Monthly Archives: July 2010

Is it Really Possible to have Free Money to Pay Off Your Debts?


Being in debt can be a highly stressful experience, not least because it is often impossible to see any way out of it. When your debts build to a certain point, it is easy to feel that you are never going to find a way of getting enough money to pay back the amount that you owe. At times like this, it is natural to look at whether there may be free money available to help pay off the debt. This idea is sometimes reinforced by adverts which appear to suggest that such funds are readily available for the asking. Unfortunately, this is not the case, and suggestions that there could be, are deliberately misleading. However, there are several other very real alternatives which can help people to get out of serious debt, some of which can have the same effect as being given some free money.

While no-one is going to literally hand out free money for you to pay off your debts, there are some schemes which have the result of wiping out large portions of your debt, thus producing the same effect as if you had a substantial gift of cash. Such schemes exist, and are designed to assist people who are in serious debt problems, usually meaning five-figure sums. These are known as debt settlement programs, and debt management plans. There is an additional scheme called an individual voluntary arrangement, or IVA, which involves making a reduced payment for a fixed period of time, after which your remaining debts are written off.

Debt Management plans allow you to consolidate all your unsecured debts into a single monthly payment. Please be aware that these are not debt consolidation loans, which just involve borrowing more money to pay off the full amount that you owe on your debts. With the debt management plan, you do not borrow any more money. What you get is the advantage of having experts negotiate with your creditors to agree on reduced payments, lower interest rates, waiving of penalty charges, etc, which all bring down the total of what you need to repay. You just have to be able to keep up with a fixed monthly repayment, and the end result is that your debts should be cleared far earlier than they otherwise would.

If you are unable to afford to meet the required payments for a debt management plan, then debt settlement could be the answer. This process involves a debt settlement company negotiating with your creditors to settle your debts on new terms which you can afford. This usually means getting large portions of your debt written off, sometimes in exchange for lump sum payments. The debt settlement process can take some time, and will often mean that you stop making payments to creditors, and pay what you can into a separate fund, which is then used towards your newly negotiated repayments. The end result should mean that you are debt free within three to five years.

Debt management plans, and debt settlement are offered in both the US and UK, but one other option is an Individual Voluntary Arrangement, usually referred to as an IVA. While debt management plans are informal agreements which depend on getting the co-operation of creditors, an IVA is a legally binding arrangement. One of the main differences being that, if you can get at least seventy-five percent of your creditors to agree to the IVA, the remaining ones are legally bound by it too. IVAs were intended to provide an alternative to filing for bankruptcy, and as such are only for serious debt problems. When you set up an IVA you agree to make fixed payments to your creditors, for an amount that you can afford, over a fixed period. This period will not normally exceed five years, and at the end of that time, your remaining debts are usually written off. It is, therefore, possible to get rid of a large proportion of your debt without having to declare bankruptcy, making an IVA an immensely popular option for many people with serious debt problems.

Retirement Planning:- Start Early and Enjoy Financial Freedom


Everyone retires one day, so the earlier you start your retirement planning, the better for your future. It really does not matter whether you would be retiring in the next 5 years, or the next 20, start planning now. That would definitely improve your financial future.

The Need for Retirement Planning

People think of ideal retirement as a combination of leisure activities, financial independence and luxury vacations – all these things are possible, only if you have enough money when you retire. To live a comfortable life after you retire, you need financial planning. There are many tools, and resources available to help you plan better.

The Basic Steps of Retirement Planning

How much money would you need after you retire?

This is dependent on your current standard of living. You need to estimate what your annual expenses will be after you retire. One point to be taken into consideration for this estimation is the difference between the current expenses, and retirement expenses. For example, right now a large percentage of your income goes towards your house mortgage, and children’s education. But by the time you retire, your children must have settled with their jobs, and you would have a home of your own. When you retire, you and your spouse may have increased medical expenses, and you would also like to spend money on vacations. Here, you also need to consider inflation. The average inflation rate is around 3 percent.

How much would you need to save?

After you calculate the inflow that may come from part-time income, interest on the savings and Social Security; you need to estimate the exact value that your assets will have, and the income you will earn after you retire. By calculating this, you would come to know the shortfall. Here, there are many factors that need to be considered. At what age are you planning to retire, the number of years you are going to live (depends upon your health), and the return on your current investment. The first two factors roughly determine the number of years of your retirement. While calculating the rate of interest on your investment, take a conservative call, and calculate the return based on around 5 to 6 percent. This would enable you to calculate the amount of money you require to save after you retire.

How to build the retirement portfolio?

Once you have determined the amount of money needed to be save each month from now till your retirement, the next step is to find a plan that is just right for your savings needs. Ideally, you should arrange for a specific amount that is directly taken from your monthly paycheck, and automatically invested in the financial plan of your choice. This type of arrangement would reduce your impulsive spending habits. You can opt for payroll deduction savings plan, or 401(k) plans.

For the perfect financial planning, you need to understand the different savings, and investment options that are available to you. This definitely requires a lot of dedication on your part. If you are busy and can not find enough time, or do not quite understand the intricacies of various investment plans, then it is advisable to hire a financial advisor, to take care of your retirement planning needs. Financial security after you retire is important – you must start planning for it now.

Creating A Household Budget to Avoid Debt Problems


Most debt problems are caused by improper money management. Statistics show that the household debt ratio reached a record of 123% in year 2007, revealing that the debt is increasing more than the income. This figure shows the average household does not have a good control on how they spend their money. In fact, they spend more than their income; this is the key reason that causes many of them to be trapped into debt troubles. If you want to be truly debt-free, gaining and maintaining control of how your money flow, must be the top priority in your financial planning. The most important step in money management is creating a household budget to help you control your money, and avoid yourself from trapping into debt problems.

The rule of thumb, in order to have positive cash flow, the household income must be greater than household expenses. Therefore, you should keep this in mind when planning your budget plan. If it works the other way round, you will have negative cash flow; meanings that you need to borrow money, which you may be using your credit cards to cover the extra expenses. A household budget works with the purpose of letting you have a better control of how your money flows.

The problem of many debtors who are suffering from overwhelming debt, is either they don’t have a household budget, or they can’t stick to the household budget they have planned for. Without a household budget or a budget that works, they won’t know where their money is being spent, and they can’t in-line their expenses with their income. That’s why they never will have income that is great enough to keep them out of debt.

Knowing the key reason why most people get into debt problem, is that they fail to manage their money with a household budget. If you want to avoid yourself from getting into the same situation, you should plan a household budget that helps you to generate possible cash flow, and follow the budget strictly to ensure you spend according to what you have planned for.

Setting up a household budget is not as complicated as many people think of. Generally, it involves 7 simple steps as highlighted below:

1. Determine your monthly earnings from all income sources.
2. List all monthly expense and bills.
3. Allocate a buffer of 5% for any unforeseen spending.
4. Cut down or eliminate expenses that are optional.
5. Track what you have spent.
6. Allocate a portion of your earnings into your saving account.
7. Review and adjust from time to time, to make sure the household expenses are within the budget.

Impulse buying, and the convenient of using credit card for cashless purchases, are the two major factors that might cause you to overspend. Therefore, you should reduce the use of credit card, and buy items with a pre-planned shopping list. If cashless purchases cannot be avoided, make sure you have tracked them into your expenses tracking record to make sure you stay within your household budget.


Statistic results show that many debt problems are caused by improper money management. In order to have good money management, you will need a household budget that works to help control your money, and avoid yourself from trapping into debt problems.

How To Maintain A Good Portfolio Balance


Many investors may not understand the concept of ensuring that they have a good portfolio balance. However, it’s not as complex or intricate as it seems. The basic idea of the portfolio, after all, is to distribute funds to various assets in certain proportions or percentages. By dividing up the portfolio, there is a greater chance that one portion of it will see an increase in profits. However, if this increase is allowed to dominate the portfolio, the balance will be destroyed, and a much higher risk of loss will be incurred in the highest valued asset.

The portfolio balance is a delicate concept, based on the equilibrium of funds in relation to each other. The purpose of this balance, is to ensure a much lower risk of loss in any part of the portfolio, while attempting to maximize the return on investment. The primary goal is to decrease risk, because any asset allocation project will ultimately fail, if no action is taken to reduce the risk that is induced by the profits of a few portions of the portfolio. The secondary goal is to recognize the underperforming funds, and sell them to invest in other funds that may yield a higher profit. However, it is also possible to generate extra cash from the assets that have already seen great increases. By placing a dependence on these well performing funds, the investor exposes the portfolio to a great risk. For example, if the dominant asset fails, the percentage invested in other parts of the portfolio will be much smaller, and there will be nearly nothing upon which the investor can fall back.

The key to maintaining a balanced portfolio, is to assess significant changes in the concentration of assets, that may lead to instability and increased risk. The accumulation of funds in a certain area, such as stocks or bonds, combined with the decrease of other funds such as cash may lead to a greater chance of an overall loss in the total value of the assets. While it may appear to be a smart decision to put all your eggs in one basket, metaphorically speaking, the seasoned investor understands the high risk associated with such a decision, and would never make such a choice, as it creates great uncertainty in the projected value of the assets.

The main concern that many investors have with a balanced portfolio is that it does not seem profitable. The concept of the balanced portfolio is based on the concept of risk, and not pure profit. Thinking solely about the profit that the portfolio can generate is a flawed attitude, given that it often leads to an imbalance among the funds. Once this equilibrium among funds is destroyed, the dominant asset will carry a very high risk, meaning that if it fails, much of the portfolio will fail as well. There will be no back up to this situation, so in order to ensure that risk is minimized, a balanced portfolio is always needed.

Simply stated, the portfolio balance is the key to any asset allocation project. If an investor chooses not to maintain this balance every so often, the portfolio will incur a much higher risk, something that the experienced investor would understand is a terrible thing to do. While it may be easier for some to consult more experienced people in the field, it is also possible to buy software that is optimized to maintain the portfolio balance that has been originally ascertained. Software such as Portfolio Rebalancer will help investors of all experience levels keep an eye on their portfolio balance.

Regardless of the manner in which an investor decides to maintain a balanced portfolio, the goal is always the same: decrease risk, increase profit. Overall, the method of managing asset allocation varies, but ensuring that you have a balanced portfolio, should be a very high priority.

The Importance of Portfolio Rebalancing


Portfolio rebalancing is crucial to any asset allocation project in which an investor chooses to minimize the risks taken, while maintaining a certain percentage of funds in various sectors of the economy. The funds available include cash, stocks, bonds, and many other types of investment opportunities available to investors who choose to deal in the stock market.

The key to the concept of portfolio rebalancing, is the elimination of risk in order to strengthen a healthy portfolio that will continue generating profits over time. For example, if 50% of a portfolio is invested in stocks, and the other 50% in bonds, the investor must ensure that this ratio does not suffer over time. Allowing percentages to exceed their proper proportions will cause the investor to develop a high level of risk in a certain asset.

By adhering to the principles of portfolio rebalancing, the investor could take many actions to restore the balance among his assets. He could remove funds from one portion of his portfolio, and transfer the profits to another area. In the previously mentioned example, if the portfolio shifts from 50% stocks and 50% bonds, to 70% stocks and 30% bonds because of some increase in the stock value, it would be possible to sell 20% of the stocks that earned a higher amount, and use the profits to invest in bonds until the portfolio is stabilized. Additionally, the investor could sell the underperforming stocks, and use the funds in other assets that he or she owns, thereby reducing the risk and increasing the profitability at once.

Portfolio rebalancing is a necessity to developing, and maintaining a proper level of risk that is acceptable, and will not leave the investor vulnerable to gross reductions in his or her assets. By allocating assets with this method, it is possible to profitably manage several funds at once, even if they are completely unrelated. However, it may be necessary to purchase software such as the Portfolio Rebalancer, which will easily manage your entire portfolio for you, while suggesting the proper course of action in terms of moving assets from one area to another. Instead of having to deal with the complexities of asset allocation, the Portfolio Rebalancer is a simple tool that will make portfolio rebalancing a simple task.

Rebalancing a Portfolio: The Risk and Reward


Rebalancing a portfolio may seem like a challenging task for many, but in reality, it is much simpler than many believe. It is possible to hire a professional for the job, or even use software such as Portfolio Rebalancer, which can easily output the necessary change needed for the rebalancing process. In this article, you will understand exactly how you can achieve this balance, and why it is absolutely necessary.

How can you go about rebalancing? Well, there are many ways to achieve this, but I will explain the main methods. The basic idea of the portfolio is that it is split up by percentages with various assets holding their respective percentage. If, say, a few assets happen to experience increases in their overall value and their percentage in the portfolio, it will be necessary to go through the process of rebalancing. The first method is to sell the extra funds to generate cash that can be used to invest in the assets that have a lower, than original percentage value. Additionally, an investor could take advantage of this process to increase the profitability of a certain asset by selling the underperforming portions of, for example, stock investments. Also, the investor could simply raise more money that can be used to boost the percentage of the asset that has fallen behind in a portfolio, but this seems slightly counterproductive because of the net loss of the investor’s money into the portfolio. However, it is up to the investor to choose the method that he, or she prefers for rebalancing. These are simply a few choices available for a quick, and easy fix.

Rebalancing is a necessity to any portfolio, because it is a process that reduces the risk of the overall value of the combined funds. For example, if a portfolio’s stock option is increased from 40% to 60%, this significant increase must be countered, or else the investor has a greater risk of losing 60% of the portfolio. Then, only 40% of the portfolio will be left as a fall back option, a terrible loss to any investor.

The daunting nature of rebalancing, and greed holds back many investors from going through any process of rebalancing. But greed only leads to a greater loss, and it is rarely rewarded. While it is possible to rebalance the portfolio in many ways, for those who are unsure of the process, it is recommended that the investor should either hire help or purchase inexpensive, easy to use software, such as the previously mentioned Portfolio Rebalancer. Rebalancing can be scary, but it is necessary to any asset allocation project.

Bankruptcy Information That Will Actually Help!


Under the new bankruptcy laws that were approved in 2005, you may find it more difficult to find a bankruptcy lawyer. This is due to the fact that the new bankruptcy laws make it more complicated to file bankruptcy. Many lawyers have chosen to no longer offer this service.

For those lawyers who do offer the service, it is now more expensive for their clients because it takes more of their time. This means that you will pay more for bankruptcy under the redesigned bankruptcy laws. For example, bankruptcy lawyers now have to personally attest to the accuracy of the information provided by their clients in the bankruptcy courts. This means that they have to take the time to personally research all of the information provided by their clients. The more time a lawyer spends with a client’s case, the more that case will cost.

While most of the changes under the new bankruptcy laws are aimed at those looking to discharge their debts under Chapter 7 Bankruptcy, there are some changes to the process of filing Chapter 13 Bankruptcy as well. Under Chapter 13, the person declaring bankruptcy will still work to pay back the debts. The creditors will work out monthly payments based on how much the individual has, after accounting for living expenses. However, under the new bankruptcy laws, the IRS decides how much the living expenses should be. The individual filing bankruptcy has no control over the living expenses. This means that many people have to live on far less than they are used to having, causing many changes in their standards of living.

Why are the new bankruptcy laws necessary? In today’s unstable economy, many people were spending more than they had, and then turning to bankruptcy when they could not pay what they owed. The government wanted to make it harder for people to file for bankruptcy, when they did not really need to do so. However, those that truly need to file for bankruptcy can still do so, under the new bankruptcy laws.

%d bloggers like this: