. These results were the same regardless of financial wealth.

Advised households are 33% more likely to feel empowered and educated than non-advised households. They were also much less likely to be the targets of fraud. It was found that when times get tough, advised households went to their advisor for advice – even on financial matters that were outside their immediate business relationship.

This has been a brief summary of the report. If you would like access to the full eighteen page report you can visit the IFIC website at https://www.ific.ca/Content/Document.aspx?id=5906. The report is available as a PDF document that you can download and save to your personal computer.

The foregoing is for general information purposes and is the opinion of the writer. This information is not intended to provide personal advice including, without limitation, investment, financial, legal, accounting or tax advice. Please call or write to Rick Sutherland CLU, CFP, FDS, R.F.P., to discuss your particular circumstances or suggest a topic for future articles at 613-798-2421 or E-mail rick@invested-interest.ca. Mutual Funds provided through FundEX Investments Inc.

Posted in budget, financial planning, investing, saving, security | 1 Comment

Tips for Effective Debt Consolidation

Posted on March 24, 2011 by Guest

You are not the only person who worries about growing debt. In fact, more and more people are becoming uncontrollably indebted. It is not a time to wallow in despair. The only way out is to keep your cool and establish and implement strategies that will help you overcome the problem. Debt consolidation could be an effective measure to rid yourself of these debts.

Do not blame yourself for lack of sufficient financial knowledge. Not everyone can be an expert in financial management, and as the cost of living continues to rise and the recent financial crisis takes its toll on all of us, accumulating debt may seem inevitable.

Debt consolidation could be your chance to unify your multiple high-interest loans and debts into a single, manageable debt. You may even be able to save on costs by obtaining lower interest payments. Here are several tips on how to effectively make use of debt consolidation.

Make necessary preparations

First, carefully check your own credit report. Before you go on, identify problem areas. Compute your overall debts, identify your lenders, and assess your current financial situation. Do you need to restructure your finances? How much money could you comfortably let go each month for debt repayment?

Second, start looking for a reputable and reliable debt consolidation agency. Remember that loan consolidation options are not all created equal. Debt consolidation is part of a growing industry whose bubble may soon burst due to high demand. Shop around to find the best option available. Debt consolidation should not focus solely on low fees and interest rates. Be sure to also look at loan terms and the lender’s reputation.

Non-profit and loan sharks

Some loan providers claim to be non-profit. There are many reasons to doubt such claims. How can a lender continue to offer loan consolidation products if it does not turn a profit? What is the loan provider’s definition of non-profit? Such loans may come with many other fees.

Avoid swimming with the numerous loan sharks in the market. They may impose higher fees on top of high interest payments. Besides, you should also consider the sources of funding these businesses rely on. You certainly would not want to contribute to the proliferation of illegal business activities, would you?

Home equity and credit card debt consolidation

Many debt consolidation loan products are actually home equity loans. Try not to obtain a loan if your home equity would be at stake. Consider the risk of default, which may lead you to a possible foreclosure in the future.

Get rid of your high-interest credit card debts. Such cards are among the most common culprits of business and personal insolvencies. Consolidate all your credit card debts into one. Use your lower-interest paying card’s balance transfer facility for doing so.

Relax. Debt consolidation is very common nowadays. There are many options available. You can obtain loan consolidation products with lower monthly charges, waived late penalties, lower interest rates, and good customer service.

Andrew Black has been working in the finance industry for several years specialising in debt consolidation loans. Andrew is now sharing his knowledge by writing articles and post at http://www.australianlendingcentre.com.au

Posted in Uncategorized | 1 Comment

I Need Help With My Debt

Posted on March 11, 2011 by Lisa

I need help with my debt, what are my options?

Have your debts become too much to handle? Perhaps you’re struggling to make ends meet due to circumstances out of your control, like sudden unemployment, poor health, or a relationship breakdown. Is this your first time with a financial issue and you’re not sure where to turn? Regardless of your current situation, one of the most important things you can do is to act quickly. There is always a solution to every problem and here are a few tips to help you alleviate the stress of debt and put a plan together to become debt free.

Understand where you currently stand

Before you can put your financial troubles behind you, you need to know where you are currently and how you got there. Establish exactly where your money is going. Create a list of your debts, including interest rates, the amount you owe, and the amount of your monthly payment. Be sure to add all debts, both secured (like your car, boat, home) and unsecured (like credit cards, store cards & medical).

With all of this information in front of you, try creating a weekly or monthly budget. By creating a budget for yourself or family, you can start to take better control of your finances. A budget should first take into count all your essentials, such as your home, food, transportation and your utility costs and then your debts. After establishing a budget and understanding your debt, consider getting rid of the credit cards so you don’t get tempted to use them again. Instead you should create a savings account and put away as much money as you can and have this work as your emergency fund. By doing this, when something does happen, you can use those funds to pay for your needs instead of using a credit card.

Once that emergency fund is at about half your month’s salary, start paying down your debt.

Consider a Debt Consolidation

For many people a simple budget will not suffice and a different solution is needed. Depending on your unique situation and background, you may qualify for a debt consolidation solution. This is the process of consolidating all of your unsecured debts into one payment which can help make monthly payments easier and affordable. Typical debt consolidations can be made through personal loans or credit card balance transfers. When looking at these as an option, it is very important that you consider the costs you may face, including interest rates, over the limit fees, early termination & late fees.

Is Bankruptcy a Possible Solution?

Bankruptcy should be considered as a last resort but if you have reached the stage where you simply are unable to repay your creditors you should consider bankruptcy. Bankruptcy will allow you to wipe the slate clean and start all over again. Bankruptcy does have many drawbacks and consequences but is rarely as bad as people imagine. If you are considering bankruptcy you should discuss it thoroughly with an expert such as a bankruptcy trustee or lawyer.

This article was contributed by Fox Symes & Associates – Debt Consolidation Solutions.

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