A few helpful mortgage application tips

Applying for a mortgage is a big step. For most American consumers buying a house and applying for a mortgage is the biggest and most significant financial decision of their life. There are a few things you should educate yourself about before obtaining that loan.

There are no magic rules for how you should apply for a mortgage. Like with any other product that you intend to purchase, and mortgage is at the end of the day a financial product that you are going to buy, there are a few things that you should be aware of and check to make sure the mortgage is right for you.

Here are a few considerations when applying for a mortgage:

How fast will the application processing take. Mortgage application involves credit checks and other due diligence steps that do take time. You also are not going to apply to many mortgages since for example having multiple credit checks at the same time can hurt your credit score. It is important to align the time when you estimate you will need the mortgage to the period of time the lender needs to approve your application. For example if you already put a bid on a home and you have 30 days to close, you must make sure that the mortgage application can be processed and approved in less than 30 days.

Know in advance which documents you will need. For example refinancing mortgages require documentation regarding your property tax and insurance policy. If you know in advance that you will need insurance documentation and you don’t have it you can have the time to get it otherwise you might get stuck during the application process with missing documents and be either denied or delayed.

Something to know that makes lots of sense is simply what is the bank threshold for approving a loan? After all if you know for example that your credit score is 650 and a specific lender has a strict policy of only approving loans for applicants with credit scores higher than 700 why apply at all? You will just waste time and energy and at the end of the process be denied. Make sure that you confirm to the lender known requirements before applying.

How much do you need to loan and how much can you afford? At the end of the day lenders want to make sure that you can pay back the mortgage. Applying for more money that you need or can afford to pay back will just result in your mortgage application being denied. Budget your income and find out how much you can allocate for the monthly mortgage payment. Be honest with yourself because lenders are thorough and if you apply for payments you can not afford they will most likely figure it out and deny your application. After figuring out the monthly allocation calculate back the total loan amount that such a payment can support.

Know the terms. There are professional terms that the lender is going to use. It is good to know those in advance. Search online or buy a mortgage book. For example you should know what is the difference between a first mortgage and refinancing, fixed vs. ARM, what is a conforming mortgage, what are points and so on.

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Basic things to know when incorporating your business

There are a few options when deciding to start a new company. Deciding on the right entity type to incorporate your business as is an important step and can have long term tax and liability consequences. If you are new to incorporation entities here are a few basic terms to know.

LLC is a simple entity very common with small businesses. An LLC can be owned by a single member or by multiple members. For tax purposes an LLC is a transparent entity. In other words the LLC does not change the way you are paying taxes. The LLC income is funneled and added to its members personal income. The reason to establish an LLC is liability. LLC does provide liability protection to its members but it is not as strong as the protection corporations provide and it depends on the type of business, number of members and the way the LLC is managed.

S-Corp is a simple version of a full blown C-Corp company. S-Corps are not separate entities for tax purposes. In other words the S-Corp income is also funneled and added to the owners personal income. This allows saving employment tax on that income but there is one caveat. You can not transfer all of the S-Corp income as personal income. You must first pay a reasonable wage to the S-Corp offices and workers and only the amounts on top of that reasonable income can be directly transferred as personal income. Those wages will be subject to employment tax, medicare, social security and so on. As such if the projected income from the business is low S-Corp does not provide a tax benefit.

C-Corp is a separate taxable entity. Any income is first taxed at the corporation level and only then can be disbursed to the shareholders and added to their personal income fr further taxation. This can be used to your advantage though in what is know tax splitting. For example if the C-Corp is paying a wage to the owners than that wage is a deductible expense and the C-Corp is not taxed for it. Slitting income means that some income is taxed personally and some is left in the company and paid by the company. In this method more dollars can benefit lower tax bracket. There is a limit though to how much money can be split this way as the IRS set a limit to the wage an owner can take from a C-Corp and still enjoy the full deductible expense. The biggest tax disadvantage of a C-Corp is that if you accumulate money in it and wants to distribute it as dividends that money will be taxed twice first at the C-Corp level and then at the personal level as dividend income.

Before choosing the right entity for your business sit down with your attorney and accountant and think it through. You will need to project things like how many owners will the business have, what is your relationships with them, what is the projected income in the next few years, what is the liability exposure of that type of business and so on.

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Ways to improve your mortgage terms

If you are reading this article then you either already have a mortgage or you are planning to get one soon. A mortgage is a big financial decision many times the biggest in your like. It is not surprising thus that getting a good mortgage is important. Here are some tips how to do just that.

Most people focus their efforts to get a good mortgage at the time they need a mortgage by shopping around for the best terms and interest rate. While this is something that needs to be done getting a good mortgage is actually something that you should start working on long time before applying for one, preferably a few years or more. After all one of the most important drivers for getting a good mortgage is your credit score and credit history which takes years to build.

One of the best advice that you can get is to simply work on improving your credit history. It is never too late to do it. Even if you neglected your credit history and now you are in need of a mortgage you can still improve your future finance by starting to work on it. Take the best mortgage that you can get with your current credit history, work to improve it and then in a few years refinance to a lower interest rate based on your improved credit history.

Track your credit history regularly. Promptly call the credit history bureaus if you identify any mistakes. Make sure that you pay all your credit cards and other loans on time. Avoid applying for credit too often and when not necessary. The number of credit applications is a factor in determining your credit score for example applying to many credit cards or discount store cards can on the long run lower your credit score and result in you ending up paying much more than all those discounts through your mortgage dues.

When applying for a mortgage you should take into consideration your future financial stability. Try to sit down and estimate what is your forecast for your future ability to pay the mortgage dues, and what is your forecast for your future financial status improving. For example if you are on a career path and you are confident that in 5 years you will be promoted to a better job that pays more you might consider taking a five year ARM mortgage that provides lower interest in the short term while your income is limited but that its interest rate goes up according to market conditions within five years at a time when you assume you will be in a position to afford larger payments. Be aware that such a tactic is risky as future plans might fall apart. Always make sure that you leave plenty of slack for unpredictable developments.

When applying for refinancing first make sure to check your credit status. Check your credit history report for irregularities. If you identify any problems delay your refinance application and first fix your credit history.

For any kind of mortgage refinancing, one needs to check on the stability of the credit status. In order to even qualify for a lower mortgage rate one has to improve the credit. In case your financial situation has improved since the time when you bought your home, you can upgrade for a better rate by just applying for the same. All of us have faced credit problems at some time or the other. But for acquiring the best mortgage rates, building up a good credit account is of prime importance.

Most mortgage loans come with a term length, in other words the given span of time for repayment of the loan. Though most mortgage loans come with a thirty-year term length; there is however forty and fifty year terms available too. Most short-term mortgages are usually considered low risk and come with lower interest rates.

While searching for lower interest rates, be sure to compare multiple mortgage offers which detail out lender fees as well as closing costs. Try to compare and contrast the best mortgage rates of various lenders in such a way that you get the best refinance loan package deal. Before you choose a lender, make sure that you have contacted credit unions, mortgage companies, banks, etc. Ask for best mortgage rate from various financial institutions before you accept any offers. You will save your time and money by contacting mortgage brokers as well and you can also submit your information to different lenders for their opinion.

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What makes a good mutual fund good?

Mutual funds are popular. If you are not invested in one right now you are more than likely to be invested in one in the near future either directly or indirectly. Choosing a good mutual fund is important for maximizing your investment performance.

Like any other investment choosing a good mutual fund really depends on your needs. Also like any other investment mutual funds are a balance between risk and performance. The higher the risk you are willing to take the higher the potential profits. Investing in individual stocks is considered riskier than investing in mutual fund although the potential gains are higher. Mutual fund usually hedge individual stock risk by managing a large portfolio of stocks and other instruments. That balance also averages the gains.

There is no simple answer to what makes a mutual fund good as the question is fundamentally wrong. The right question is what makes a mutual fund good for you and the answer depends on what you are looking for. In order to choose a mutual fund you choose both know what your options are and also really know and understand what your needs are and how much risk you want to take.

One of the more common mutual funds that tend to perform well at a lower risk are index mutual funds. Like their name suggests index mutual funds value is attached to the performance of a specific index like the famous S&P 500. Index mutual funds are pretty simple to understand and to track and for the most part there is no big difference between different funds if they invest in the same index.

Other funds invest in stocks and other instruments. Most funds have a theme or a policy of how they invest. For example a small cap fund invests in stocks of small cap companies why an technology fund invest in technology innovative companies. Themed mutual funds are managed by people who decide what to buy when to buy and when to sell each of the individual stocks. One of the most important things when choosing a mutual fund is to read about who manages its daily operations and who decides how the fund invests its money. Check how experienced the management is how long have they been with the fund and with other funds and how well have they done. Although a manager they did very well in the past can certainly fail in the future it is still statistically a better choice than an inexperienced manager or a manager that failed.

Since mutual finds have managers and other operation costs they have to charge some management fees. Usually the management fee is expressed in a percentage that the fund takes for itself. If you are investing long term that fee is less important. If you are looking for short term investments the fees can be significant and you should consider them when choosing the fund.

Education is your best tool when choosing a fund. Don’t be tempted to invest in a fund just because its headline says 25 percent annual gain. Read about it read about the management read about its investment philosophy and maybe even look at its portfolio and randomly pick a few stocks it is invested in and judge for yourself if those were good buys or not.

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Creating jobs in a way of borrowing money for new businesses

The number of new jobs created each month is usually used as an indication of the economy health. New jobs are created when new businesses are created or old businesses are expanded and this is done via the vehicle of borrowing money.

You have probably heard on the news more than once that the number of new jobs has increased in the last month by a certain amount or maybe sometime it was just flat or even declined. New jobs mean that the economy is expanding. New jobs are good for employees since it means the supply of available jobs is growing and with more supply you have more options to choose from which usually translates to higher wages and better benefits.

So how are new businesses created? The answer is by borrowing money. New businesses usually start with an idea and a group of entrepreneurs that are enthusiastic about realizing that idea. An idea can be anything from computer software to real estate development. When a group of entrepreneurs come up with such an idea then would plan the necessary steps needed in order to realize it.

Every step in realizing a new business requires funding. Since most entrepreneurs do not have the cash needed to fund the business on their own they usually have two options one is to sell a portion of the business in return to cash that will fund it and the other to go to a lender like a bank and borrow money that will fund the business.

Borrowing money is usually the better option since the entrepreneurs can to keep their equity in the business while having the cash to build the business. So why do lenders give money to such entrepreneurs? The reason is simple they do it in return to an interest paid for the loan. A lender would usually evaluate the risk in the business. The higher the risk the higher the interest rate that the lender would charge.

For some businesses the risk is so high that lenders would simply refuse to lend money to such business. For such business like for example the hi tech software market the only funding option is through selling a portion of the business or in other words giving away equity for cash.

The ability to borrow money in reasonable terms is the fuel that runs the economy. The easier it is to get money for lower interest rate the easier it is for entrepreneurs to fund and start new businesses. Some of those businesses would fail but other would flourish and supply jobs and products to expand the economy.

When the economy is bad and many business fail lenders tend to stop lending money and wait. In such scenarios the economy is flat and can not grow. Many times the government of the central bank would intervene by lowering the interest rate or providing other incentive and sometimes even lending money itself in order to fuel the economy and create new businesses and new jobs.

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The concept of borrowing money and its importance to the economy

Many people do not realize how important the concept of borrowing money is to the economy. For most people borrowing money is just an easy way to get a new car or buy a house but for the country economy it is much more.

One of the things we keep hearing on the news is a percent number that symbolizes how fast the economy is growing. Economy growth is important to our lives. Although it sounds like yet another number professional economist use and confused us with in reality the economy growth is a good indicator to the health of the economy.

The health of the economy is important to us all. If the economy is doing well it means there are more jobs and there is more money for us to earn and of course to spend.

It is easier to understand the concept of economy growth and how it relates to borrowing money through an example of the job market. When the economy is growing there are also new jobs created and as employees in the job market we have more options to choose from that usually translate to better wages and benefits.

How are new jobs created? The answer is simple by creating new businesses. For example if a new factory opens in your city it will need to hire all kind of employees from factory floor workers to human resources and financial managers. When the economy is growing new business are created and in return they create more jobs.

How are new businesses created? Except for some rare cases all new business rely in one or another on borrowing money. Usually a group of entrepreneurs decide to start a new business for example a new computer manufacturing factory. They check the market evaluate the potential and write a business plan.

In order to build the factory they need a certain amount of money. The money is used to create the business and to run it to the point when it turns profitable. Most entrepreneurs do not have the cash to spend on such a new business. In turn they go to a bank or another borrower present their case the business plan and the idea and ask for money.

The bank makes a decision based on its evaluation of the new business risk. Usually the higher the risk the higher the interest rate that the bank would collect for the loan. At some point if the risk is too high the bank might decline the loan altogether.

If borrowing money is not available then new business are very hard to create since entrepreneurs do not have the cash to start them. If new businesses are not created the job market stays flat and the economy too. As you can see the concept of borrowing money is crucial for any economical growth. The ability to loan money allows for the creation of new businesses and for growth. Without money borrowing the economy will stay flat and eventually shrink.

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Helpful mortgage application tips

Applying for a mortgage is a big step. For most American consumers buying a house and applying for a mortgage is the biggest and most significant financial decision of their life. There are a few things you should educate yourself about before obtaining that loan.

There are no magic rules for how you should apply for a mortgage. Like with any other product that you intend to purchase, and mortgage is at the end of the day a financial product that you are going to buy, there are a few things that you should be aware of and check to make sure the mortgage is right for you.

Here are a few considerations when applying for a mortgage:

How fast will the application processing take. Mortgage application involves credit checks and other due diligence steps that do take time. You also are not going to apply to many mortgages since for example having multiple credit checks at the same time can hurt your credit score. It is important to align the time when you estimate you will need the mortgage to the period of time the lender needs to approve your application. For example if you already put a bid on a home and you have 30 days to close, you must make sure that the mortgage application can be processed and approved in less than 30 days.

Know in advance which documents you will need. For example refinancing mortgages require documentation regarding your property tax and insurance policy. If you know in advance that you will need insurance documentation and you don’t have it you can have the time to get it otherwise you might get stuck during the application process with missing documents and be either denied or delayed.

Something to know that makes lots of sense is simply what is the bank threshold for approving a loan? After all if you know for example that your credit score is 650 and a specific lender has a strict policy of only approving loans for applicants with credit scores higher than 700 why apply at all? You will just waste time and energy and at the end of the process be denied. Make sure that you confirm to the lender known requirements before applying.

How much do you need to loan and how much can you afford? At the end of the day lenders want to make sure that you can pay back the mortgage. Applying for more money that you need or can afford to pay back will just result in your mortgage application being denied. Budget your income and find out how much you can allocate for the monthly mortgage payment. Be honest with yourself because lenders are thorough and if you apply for payments you can not afford they will most likely figure it out and deny your application. After figuring out the monthly allocation calculate back the total loan amount that such a payment can support.

Know the terms. There are professional terms that the lender is going to use. It is good to know those in advance. Search online or buy a mortgage book. For example you should know what is the difference between a first mortgage and refinancing, fixed vs. ARM, what is a conforming mortgage, what are points and so on.

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About your home and taxes

For most people owning a home means paying more in tax. Property tax for example can add up and is a major expense for many. A home however can also act as a way to save money. Here are a few words about that topic.

You must have heard the words tax shelter before but for most it is usually associated with hiding money in offshore banks. Although many are not aware of it and do not take full advantage of it a home can act as more than just a physical shelter for you and your family, it can act as a good tax shelter too.

The two most known tax benefits when buying a house are mortgage interest deductible and being freed from capital gain tax when selling the house (assuming you lived in it as your main residents for two or more years). Mortgage interest deduction allows you to loan money at a discount (since by deducting the interest you effectively get a cheaper loan). In return the loan money is invested in a real estate assets that proven again and again is one of the best long term investments. Capital gain tax is levied when selling and profiting from capital investments such as a home. If you use your home as your main residents though for two or more years you can sell it and keep the profits to yourself without the need to share them with the IRS. So not only did you get a cheaper loan and money to invest but you also got to put the profits in your pocket tax free.

Both interest rate deduction and capital gain tax benefit have limits. Mortgage interest is deductible for the first and second house and up to one million dollars in mortgage. Capital gain is free of tax for the first $250 thousand dollars profit per individual (in other words married couple can put up to $500 thousands dollars before they have to pay taxes). The reason for those caps is to encourage the economy with most middle class consumers while taxing the rich and luxury homes market.

Another way to invest in your home while squeezing tax benefits from the government is by improving your home. Any work that is done on the home to improve its value for example adding a room is considered an improvement and if you take a loan to finance it you can deduct the loan interest payments.

There are other creative ways in which you can save tax when owning a home. If you are working from home full time or partial time you can allocate a specific area in your home, most likely the garage or basement area, as your home office. If you do that you can be qualified to deduct a portion of your home expenses relative to that area such as electric bills, gas bills, insurance and more.

As always it is best to consult with your accountant before making any financial decisions. Your accountant can explain all the options for saving taxes while owning a home.

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Everything you should know about your house and its tax issues

For most people owning a home means paying more in tax. Property tax for example can add up and is a major expense for many. A home however can also act as a way to save money. Here are a few words about that topic.

You must have heard the words tax shelter before but for most it is usually associated with hiding money in offshore banks. Although many are not aware of it and do not take full advantage of it a home can act as more than just a physical shelter for you and your family, it can act as a good tax shelter too.

The two most known tax benefits when buying a house are mortgage interest deductible and being freed from capital gain tax when selling the house (assuming you lived in it as your main residents for two or more years). Mortgage interest deduction allows you to loan money at a discount (since by deducting the interest you effectively get a cheaper loan). In return the loan money is invested in a real estate assets that proven again and again is one of the best long term investments. Capital gain tax is levied when selling and profiting from capital investments such as a home. If you use your home as your main residents though for two or more years you can sell it and keep the profits to yourself without the need to share them with the IRS. So not only did you get a cheaper loan and money to invest but you also got to put the profits in your pocket tax free.

Both interest rate deduction and capital gain tax benefit have limits. Mortgage interest is deductible for the first and second house and up to one million dollars in mortgage. Capital gain is free of tax for the first $250 thousand dollars profit per individual (in other words married couple can put up to $500 thousands dollars before they have to pay taxes). The reason for those caps is to encourage the economy with most middle class consumers while taxing the rich and luxury homes market.

Another way to invest in your home while squeezing tax benefits from the government is by improving your home. Any work that is done on the home to improve its value for example adding a room is considered an improvement and if you take a loan to finance it you can deduct the loan interest payments.

There are other creative ways in which you can save tax when owning a home. If you are working from home full time or partial time you can allocate a specific area in your home, most likely the garage or basement area, as your home office. If you do that you can be qualified to deduct a portion of your home expenses relative to that area such as electric bills, gas bills, insurance and more.

As always it is best to consult with your accountant before making any financial decisions. Your accountant can explain all the options for saving taxes while owning a home.

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Applying for a home mortgage

Applying and getting a home mortgage loan is one of the biggest financial step for most American people. There are many issues and considerations when applying for that home mortgage that can have long term consequences on your financials. Here are just a few.

Although many people do not look at it this way a home mortgage is a product like any other product. It has a price and it has different features and attributes. Like any other product that you buy just comparing the price is a mistake. You should also look at the balance between the price of the home mortgage and its features. You should also make sure that its features are right for you.

For example home mortgage applications can be processed in different speeds depending on the amount of the loan, the market conditions and the company you are taking the loan from. Sometimes that time is not important and should not be considered at all. But sometimes it can be the most important feature for example if you have a rare opportunity to buy a real estate asset and you are limited in the time you are allowed to get the loan. Generally speaking it is best to not be constraint by the application processing time. The more time you have the more loan options you can check and the better product you will buy for a lower price. Try to you’re your home purchase know in advance how much time will you need and make sure you allow yourself enough time.

Applying for a home loan is tedious. The lender will want to make sure that you can pay back the loan and that in case you can not pay the asset on lien will be valuable enough to pay the loan off. The way lenders work is that they do due diligence on you and the asset. A lender requires many documents that prove you financial ability to pay the loan, that prove the asset fair market value and so on. Know in advance which documents are needed and have them ready. For example if you intend to buy a house in the next 6 to 9 months and you know you will need a home mortgage loan don’t wait for the last moment, go to a few lender and get the list of documents they will require. Have those documents ready so that when you need the loan you can quickly file them with a few lenders and make your choice.

Understanding the language the lender is going to be speaking is important to. Familiarize yourself with the mortgage industry common terms such as refinancing, ARM, fixed interest rate, interest rate only, title insurance, points and so on. For example if you know what a prepayment penalty is then when you get a mortgage you can ask on prepayment terms and make a decision if they fit you or not. If there is a chance that you will pay off all or mart of the mortgage earlier you should take caution with prepayment fees. If you estimate interest rates will go down and you will want to refinance you should also be cautious about prepayment fees.

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How to improve your mortgage terms

If you are reading this article then you either already have a mortgage or you are planning to get one soon. A mortgage is a big financial decision many times the biggest in your like. It is not surprising thus that getting a good mortgage is important. Here are some tips how to do just that.

Most people focus their efforts to get a good mortgage at the time they need a mortgage by shopping around for the best terms and interest rate. While this is something that needs to be done getting a good mortgage is actually something that you should start working on long time before applying for one, preferably a few years or more. After all one of the most important drivers for getting a good mortgage is your credit score and credit history which takes years to build.

One of the best advice that you can get is to simply work on improving your credit history. It is never too late to do it. Even if you neglected your credit history and now you are in need of a mortgage you can still improve your future finance by starting to work on it. Take the best mortgage that you can get with your current credit history, work to improve it and then in a few years refinance to a lower interest rate based on your improved credit history.

Track your credit history regularly. Promptly call the credit history bureaus if you identify any mistakes. Make sure that you pay all your credit cards and other loans on time. Avoid applying for credit too often and when not necessary. The number of credit applications is a factor in determining your credit score for example applying to many credit cards or discount store cards can on the long run lower your credit score and result in you ending up paying much more than all those discounts through your mortgage dues.

When applying for a mortgage you should take into consideration your future financial stability. Try to sit down and estimate what is your forecast for your future ability to pay the mortgage dues, and what is your forecast for your future financial status improving. For example if you are on a career path and you are confident that in 5 years you will be promoted to a better job that pays more you might consider taking a five year ARM mortgage that provides lower interest in the short term while your income is limited but that its interest rate goes up according to market conditions within five years at a time when you assume you will be in a position to afford larger payments. Be aware that such a tactic is risky as future plans might fall apart. Always make sure that you leave plenty of slack for unpredictable developments.

When applying for refinancing first make sure to check your credit status. Check your credit history report for irregularities. If you identify any problems delay your refinance application and first fix your credit history.

For any kind of mortgage refinancing, one needs to check on the stability of the credit status. In order to even qualify for a lower mortgage rate one has to improve the credit. In case your financial situation has improved since the time when you bought your home, you can upgrade for a better rate by just applying for the same. All of us have faced credit problems at some time or the other. But for acquiring the best mortgage rates, building up a good credit account is of prime importance.

Most mortgage loans come with a term length, in other words the given span of time for repayment of the loan. Though most mortgage loans come with a thirty-year term length; there is however forty and fifty year terms available too. Most short-term mortgages are usually considered low risk and come with lower interest rates.

While searching for lower interest rates, be sure to compare multiple mortgage offers which detail out lender fees as well as closing costs. Try to compare and contrast the best mortgage rates of various lenders in such a way that you get the best refinance loan package deal. Before you choose a lender, make sure that you have contacted credit unions, mortgage companies, banks, etc. Ask for best mortgage rate from various financial institutions before you accept any offers. You will save your time and money by contacting mortgage brokers as well and you can also submit your information to different lenders for their opinion.

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Things to know when applying for a car loan

Getting a car loan is a major step when buying your used or new car. Most American buy their cars by using some debt tool either as a loan or as a lease. There are a few things you should know when applying for a car loan and that can help you can a better loan faster.

Here are a few considerations when applying for a car loan. The first thing to decide is if you are going to get the car loan through the dealer or independently from a bank or another lender. Getting a car loan through the dealer is the easiest and sometimes dealer through more goodies at you if taking the loan with them making it a better deal than going to an independent lender. However knowing what the market interest rates are can help you negotiate the dealer loan terms down. Even if you decide to get the loan from the dealer do some homework first and check what the market has to offer.

How fast will the loan be processed is another important factor. Dealers can process it on the spot since they have the incentive to sell the car. Other lenders might take anything from immediate processing to a few days. Part of the loan application process involves the lender running a credit check on you. Don’t apply to many lenders since for example having multiple credit checks at the same time can hurt your credit score. It is important to align the time when you estimate you will need the money for the car to the period it takes lenders to approve the loan. If for example you plan to go and buy a car in a week make sure you apply for lenders on time so that when you go and get the car you have an approved loan in your hand that you can either use for cash or use for negotiating the dealer down.

Something to know that makes a lot of sense is simply what is the lender threshold for approving a loan? After all if you know for example that your credit score is 600 and a specific lender has a strict policy of only approving loans for applicants with credit scores higher than 650 why apply at all? You will just waste time and energy and at the end of the process be denied. Make sure that you confirm to the lender known requirements before applying.

How much do you need to loan and how much can you afford? At the end of the day lenders want to make sure that you can pay back the car loan. Applying for more money that you need or can afford to pay back will just result in your car loan application denied. Budget your income and find out how much you can allocate for the monthly car loan payment. Be honest with yourself because lenders are thorough and if you apply for payments you can not afford they will most likely figure it out and deny your application. After figuring out the monthly allocation you can in turn calculate the total loan amount that such a payment can support.

Know the terms. There are professional terms that the lender is going to use. It is good to know those in advance. Search online or buy a book about car loans and leases. For example you should know what the following terms mean: interest rate, APR, money factor, prepayment penalty and so on.

Another important feature of car loans is a prepayment penalty. Some loans include provisions for prepayment penalties. In other words if you will end up paying off the loan before its predefined term ends you will have to pay a certain fine. In most cases such loans are cheaper but you should only get them if you are certain you will not end up paying them off early for example if you plan to receive some money and use it in the future to pay off the loan or if you plan to sell the car before the loan term ends.

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What makes a good savings

Savings accounts are a good way to do what their name suggests, save money. Growing a habit of putting a set amount of money from every paycheck is a good way to save. Saving money a small amount at a time can add up. Here are some things you should know when opening your savings account.

The most important feature of a savings account is the interest rate the bank pays on your savings. After all the goal of a savings account is to save money and while your money is sitting in the bank account it should also grow through the accumulation of interest paid on it by the bank. If the bank would not pay any interest on that money you would actually be losing money due to inflation.

Another thing to consider is the minimum deposit needed to open a savings account. You should make sure that you do have enough money to top that amount. This is usually not a problem though since many banks let you open a savings account with just a dollar deposited while some other require larger sums but still manageable in the tens of dollars.

Having your savings account with the same bank where you keep your checking account and maybe other business is a good idea but it is not necessary. Although convenient if it results in getting a lower interest rate than it might not be worth it. If your bank where your checking account is managed offers a lower interest rate on savings account than you can find somewhere else try to negotiate with your bank to raise their interest rate. You will be surprised at home often that can work and if not just walk away and go to the highest one. Make sure though that the bank you are going to save your money at is FDIC insured otherwise you are risking your money and the extra interest rate you might get from a non FDIC bank might cost you much more if things go bad for that bank.

Having easy access to your savings account is important too. If depositing money is hard you might end up not doing so. Make sure that you can easily deposit funds. Most banks today provide online access and will let you deposit money online directly from your checking account sometimes linking to checking accounts at other banks. If not you should be able to write a check and mail it for deposit.

Set an achievable target. Try not to withdraw money from your savings account even though it is the easiest solution for a temporary cash need.

Some banks would provide you with a debit card linked to your savings account. It is better to refuse that card as it will just serve as temptation for using the money in your savings account instead of saving it.

Savings account are a great way to save small amounts of money. If you accumulate larger sums you should look at other savings instruments like certificate deposits (CDs), mutual funds and more. You can get higher interest rate with CDs for larger sums of money that you can put lock aside for a predetermined period of time and you can get even more if you are willing to take a risk and invest some of your money in mutual funds and stocks.

By : blane.house1380
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Basic things to know if incorporating your business

There are a few options when deciding to start a new company. Deciding on the right entity type to incorporate your business as is an important step and can have long term tax and liability consequences. If you are new to incorporation entities here are a few basic terms to know.

LLC is a simple entity very common with small businesses. An LLC can be owned by a single member or by multiple members. For tax purposes an LLC is a transparent entity. In other words the LLC does not change the way you are paying taxes. The LLC income is funneled and added to its members personal income. The reason to establish an LLC is liability. LLC does provide liability protection to its members but it is not as strong as the protection corporations provide and it depends on the type of business, number of members and the way the LLC is managed.

S-Corp is a simple version of a full blown C-Corp company. S-Corps are not separate entities for tax purposes. In other words the S-Corp income is also funneled and added to the owners personal income. This allows saving employment tax on that income but there is one caveat. You can not transfer all of the S-Corp income as personal income. You must first pay a reasonable wage to the S-Corp offices and workers and only the amounts on top of that reasonable income can be directly transferred as personal income. Those wages will be subject to employment tax, medicare, social security and so on. As such if the projected income from the business is low S-Corp does not provide a tax benefit.

C-Corp is a separate taxable entity. Any income is first taxed at the corporation level and only then can be disbursed to the shareholders and added to their personal income fr further taxation. This can be used to your advantage though in what is know tax splitting. For example if the C-Corp is paying a wage to the owners than that wage is a deductible expense and the C-Corp is not taxed for it. Slitting income means that some income is taxed personally and some is left in the company and paid by the company. In this method more dollars can benefit lower tax bracket. There is a limit though to how much money can be split this way as the IRS set a limit to the wage an owner can take from a C-Corp and still enjoy the full deductible expense. The biggest tax disadvantage of a C-Corp is that if you accumulate money in it and wants to distribute it as dividends that money will be taxed twice first at the C-Corp level and then at the personal level as dividend income.

Before choosing the right entity for your business sit down with your attorney and accountant and think it through. You will need to project things like how many owners will the business have, what is your relationships with them, what is the projected income in the next few years, what is the liability exposure of that type of business and so on.

By : blane.house1380
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Can you afford the loan you are applying for?

The latest credit crunch and mortgage crisis is the best proof for how wrong the assumption that if a lender approves a loan it means that the borrower can really afford the loan and pay it back in full including all interest and other payments. For many reasons bank and lenders approve borrowers that are not really loan worthy for the loan they are applying for. The reason vary from greed to simply making mistakes or using wrong judgments or tools. As much as lenders try they can not know the borrower as well as the borrower knows himself. Some loans are approved because of lack of such intimate knowledge and because further diligent by the lender is too expensive making taking the risk of lending the money more economical than actually applying more diligence.

Our first suggestion is to sit down and try to estimate if you can afford a loan that you are applying for before receiving the reply from the lenders or better before applying at all. There are two main reasons for that. First if your diligence proves that you can not afford the loan then applying for it is simply a waste of time not to mention the implications to your credit report as any application will involve credit report checks which having to many of can decrease your credit history score.

The second reason is more psychological. If you get approved by a lender and then sit down to check if you can afford the loan you might end up not being honest to yourself of cut corners since the approval might be a good enough justification for you to go ahead with the loan. This is not intentional but just the wait we tend to behave. To prevent that possibility it is best that you first make your decision as to the loan affordability before a third party lender pushes you to the wrong conclusion.

So how can you tell if a loan is affordable by you or not? To make a complete financial accurate assessment would take a long time. It is best to focus on some simple rules and considerations. For example estimate the monthly payment on the loan and compare it to the residual income that is available now. It is not enough for the payment to be less than the current residual income. You should try to write down a list of bad things that can happen and see if in those cases you have a way out from the loan or enough slack to continue making payments until the bad things are remedies.

For example you should have enough savings to pay for at least 6 months of payments in case you lost your job with the assumption that in 6 months you should be able to find a new job. You should make sure that after making payments you will still have some residual income to continue saving and for unexpected expenses. Another consideration is the total amount of the loan and the collateral that you take against it. Never risk your life savings or 401K or other pension tools to borrow money. Borrowing to buy a home or a car should use the home or the car as collateral. Taking a loan to buy luxury or leisure products should never be done against savings or other money that is for use in the future.

By : blane.house1380
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Think about retirement while you are young

Retirement is a big deal for all of us although most people only remember to deal and plan for it when they are getting too close to their retirement age. Planning your retirement when young is not just smart it is crucial to successful retirement.

Retirement for most of us is something that will happen long in the future. At the age of 60 or 65 we will stop going to work and start living our free life. The problem with stop going to work is however that that monthly paycheck that we use for everything from food to paying for our car and home will also stop. This makes retirement a challenge. How do you pay for everything that you do during your retirement?

Most people ignore the retirement financial question until it can be too late. The simple answer to how you pay for your retirement is by saving money all your life and then using that money when you retire. It is common sense that the earlier you start saving the more money you can save until you hit retirement. For many that saving is in the form of a retirement 401K plan but there are many other options for how to save your money.

Saving money is not enough. If you would just put your money in a market money account and let it sit there until retirement you would probably have it lose its value quite a bit over those many years. So saving money must be combined with investing the money. Investment is not risk free though. In general it is common for younger people to invest more aggressively in the stock market as in the long run the stock market has always been the best avenue for financial growth. The older people get though the closer they are to their retirement and the less aggressive they should be.

The goals of retirement investment should change from growth to maintaining your money value. In early days when retirement is far away being more aggressive with your investments trying to optimize growth and gains is a smart thing to do. As you getting closer and closer to retirement moving a larger and larger portion of your savings toward safer financial instruments that do not provide high gains but can keep the money value with relatively low or no risk at all is the way to go.

When you eventually reach that retirement phase of life you should have completely all of your savings put in risk free value keeping financial instruments. During retirement you should not invest for growth or risk your money. Remember as opposed to when you were young if you lose money during your retirement years you have no real way to make it again and replenish that broken saving account.

Saving for retirement also allow for some tax benefits as the government would like to encourage such savings. For example 401K retirement plans as well as some other IRA retirement account plans allow for deferred taxes letting you save and invest your pre tax money for maximum benefits.

By : blane.house1380
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Credit cards not the best tool for getting credit

Credit cards are convenient and easy to use tools for making payments. However although the name credit card suggests that their main purpose is to provide credit reality is that they are one of the worst tools to use for credit.

Credit cards have that elusive Credit word in their names. Many consumers confuse the name for meaning a tool for providing credit. Although credit cards can provide significant amount of credit and debt to consumers they are not the best or the cheapest way to get such credit. The Credit portion of the credit card can be construed in two ways. One is as a way to get short term less than a month credit. You use the card to make payments and then at the end of the month you pay off the card basically utilizing a less than a month credit line. The other one is as a way to get long term credit. You use the card to make payments and at the end of the month you make a partial pay off payment thus rolling some debt into the next month and so on which in effect translates to a longer than a month debt or credit.

There is a merit to using credit cards but there is no merit for using credit card as a long term credit or debt tool. Credit card debt is almost always expensive. Even if your credit card company promises zero percent for a short time the truth is that most likely some fine prints rule will make you exempt from that zero percent promotion. Credit cards usually carry a high interest rate than any other debt tool like a loan from your bank or equity line on your home. Credit cards are also random credit tools many consumers spend on their card more than they can pay and end up finding themselves in debt they did not really plan for.

Credit cards have many good qualities too. They are convenient payment tools no need to carry lots of cash and handle change all the time. They are also a great liability control tool. If you buy a product that is faulty and the store refuses to take it back or to handle your claim you can dispute the charge on the card and the credit card will give you the money back. They are also great tools for making safe online purchases which is a more and more common way for consumers to buy stuff these days.

Credit cards should be used carefully and diligently. Make sure that you track how much money you put on the card during the month and always have a budget for how much you can spend. This will ensure that you do not end up over charging the card and then being forced to use the card credit tool because you have no money to pay the card off. Also always check your month end statement for wrong charges or for fraud. And lastly remember to track your card rewards and other perks. Some cards for example allow you to get frequent miles for every dollar you spend while others provide different types of gifts and incentives.

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Makes Business Easy through Export and Import Directory

Now a days, Import and export business world is constantly on the rise in an amazing way in Indian market and across the globe. It’s quite for trade markets with inclusive directory which assist them. Dealers and traders can do huge business in India because it is extremely populated country. The possibilities are never ending for export business here. Even possibility of small hotels, cottage and small scale industries are also good. India is known for its spices and such spices are in great demand in the foreign countries.

Chemical and Internet business are also of good quality compare to other nations. Most US companies outsource their business to India because of its man and brain power. Automobiles, Gold jewelry production, dresses, dress raw materials, machinery, clothing business are also in huge demand. Apart from this, India is biggest hub for pharmaceutical industry.

Really, Export and import directory helps to make world very small. Nowadays, people can buy OR sell anytime anywhere just using internet through online trading systems. Import and export business can start anybody who has guts. A very few companies are that they’ll transport you small quantities items without having to so through custom sample order. People can do all kind of deals to buyer or sellers for their particular products online.
You can get any product information through Email. You can get information speedily compare to anything else. You can direct contact buyer or seller for negotiations if you are looking for long term business or some regular products which are highly demand in your area. Make sure that you have to send them invoice before send money because there are also lots of fraud working on internet. Get all the details information about company which you are going to do business.
Internet has made exporting goods to the small retailers very easy. Even a decade ago, exporting goods to small retailers was an up hill task. The suppliers would be faced with innumerable problems such as difficulty in accepting small payments, expensive communication and lack of information.

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Thoughts about using credit card debt

Credit cards can be used in order to obtain debt. Many consumers hold credit cards with ten of thousands of credit available on them. A short swipe and you can spend lots of money which you will have to pay slowly in the future.

But taking credit on your credit card is not the best choice. There are many reasons why credit cards debt is bad but the first and foremost one is a very simple and straightforward reason. Credit cards debt is simply expensive. In fact credit cards are probably the most expensive form of debt available while ironically they are probably also the most easier debt to obtain.

Credit card debt can be used for any purchase. The money is there available for spontaneous purchases. Many credit cards are happy with consumers spending more on their credit cards than they can afford. The fact that at the end of the month you can not pay off your credit card bill is actually a very good thing for the credit card companies as they are happy to collect the interest on your debt. The credit cards companies are trying to maximize their profits the best credit card customer is a customer that each months pays the minimum required payment and the required financing interest on his credit card debt. The best customer would also eventually pay off his debt.

The credit cards are taking some risk in providing such easy debt as some customers will eventually default and will not be able to pay off their debt. Although rare this does happen. The reason why this is rare is that many consumers are somehow scared to default their credit card bill. Many times such consumers would prefer to take an equity line on their home or some other debt in order to pay off their credit card debt. One of the reasons of course is the fact that credit card dent is more expensive than any other debt which makes sense paying it off by taking a cheaper debt somewhere else.

Credit cards are great tools they provide an easier way to make purchases and also safety and security. Bad products purchases can be disputed liability when using credit cards is limited and of course Internet based commerce can only be effectively done with credit cards. Without credit cards Internet commerce would be basically zero. Credit cards are also a debt tool but that debt tool is really more of a trap than a good thing for consumers. It is a trap because it is so easy to get and use that debt. It is a trap because the interest on that debt is ridiculously high. It is a trap because many consumers take this debt unconsciously because of the ease of use they end up using their credit card more than they can afford to.

Using a credit card is something that can not be avoided these days of age. Reverting to a cash based society is impossible. But there is no reason why consumers would not be more educated about using their credit cards. Especially these days with online credit card access consumers can track their credit card usage on a daily basis to make sure they do not charge too much on the card just to find out at the end of the month that they can not pay off their statement. Some online credit card tools can also provide with alerts for when the debt on the card reaches a certain limit.

By : blane.house1380
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Money is a product like any other product

Many people do not realize it but money is a product like many others products. It has a supply and demand and it has a cost. For many this sounds just impossible but a few examples would explain how that is true.

Money is a product every finance expert would tell you that or maybe you have heard that if you took some finance classes in the university. Products have supply which defines how much of the product is available in the market. Products have demand with attributes how much of the product is in demand in the market. And products have a price which indicates how much money it costs to get the product. In the case of money the price of the product is the product itself which can look weird and not intuitive to many.

Money has a supply. The supply of many is the amount of money that is available to the market. Usually the supply of money is controlled by the central bank or in the United States by what is known as the Fed which is actually the Federal Reserve which is the United States central bank. How is money supply being controlled? The simplest form is by controlling how much money is printed and infused to the market. The money we all use in notes or coins forms has to come from somewhere. The manufacturer of the money of you will controls how much money is manufactured or to be more accurate printed and minted. The supply of money is more complex than simple controlling how much money is printed. The supply of money is also controlled by the central bank using its reserve to release money to the market or to buy money back from the market. It is also controlled by the central bank providing bonds and other tools to the market allowing the market to borrow money from the central bank.

Money has a demand. Sounds weird? True that you could claim that money should have an infinite demand. We all want money and if we could get it for free we would get as much as we could of it. But since money has a price associated with it the demand for money is actually not infinite and depends on the money cost. At a cost of zero the money supplier which is the central bank would not sell any money to the market. At a cost that is too expensive or in other words if buying money cost more than you could profit from that money than the market would have no demand for it. If the price of money is anything in between than there would be a certain amount of demand and certain amount of supply.

Money has a price. The price of money is the cost of getting money. Since nobody will be willing to give money for less than its face value the price of money is always more than the money face value. The price of money is also known as interest. A money supplier would sell its money for terms that usually include two portions. One the buyer promises to give back the money after it used it for a certain amount of time. Second the buyer also promises to pay some interest either on a monthly basis or when returning the money to the seller. The price of money needs to make sense and like any other product it is where demand meets supply. Consumers and business would buy money if they can in return invest it to make more than the interest or have some other benefit that is worth the interest they have to pay. Banks would sell money at an interest that makes sense for them and if they have no other more profitable investment venue.

By : blane.house1380
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Some random thoughts about consumer credit and debt

There are a few ways in which consumers can obtain debt. Usually debt is needed in order to make a specific payment of buy a specific product or item. In other times debt is more generic as consumers are in need for cash for many smaller purchases or just to run their daily life.

The most common product specific debts that almost all American consumers end up accumulating at one point of their life are mortgage debt to buy a house car loans to buy a car and college loans to pay for their education tuition. Some less common debt tools used by a smaller number of people are lines of credits that allow consumers a certain amount of debt money they can cash out at any time for any use.

Product specific debts are usually easy to get assuming that you have a descent credit history and credit score. If you did not go through bankruptcy in the last seven years and were not delinquent more than once on your bills then you are most likely to easily be approved for a product specific debt. The debt terms might vary the main one being the interest rate on the debt according to high good your credit history is but the debt itself should be obtainable. When applying for debt some lenders would want to see you putting some cash toward the purchase. Most commonly seen in home buying debt also known as a mortgage is lenders looking to see the loaner putting a certain cash down payment on the house usually between twenty to thirty percent. The same is true when buying a car though usually getting a car without putting any cash is possible.

Another commonly used form of debt is credit card debt. Many consumers use their credit cards for temporary short term debt to bridge between periods of low cash flow. For example credit cards are used to make purchases while not having hard cash for example when waiting for your next pay check. Credit card debt however can be dangerous as it is very easy to end up accumulating credit card debt without realizing it just to find yourself not being able to pay off the credit card statement for a long time. Credit card debt is one of the most expensive forms of debts with credit cards companies charging a hefty interest rate on owed funds.

The Line of Credit is a less used for of debt. Lines of credit are more known and used in the business world although they are widely available for consumes too. A line of credit is a general debt. It is called a line of credit and not simply a loan since applying for debt and actually realizing it by asking for cash happen in two different times. With lines of credit a consumer can ask the bank to provide him with an option to get debt up to a certain limit and for a certain period of time. The banks would run the credit checks at the time of the applications. If approved the line of credit will have interest terms and a period set by the bank. For example the line of credit can be valid for one year meaning during that year at any time the consumer can call the bank asking to realize cash from that line of credit without any need for more credit checks or in many cases without the bank being able to refuse such a request.

By : blane.house1380
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Getting A Mortgage For A Manufactured House

If you're thinking about purchasing a manufactured house and you're worrying about the mortgage options for these kind if homes, you can breathe easy. Most lenders treat a manufactured house the same as a 'normal' house and therefore, you will have the same mortgage options available.

When looking for a loan, there are a lot of places to look. You can try your local bank, or go online and search for rates. Maybe you already have a trusted advisor in this area. If so, ask him or her for advice on your mortgage.

When looking for a manufactured home loan, there are a few steps you can take. When you do your comparing online, ask for multiple quotes. This way, you get a few different interest rates and loan varieties to choose from.

You will probably get a call from some of the mortgage companies when you've submitted requests for a few quotes online. The mortgage companies will ask you for some more data in order to provide a more accurate quote.

When you have received a quote that you're happy with, you print it out, sign it and send it to the mortgage company. They will tell you what other paperwork you will have to send. Make sure that there's a deadline on the quote, so the builder of your manufactured home gets the money on the right date. After that, everything goes automatically.

By : JohnGraystew
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How does debt grow the economy?

For some consumers good credit comes naturally. Paying bills on time and not getting into unaffordable debt is their second nature. But for many other consumers bad credit is a chronic problem that takes a lot of attention and care to cure.

Credit scores and credit history are very important in our current economical environment. The United States economy as well as many other western countries is based on the ability of individuals and businesses to get loans or in other words to have debt. By utilizing debt tools Through debt the business can grow and individuals can build wealth and assets.

If you are not sure how debt can help grow the economy and also help grow individual wealth maybe some examples would help. Lets first look at a business that would like to grow. In order to grow businesses need to invest. Investments is basically the building of assets and acquiring of resources that when used in the course of the business creates more revenues than their investment cost. In order to invest a business needs cash. A typical business can get cash in two ways. One is to use its own cash reserves. The other is to borrow money from a bank or other investors.

Businesses that are rich in cash can opt for the first option however most businesses would need to wait a significant amount of time to accumulate the cash they need to make the necessary investment in many times waiting too long and losing the potential market initiative. Borrowing money is a fast an efficient way for a business to make fast investment. By relying on the current business cash flows and credit history a bank or other investors would provide the business with the necessary cash to make the investment. The business would then invest and by doing so would create more jobs resources and assets. If successful the business would compensate the lenders by paying an interest on the loan and also sometimes providing the lender with some equity stake.

For individual creating wealth is usually associated with investing in some assets too. The most common asset is a home. Similar to the business if an individual would have to wait until he or she saved enough cash to buy a home they would most likely end up buying the home at their retirement age losing many years of potential home price appreciation. By taking a loan also known as a mortgage on their home individuals can buy a house at an early stage with the downside of paying an interest on the money they borrowed. The assumption behind such wealth building is that home appreciation averaged over the course of many years would be higher than the interest on the mortgage.

Debt however can also result in the opposite of growth and wealth. Irresponsible borrowing results in loan defaults or in other words in the inability to return the money to the lenders. In a normal situation some borrowers are expected to default. After all not all business investments succeed and not all individual purchases appreciate as expected. But in a normal situation the lenders make sure they have enough collateral to collect the debt or some of it in case of a default. In a normal state the defaults are also relatively low and thus overall most debt taken and invested is profitable. If too many loans default and there is too much money that lenders have to write off as a result of debt being not collectible the economy can actually shrink as those write offs delete a large number of assets from the economy in extreme cases more than the overall successful investments value.

By : blane.house1380
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Credit card has some drawbacks to cash

Credit cards are wonderful financial tools. They provide comfort and ease of use when purchasing goods. They provide a peace of mind and liability protection. But credit cards can also be a dangerous vicious tool when not used correctly.

Credit card debt is a big problem in the United States. There is something magical about the ability to go to a store find a product that you would like to purchase and then go to the cashier and be able to walk away from the store with that product by online swiping and plastic card and signing a small piece of paper. Using credit cards can be too easy which can be risky as consumers lose touch with money and with how much they really spend.

The problem with credit card being too easy is that in contradiction to cash which as a tangible feel a credit cards does not. An example would illustrate it. Lets say that you are at a store and would like to buy a product that costs four hundred dollars. If you were to pay in cash you would see in a very visible way the about of money you paid. You will have to count twenty dollar bills and would see how they pile up. This will in turn give you a better understanding and a better feel of how expensive that product is. There are many more bills to count and there are many more notes on the table when buying a four hundred product as opposed to a twenty dollar product.

With credit card this ability to visualize the cost of a product is lost. Regardless of the cost of the product the process is always the same and always takes the same time and requires the same tangible elements. The process is simple the credit card is swiped on a special payment terminal. The terminal then prints a slip on which you have to sign. Once the slip is signed the deal is closed and the charge is put on your card. The only difference between buying a four hundred dollar product and a twenty dollar product is the number printed on the slip which has no tangible visualization.

Using cash allows people to get a feeling of how fast they fun out of money. If you have five hundred dollars in your pocket and you buy a four hundred pocket it is very visual that you are left with not much. For most of us being able to estimate the sum of many small charges on our credit card is very hard. Ask most consumers when they get their credit card monthly statement if they can guess what would the total be and most of them would guess wrong usually assuming it is much less than what it really is.

The first step to solving this problem is awareness. Consumers that are aware of that problem can do many things. They can combine using credit cards when they are really needed and cash in all other times. They can also make sure to login to their credit card online account to see live updated list of charges on their card and the total thus constantly being aware of how many charges they are accumulating on the card.

By : blane.house1380
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Online small business strategies that can make a difference

Small businesses are struggling especially in these hard economical days. In order to stand out and attract more business small businesses need to be creative in their marketing efforts and in improving their efficiency and reducing their cost.

The credit crunch and the economical crisis call for companies to be creative and original in order to be able to ride this turndown and survive into better days. Companies should focus their efforts in two venues. One is preserving cash by improving efficiency and reducing cost. The other is by attracting new customers and increasing or at least maintaining their revenue stream.

The Internet provides a good platform for small businesses to utilize during the economic turndown. The Internet is the perfect venue for high efficiency and cost reduction. The Internet can also be a very useful tool when trying to attract new customers. Operating costs can be lowered by using automation and utilizing many of the free online services. For example lets look at a small business that needs to maintain email connectivity.

One way is to host its own Exchange or other email server. While this option might provide some higher security and flexibility it is also much more expensive that other alternatives. The server and hosting cost together with some IT services needed to maintain the mail server and some other services needed in order to back it up can add up to a significant expense. Instead of hosting its own email server a business can use one of many Software as a Service options. Using this model the business pays a small monthly fee for each mailbox it uses. Another even cheaper option is to use one of the free email services like Hotmail Yahoo or Gmail. If you want an email at your own domain you can pay a very small fee while still using a free service.

While email is just one example there are many other options for online cost savings. But while saving expenses can help a company maintain its cash reserves attracting new customer and maintaining current customer is crucial to maintaining or even increasing the company revenue stream. The Internet is an efficient promotional and marketing tool. For example acquiring new customers can be done in a cost effective and easy while by using one of the many online advertisement services such as Google Adwords. A company can set the customer acquisition cost that is still profitable and try to win keywords that best convert to paying customer at that cost.

The Internet is also a good and low cost tool for keeping in touch and maintaining current customers. Churn prevention is important as many consumers have less money to spend and are less active in looking for products to buy. Maintaining a good customer relationship management can also be done practically free using online tools. Keeping updated information about the company customers such as their address telephone number and email address is crucial to the company success. For example by sending a weekly or monthly newsletter to your customers you can keep their awareness about the company offerings and provide them with discounts and other incentives to keep using the company services or buying its products.

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