Category Archives: Finance

Common Vendor Finance Questions

How does it work?

Vendor finance is when the person selling something is allowing the person who is buying the asset or object to pay for it over time. This can be for anything, a house, a car, a bike or even something as small as an iPod! For example, If I was selling you a bike for $500 then you can either pay me $500 now, and take the bike away. Or you could pay me $100 now and then $100 over the next 4 weeks.

Either way you are still buying the bike for $500 dollars and I am still getting $500 for my bike. The only difference for me is that instead of getting $500 up front I am getting $100 up front and the rest at $100 over the next 4 weeks. If you buy the bike the second way then I have vendor financed that bike to you.

It is the same concept with a house. The only difference is that with a house there are a few extra bits of paper work that you need to use to make sure that the process goes smoothly. Most people who are selling their property want the money up front and therefore don’t want to offer the vendor finance.
But every now and then a property comes along and it does suit the seller to sell using vendor finance. For example maybe they don’t need all the money now because they are going traveling or they have changed jobs and are moving out of the area and will be renting for the next few years so they don’t need all their money straight away.

This is why when a property that is selling using vendor finance terms, then there is always a lot of people who can see the opportunity and often it is the quickest person that makes a decision who gets home ownership. Vendor finance is a great way to buy a home!!!

Is it legal?

Yes vendor finance is 100% legal! It has been used in Australia for over 100 years. The Australian Government has even used vendor finance at times to sell properties.

Starting in the late 1800’s many parts of Australia including North Sydney, the Blue Mountains and the Hunter Valley in New South Wales were sold using vendor financing on house and land packages.

Historically, vendor financing is popular when banks decrease their lending. During and after World War II, there was very little money from banks available to buy residential property, as most of the money was being used for the war efforts. At that time, if a vendor wanted to sell their house, they would offer vendor terms (financing) to the new buyer because the buyer couldn’t get a bank loan.

Today, small and even larger developers such as Meriton, sell their properties using vendor or seller financing. One reason Meriton sells this way is that buyers can purchase on a lower deposit. Instead of needing 20% deposit upfront to qualify for a bank loan. This makes it a lot easier for Meriton to sell their home units because they are opening up the market to more buyers than just those who have 20% deposit. Naturally, as part of their process, Meriton will do their up most to confirm that the buyer has sufficient income to support their monthly payments.

Why don’t more people know about it?

Most people use a bank for buying a property. This is because the people selling normally want all their money up front. Most of the time they will pay off their mortgage and if they have any money left over they normally have plans for that money. They may want to buy another property, buy a car, invest or just put it in the bank.

What this means is that most people don’t want to sell using vendor finance and so, there is never a massive amount of properties on the market that you can buy using vendor finance. That is why they often sell quickly.

However, there are always people out there who are willing to sell using

What’s the catch?

There is no catch. You can legally and ethically buy a property this way. There are many people just like you who buy a property this way every day. Most people have never heard of buy a property this way and so have their misgivings. But you don’t need to as this is a great way to buy your own home if you don’t have a full deposit, or you may just not meet the banks tough qualifying criteria.

What if I get into trouble and can’t make a payment?

What would happen if you bought a property using a bank and you stopped paying? It is the same with this process. You would get a letter asking you to catch up. If you made up the payment then that would be the end of it. If you don’t then you get another letter. This process follows like the banking system. If you don’t pay then you cannot keep the house. If you fall behind then you aren’t thrown out onto the street.

There is a process which allows you to make arrangements to catch up. It is in everyone’s interests that you don’t fall behind with the payments.

That is why we never put people into a house if we feel they cannot keep up with the payments. We have checks and certain criteria which we look for to make sure that we do our best to eliminate the possibility of you falling behind. That being said you never can control the future.

Who owns the house?

The owner of the property keeps their name on the title but you get the right to occupy and you get what’s called equitable title (in Queensland). The Government recognises the contract and it is stamped and processed by them. Check with a solicitor your legal rights. If you like you can contact our office, as we can put you in contact with solicitors who have a lot of experience with vendor finance arrangements.

Can I on sell the property whenever I want?

You can sell the property at any time. The only thing that you need to be aware of is that you need to make sure that when you sell the property that it sells for more than you paid for it. For example, if you bought the property for $400,000. Then you will need to sell it for more than $400,000 because when the property sells you need to pay out to the seller what you owe him. Which in this example is $400,000.

What’s great about this is if the property goes up $50,000 and you sell it for $450,000 then you get to keep the extra $50,000. You can then use that money to get another property if you like. This is why it is in your interests to buy a property and then clean it up because it adds value which you get to keep once you on sell the property.

Do I still have to have property inspections?

No the property is yours. You are not renting it. Therefore you do not have any property inspections. Also, if you wanted to paint the property a different colour then you can. If you wanted to do any landscaping you can. It is your property.

Who pays the rates?

It is the exact same system as if you went to the bank and bought a property yourself. In other words, if you bought the property using a bank loan, who would pay the rates? You would as it is your house.

Get Easy Approval With This Highly Useful

What’s that one thing which drives every American crazy? Cars – the most breath-taking invention of the century! Everyone will agree that cars are the center of fascination. If want of cars is driving you crazy, this article can be the right medicine for you. It is the perfect car loans guide for getting stress-free and easy approval.

We all know that rising car prices and unavailability of ready cash has made auto loans compulsory. This article will be your guiding light in getting easy approval on auto financing programs.

How to get Easy Approval on Auto Loans?

Many Lenders – More Options

Keep reminding yourself that there are many options with you. There are several lenders and online car financing companies who offer instant approval and low rates on auto loans. Don’t worry if a lender has rejected you in past. You can still get approved because there are many more who will fit your requirements.

Know your Money

Knowing your money is important to get more money from an auto lender. Before applying for an auto loan, you must be familiar with your finances. Know if you are financially capable of making regular payments. To identify your affordability, you must calculate your budget. Ascertain income and expenses. Remember to factor in car related expenses like title and registration, maintenance, fuel, insurance, etc.

What does your Credit Report Say?

Not knowing your credit score is a fatal mistake in the process of auto loans. You must understand that every lender will check your credit report even if he says otherwise. So, it is better that you first check it and remove all errors. Also, if you have a bad credit history, pay-off few debts to ensure an increase in the credit score.

Cars and Cars

Even though it is not advisable to select a car model before getting approved for a car loan, have an idea of the current automobiles. Have a few favorites so that once you get guaranteed approval on auto loans, you won’t have to spend time on checking each and every car.

Complete Work of Paper-Work

It is easier for the lender to complete the auto financing process if you are ready with documents. Ready paper-work will have a positive impact. Following is the list of documents that you will require for getting easy approval:

1. SSN
2. Credit Report
3. Income and Employment Proof
4. Vehicle Information, if you have already decided on a few specific models.

Can you get a Co-Signer?

A co-signer is a great way of getting approved. Find someone with a decent credit score and stable debt-to-income ratio. A co-signer will reduce the lender’s risk and thus, ensures easy approval.

Trade-ins and Rebates

It would be great if you can manage a down payment of 10%-20%. But, car buying is already difficult and down payment can make it even more difficult. The good news is that cash down payment is not the only alternative with you. You can trade-in your old car or use the cash from rebates as down payment. By doing so, you will lower the auto loan amount and thus improve your chances of approval.

All these tips will be very handy in getting easy approval on auto loans. Once you are done with all the above mentioned suggestions, you can start applying for car loans program. You will have two options with you: 1. Offline – Walking to every lender’s office and filling the auto loan application form. 2. Online – You can apply with online auto financing companies from the comfort of your home.

A Guide For First Time Business

Owning your own business can be very rewarding both financially and emotionally. Business ownership provides innumerable opportunities to put ideas into action and reap the rewards (and sometimes the pain).

Buying a business, rather than starting a business from scratch, has many advantages:

The business should have established customers who will provide revenues for the business almost immediately. Unlike a start-up business that needs to find customers and take them away from another business, the business buyer must retain it’s existing customers. It’s always easier and less expensive to retain customers than to try to find new customers.

The business you buy will have systems in place that you do not need to invent. Although it’s rare for any business to have perfect systems, the business you buy will certainly have a certain way of doing things. Business buyers should always make certain they understand why the former business owner did things BEFORE changing it. The laws of unintended consequences are inescapable. Make sure you know exactly what effect changes will have before you make changes.

Financing the Purchase of the Business

Financing a business purchase is important and should be considered carefully. For businesses valued under $2,000,000 the primary financing options are the lenders who offer Small Business Administration (SBA) guaranteed loans or the business seller.

What are the advantages or disadvantages of each?

First let’s look at Seller financing.

Many books on “How to buy a business” claim that a buyer should not buy a business if the seller isn’t willing to finance the sale of the business. The books often say to offer the seller 25% – 40% as a down payment then pay the balance off over 5 -10 years. The theory is that the seller who finances the sale has confidence in the business and, since the buyer owes the seller money, the seller will “help” the buyer succeed.

Makes sense, right? Not so fast. Let’s look at seller financing from the perspective of a business owner who wishes to sell a good business. A seller who sells the business and finances the sale takes HUGE risks. What are the risks? First, what if the buyer ignores the seller and runs the business into the ground? What if the buyer changes the whole business operation to a model that doesn’t work? What if the buyer is terrible with employees and he loses some? The “experts” say so what, the seller gets the business back and still has the buyer’s down payment. Sellers of good businesses don’t want the business “back”. If they wanted the business back they wouldn’t be selling it.

Here is another reason why a business owner who wants to sell a good business shouldn’t need to finance the sale and why a buyer shouldn’t want the seller to finance the deal either. SBA lenders often receive a government guarantee on a business acquisition loan (7A) of about 75%. This means an SBA lender can’t lose more than 25% even if the business fails and the loan goes bad. If the seller finances the deal the seller does NOT have a 75% guarantee so seller’s who finance deals should charge a lot more for financing (or selling price) to account for the increased risk compared to an SBA loan. This increase in financing costs puts more leverage on the buyer and actually INCREASES the likelihood the business will fail. That’s bad for the buyer and the seller.

Another common reason for seller financing is many “experts” say that small business records are so bad that only the seller knows if the business is making a profit so a seller who is willing to finance is defacto saying the business is profitable. As always, two sides to the story. Here’s an example of why this is a fallacy. Let’s say Mary owns a business that does carpet cleaning and some customers pay by credit card, some by check and some cash. Let’s assume for whatever reason the cash income can’t be identified in the company books. The books show the business is making a marginal profit but Mary says she gets about $1,000 per week in cash that needs to be considered when judging the selling price.

The books show the business is making about $20,000 per year, Mary says she’s taking another $50,000 that can’t be identified in the books. That’s a total of $70,000 and Mary wants to sell the business for $140,000. She’ll take $64,000 down and a note for 5 years at 8%. Good deal? 2 times earnings is a good deal, seller financing is good, right? Wrong. What if Mary is lying about the $50,000? You bought the business, she has your $64,000 (which is more than the books show she makes in 3 years). So you stop making payments and Mary gets the business back. Who got the better deal, Mary or the buyer?

TIP: If a business has provable cash flow and a reasonable price AND a buyer whose financial circumstance is in order, there is an SBA lender who will provide financing. There are plenty of businesses available that have provable cash flow. Inexperienced buyers should be very, very cautious about purchasing a business where the earnings can not be ascertained with reasonable certainty.

Advantages of SBA financing

Understanding the steps in getting an SBA loan makes it clear why the buyer and seller are both generally better off if the seller does not finance a transaction.

Requirements of buyer to get an SBA loan: good credit, manageable debt relative to the ability of the buyer to service the debt, buyer income requirements BELOW that which can be provided by the buyer and business.

Requirements for business to be eligible to be purchased with SBA loan: provable earnings of business adequate to make debt payments and income to seller adequate to meet sellers’s personal needs, business will likely be appraised by bank to make sure what the buyer is paying for the business is reasonable.

A buyer benefits using SBA for financing because the SBA will likely add discipline to the process for the buyer and reduce the likelihood that a buyer will make a critical mistake.

Due Diligence

Buyers – Before closing on the purchase of a business buyers should conduct adequate due diligence to ascertain if what they “think” they are buying is actually what they are buying. Due Diligence has 4 primary areas:

Industry – There is usually public information available for almost any industry. Buyers should do research to see if there are any industry issues that will positively or negatively impact the business.

Business Finances – Business buyers should retain an accountant to assist them in looking at the business books to confirm the business is earning what is claimed by the seller.

Business Operations – Before closing there is usually only so much that can be done. An important activity is to meet with the seller and discuss in detail what the seller does on a day-to-day basis so the buyer can get comfortable either filling that roll or bringing in people to fill that roll. If the seller is the guy who also repairs all the trucks then you either need to be able to repair the trucks or find someone who can!

Legal – Buyers should engage an attorney to review closing documents and make sure that the buyer understands their rights and obligations in any contracts. Good legal work BEFORE closing usually means smoother sailing after the business purchase.

How to Get Finance With Unusual Employment

An increasing number of people are choosing flexible working opportunities with their employers, as it enables them to successfully combine both their lifestyle arrangements and their family commitments.

However, many have found that when it comes to visiting their local bank branches while looking for a home loan, car and truck loan or even equipment finance, their local bank is still apprehensive towards them. And, it is because of their irregular working hours:

1. They don’t seem to fit into the strict lending guidelines set out by banks; and

2. They are not seen by banks as holding down a stable job with a regular income.

What the Common Unusual Employment Types?

Here are some of the common unusual employment types:

1. PAYG (pay-as- you- go) contractors

2. Casual workers

3. Part-time workers

4. Self-employed individuals

5. Sub-contractors

6. People with other forms of income

Type 1 – PAYG Contractors

PAYG contractors are normally employed via an agency or directly via their employer. This form of employment is now common in a variety of fields such as:

>> Medical;

>> Engineering;

>> IT (Information Technology);

>> Mining;

>> Project Management;

>> Construction; and

>> Government.

So, if you are a PAYG contractor and you are looking for finance, here is a list of things that lenders/credit providers will require you to provide:

1. You will be required to provide a copy of your most recent “Employment Contract”, with income details listed;

2. You will need to provide evidence that you have a minimum of 12 months employment in the same industry and that you have a good track record in your chosen industry; and

3. You will need to provide evidence that your employer or employment agency takes care of your income tax and superannuation contributions for you.

Note: If you are not on the direct payroll of an employer or employment agency, you may be treated as being self-employed.

Type 2 – Casual Workers

This type of employment applies to people working on a casual basis in the following industries:

1. Restaurants;

2. Retail;

3. Teaching and Tutoring;

4. Nursing;

5. Childcare;

6. Trades;

7. Drivers; and

8. Cleaning.

If you are a casual employee, you will need to provide evidence that you have been employed at the same place for at least 6 months.

Lenders/credit providers will calculate your average earnings over a set period, and count this as your income. However, if you want to work out your own average earnings, then you can use an income annualisation calculator to calculate your own average earnings.

Type 3 – Part-Time Employees

If you are employed on a part-time basis, you will find that lenders/credit providers will generally require you to:

1. Provide evidence that you have been employed at your current place of employment for at least 6 months: and

2. Provide copies of the following documents:

>> Current computerised pay-slip covering a minimum of two (2) pay cycles in order to confirm details of your base income; and

>> PAYG Summaries; or

>> A signed letter of employment from your employer listing details of your current base-remuneration.

Type 4 – Self-Employed Individuals

You are self-employed if you run your own business. You are categorised as self-employed individual even when you are conducting freelance work as a journalist, photographer, tour guide, etc. In such a situation, you will find that most lenders/credit providers will require you to provide evidence that you have a regular income to sustain a loan. This includes providing evidence that:

1. You are a business owner or partner;

2. You have been trading in your current business for at least 24 months;

3. Your business provides a steady income; and

4. You will be required to provide copies of:

>> Your most recent Personal and Business Income Tax Returns, and

>> One set of the business financial statements, reflecting two (2) years trading activity

Note: If you conduct freelance work with an employer, you may find that lenders/credit providers may require you to provide a copy of the written agreement between you and the employer that outlines your pay and conditions.

Type 5 – Sub-Contractors

Sub-contractors have specialized skills and they are generally employed by a primary contractor to provide specialized services in a variety of fields such as:

1. Building and Construction;

2. Mining;

3. Civil Engineering; and

4. IT (Information Technology).

Note: Many sub-contractors have little to no overheads and no staff and most are typically self-employed. In a sense they are similar to PAYG contractors.

Type 6 – Other Forms of Income

If you receive any other form of income and you are unsure if it is acceptable to lenders/credit providers, you should seek help from a qualified and licensed finance broker or a mortgage broker. You can even seek financial and legal advice from your accountant and solicitor. These other forms of income can include:

1. Centrelink payments;

2. Commissions and Bonuses income;

3. Trust Distributions income;

4. Car Allowances;

5. Annuity Income from Superannuation;

6. Director’s fees;

7. Second Job income;

8. Investment income (i.e. Dividends received from publicly listed companies); or

9. Court Ordered Maintenance payments.

Seek Expert and Professional Advice

If you still have doubts regarding your employment status and want to obtain finance, you can seek help of a finance broker. You should opt for a professional qualified finance broker because he/she will have experience of dealing with many lenders/credit providers on a regular daily basis. Also, he/she will be familiar with the lending guidelines and credit policy requirements of a number of lenders/credit providers.

Choosing the Right Home Finance

If you are ready to buy a home you are probably considering home finance. There are so many options it’s often hard to work out which type of finance is best for you. It’s a good idea to understand what’s available:

Type – Fixed rate, standard variable/ARM, basic variable, honeymoon, interest only, redraw/line of credit loans; each have advantages and disadvantages so you need to understand the differences.

Fees – Set-up, closing, account keeping, late payment and early pay-out penalties; these fees are payable in addition to the regular loan repayments.

Loan Amount – 70%, 100%, 110% of property value; loan amounts may be tied to loan type and the location where you want to purchase as well as the amount of your deposit and your ability to make the repayments.

Repayment period – 25, 30, 40, 45 years; time may depend on a number of factors including loan type. A shorter loan reduces interest paid over the life of the loan but the repayments will be higher.

If low interest rates are a high priority for you, then consider a Honeymoon rates loan, a discount mortgage, a basic loan, or fixed rate loan. Loans offering lower interest rates generally only offer the lower rate for a specific period of time, such as one year, before reverting to the standard variable or adjustable rate. These loans are often ‘no-frills’ loans and don’t have many of the features found on other loans. You will need to consider how much difference one year of low interests rates will make to your own circumstances, taking into consideration the long-term view of having the mortgage for many years. This is just one of the factors that may be key to your requirements, so work through the process for anything else that is critical to your unique situation.

Don’t forget, when considering finance you are considering what kind of institution to borrow from and on what kind of terms. You’ll need to consider the pros and cons of each different choice and remain flexible with your approach. For instance, the interest rate may be better at one type of institution but the repayment schedule suits you better with a different lender. You may still be unsure about whether to get a home finance with a variable or fixed interest rate, and if this is the case you need to take all other factors into account, such as application and account keeping fees, repayment schedule and the total cost over the life of the finance.

Personal Finances to Improve

At the turn of each year, we all have our dreams and we possess new energy levels to achieve them. This individual expectation is like a cycle. Everybody wants to succeed, at least in their minds but not everybody will. Below is a list of 25 actions you should take if you want to improve your personal finance this year.

1. REVIEW THE PAST YEAR: The first thing you should do is to analyze the past year. Research has shown that of the lots that make ‘new financial resolutions’ every year, less than 10% actually get to follow those resolutions through the year. Does it not bother you that at the beginning of last year, you also made resolutions that you failed at? Why turn around in cycles every year? Take a pen and paper, sit down and review your financial activities for the past year; from your income earnings to spending. Break everything down into tiny bits and you will have a clearer picture of why some of your financial desires didn’t come to pass. It could be that your total expenditure outweighs your income.

Simple Guide: Create a ledger of credit and debit. Every of your income, no matter how little, should come to the credit side while expenditures come to the debit. Sum each side up. If your debit is over 30% of your credit, do you still wonder why that financial dream of yours was out of reach in the past year?

2. CREATE A CHECKLIST OF ALL YOUR FINANCIAL MATTERS: The second step is to create a checklist of all your financial matters, while including ‘Emergency’ as the last in the checklist. This is because emergency situations will always arise and can dent your plans, if you are not adequately prepared.

The best way to create this checklist is to break each financial matter down into months. Many people go through the year with false belief that they have everything sorted out in their heads. The more reason they fail because human beings are susceptible to memory loss. Sort them out in black and white instead, and a new level of motivation will come on you each time you look at the checklist. Alternatively, tools such as PocketGuard and Spendee can help you do this.

3. SET SPECIFIC FINANCIAL GOALS: After creating the checklist, the next step is to set your financial goals complete with specific dates. That is only when your wishes become goals since the dates act as deadlines thereby putting you on delightful pressure to beat them. Any goal without a specific date of achievement is not a goal. You are merely wishing. Sadly, this is what many people do.

By specific, I don’t mean you saying you will make a million naira in August 2018. Be more specific with date. Rather, say ‘August 30, 2018’ for instance. Then it becomes a goal that you can wake up every morning and chase around.

4. KEEP A FAITHFUL BUDGET: The failing of many people is that they are never faithful to their budget. This shows indiscipline. Learn to set and work within budget. That way, you can meet most of your financial plans and obligations. Going beyond budget will only put you in bad debt and make you miserable. If you cannot plan your budget in black and white, there are wonderful digital tools such as Wallet and Personal Capital that enables you to do this and carry your budget around in your phone. Some others like PocketGuard even alert you that you are already spending beyond budget. Take advantage of these tools for better living. One thing you must never do is to simply budget in your head.

5. SPEND WHAT IS LEFT AFTER YOU HAVE SAVED: Learn to live by this rule today. For every dime you earn, save at least 10% of it. Now, this is the difficult part: many people aren’t disciplined enough to do this. The key to achieving this is to separate your business income from your personal finance.

6. LEVERAGE ON GOOD DEBTS AND AVOID BAD DEBTS: Everybody should like debt. This is a principle of the wealthiest people in the world. They like good debt and abhor bad debt. Good debt brings you more cash flow and if well managed, sets you towards financial freedom. Bad debt on the other hand, brings you unneeded luxuries, put serious pressure on you and can make you miserable. If you must boost your personal finance in 2018, try to avoid bad debts.

Good debts are incurred towards fulfilling rewarding financial obligations like the purchase of businesses, investment and stocks or real estate; these are things that will compound your financial interests over time and make you independent. Bad debts are taken out to buy non-essential luxuries such as cars, holiday trips and best proposal dinner. These luxuries don’t compound wealth. Rather, they take what you already have. Decide which one you want.

7. PAY OFF YOUR SMALLER DEBTS FIRST: By now, you must be saying ‘but I am in debt already. My debtors are breathing down my neck’. All well and good. Make it a point of focus to liquidate your bad debts. Start by making a list of your bad debts in order of their sizes. Then settle the smaller debts first. Any debt that is fully settled should be cancelled out before moving to the next.

The logic behind this is simple. The smaller the debt, the easier it is to pay off. With each debt cancelled out, the more confident you will become of liquidating the bigger ones. This confidence brings with it desire not to keep going through the show of cancelling out debts every year. In other words, you’ll become a better manager of your finances.

8. LIVE YOUR MEANS: This must be a strange one. I have heard many people advocating that people should live below their means in order to have reasonable savings. Well, I actually believe people should live their means. If you can afford to conveniently buy out a business, why not? The key to living your means is convenience.

In measuring your convenience level at taking on situations, you must be truthful to self about your financial situation. You might be on a 100, 000.00 Naira per month wage and feel you can live in a two bedroom apartment in town. You should calculated the other supervening expenses like monthly feeding, clothing, welfare and transportation to know how much you are left with to contribute towards the means you want to live.

A simple rule I advocate is this: if a personal financial project is more than 10% of your actual income, then you might be better off living below your means.

9. AVOID HAVING ENTITLEMENT MENTALITY: As a major, nobody owes you anything in life. So quit that lazy mindset. In business as in your personal finance, you are solely responsible for the decisions you make; for your successes and failures. Once this is firmly ingrained in your mind, the zeal not to fail will become a greater motivation that pushes you towards making smart financial choices. You will learn the act of taking responsibility. The most successful entrepreneurs don’t sit down and wait for goodwill from some family members or friends. They struggle their ways through web of failure until the elusive success is captured. Then they work harder to keep the success. You should also have that mindset.

10. AVOID THE LOTTERY: This might not go down well with some lottery lovers but if you don’t have firm control of your personal finance, then stay off the lottery. People ask and I tell them lottery is business of luck based on correct punditry or guessing of a given situation. You expend money time and time again in the hope of becoming lucky and hitting the jackpot. But what if you don’t? Let us even assume you win. Have you taken stock of how much you have contributed to the lottery over the months and years and if what you won is up to your contribution? A few will be lucky to hit it big. However, a vast majority of people won’t. The wealthiest people know that waiting for some big manna from heaven is a lazy way of understanding the concept of luck. They know that luck is a deliberate effort of an individual therefore they diversify their portfolio before engaging in lottery.

11. OPERATE 3 DESIGNATED BANK ACCOUNTS: I am advocating this because most times we tend to draw from a single bank account to solve our personal financial challenges. The danger in this is that such practice is an enemy of financial planning and often runs people dry.

If you are serious about securing your financial future, then have 3 bank accounts where you save at different times. The first should be for savings and this could be your salary account. The second is for emergency while the third is for philanthropy. Since you’re working on a budget, you know which account to go to on each occasion and discipline will stop you from touching the other accounts when you have no need to.

Finance experts like Robert Kiyosaki advocate this strategy. I recommend it also.

12. TRACK YOUR NET WORTH ALWAYS: Do you really know how much you are worth? The problem is many people have a false sense of security. They believe selves to be worth more than they actually are. People who take control of their personal finances make it a habit to track their net worth always. Quit blushing over your assets. Try removing your liabilities from those assets to get an idea of how much you are really worth. Whatever remains after you have subtracted your liabilities from your assets is what you are truly worth.

13. DIVERSIFY YOUR INVESTMENT HOLDING: Diversifying will help you to minimize your investment risks. Smart working entails you have your risks spread in different sectors. If your investments in a sector fail, your investments in other areas will help to mitigate the effect of your loss. There are many reasons why you should diversify: loss of business, inflation, taxation, government policies and political instability are a few of the reasons why you should never remain in a single sector as an investor.

14. CREATE PASSIVE INCOME: This is a key to financial freedom. To build passive wealth, you must be involved in activities or buying assets that generate you more income. To boost your personal finance this year, start engaging in activities that will generate you income even when you are not seriously working. Leverage on technology and get involved in online businesses, get involved in genuine network marketing programs, invest in viable businesses and watch your income compound.

15. LEARN THE RULES OF INVESTING: That you want to diversify and create passive income does not mean you should not follow the rules of investing. The first rule of investing is that you should never invest in what you don’t understand. Get adequate knowledge before plunging your hard-earned money. The second rule is that you should never invest money you cannot afford to lose. Investment can be a risky venture, so have liquid cash you can fall back to if the investment fails.

There are other rules you should learn such as the principle of compound interest, legal framework of what you are investing in, and so on.

16. ENGAGE IN YOUR PASSION AND HAVE FUN: Some people are miserable because they are not doing what they love. Some are stuck in jobs they hate just for the salary. To do great things in life, you must be passionate and enthusiastic about what you do. I love providing business and financial solutions to people who need them. It gives me joy.

Learn to be passionate about what you do. That is when you can have fun and enjoy life to the fullest. Not loving what you do can drive you to make poor financial choices.

If you hate what you are presently doing, here is a tip: give yourself sufficient time to properly invest in what you are passionate about. Then move on.

17. EXERCISE TO KEEP YOUR MIND AND BODY IN SHAPE: Many people work few hours and they are fagged out since they don’t perform any kind of exercise. Engaging in physical exercise keeps your mind at alert and your body in great shape to take on any physical activities.

18. TAKE YOUR HEALTH VERY IMPORTANT: All your goals in life will go as far as your health permits. Your health is your number one wealth; therefore you shouldn’t be careless with your health. I have seen people who are careless about what and how they eat and drink, and are clumsy. Personally, I hate sluggishness.

19. BE FLEXIBLE AND ALWAYS ADJUST: We all want to appear to be in charge, that we have planned ahead and are ready to take hold of our financial situations. However changes will occur along the way, some of them beyond our control. The people who take biggest control of their personal finances are people who adjust to favorable evolving trends. They are spontaneous in their approach towards life. The danger of being rigid is that you are not open to new ideas and opportunities. You are stuck with your viewpoint, with your personal understanding of doing things which may be what is limiting you. The wealthiest entrepreneurs and CEOs have a trait in common. They hire the smartest people to bring new innovative ideas that they can learn from and make adequate adjustments along the way. This is how businesses succeed. This is how personal finances compound. There are times when you follow your conviction, but make sure you have taken every necessary factor into consideration.

20. WORK SMART: Have you noticed that while you are stuck in your 9-5 job for a few thousands every month, another person works few hours and earns far higher than you? The rule of the 21st century is working smart. While I loathe laziness and cannot encourage it, yet your hard work should be embedded in working smart. Think of disruptive ways you can engage the public that will generate you more income. Do you have large following on social media? You should leverage on that and promote your passion. Create reasonable awareness. The more awareness you create, the more people that need your services will seek you out. You don’t have to wait for the fat bucks to come to you so you can rent the choicest office space. Take advantage of technology and start with what you have.

21. LEVERAGE ON TECHNOLOGY AND AUTOMATE SAVINGS: This is the age of technology and everything is going digital. You cannot afford to keep living an analogue lifestyle. Get accustomed with the various available technologies that can help boost your personal finance this year. It is useless, for instance, to be carrying cash around when you can easily perform banking transactions on your mobile phone. You can automate your savings and spending so that you don’t exceed your budget. An application like PocketGuard lets you do that.

22. GET INVOLVED IN PHILANTHROPY: I believe that giving is an effective way of receiving. There is fulfillment that comes with helping people around you to be better than they were. Philanthropy is not all about giving alms to the needy. It is about doing the little things to improve the circumstances of those around you. You can engage in community service, render pro bono services to do that really need it and so on.

If you have enjoyed some excellent services from a startup, you can help that business survive by a little words of mouth marketing. Doing such little things go a long way to impact on your personal finance as you will be seen as a trustworthy person whose recommendation is genuine, and this can only be good for your business.

23. HAVE A RETIREMENT PLAN IN PLACE: Some people think retirement is working for several years in the civil service and retiring to a life of pension. Retirement is planning for a life of less stress at work, not that you stop work altogether. Even if you own chain of companies, you cannot work forever. You should give way at some point for younger, more dynamic leadership while you take on the overseer’s role. So what are your retirement plans? Do you have insurance in place? How about retirement savings account? Have you buried your finances in different investment portfolios that will generate you income in years to come?

Do you have any shares or stock holding, and more especially, do you have any real estate investment? Have you taken time to study about some government policies in your country and even study some government introduced financial incentives such as the sukuk bonds in Nigeria to know if it’s a risk worth taking?

I have seen some people go broke after retirement because of lack of adequate planning. Don’t fall into that trap of waiting for some pittance called pension from the government or whatever organization before you can survive. That is a life of misery, unless you want to live your whole life dependent on others for your basic survival.

24. HAVE A MENTOR: I believe so much in the power of imagery. You can only conceive an idea after you have built images in your mind. That is what mentor ship does to you. Whatever financial race you are in today has been won in the past by another. So make a mentor out of that person. Use their struggles and triumphs as a guide so that you can arrive faster at your destination than they did. Ask them relevant questions and get answers. There is no point making some mistakes if they can be avoided by having a mentor. We should learn to do things from a point of comfort.

25. START NOW, IT’S NEVER TOO LATE: Finally, it is never too late to start planning towards your financial independence. You can start putting in the hard work now and realize the benefits later. The danger is in not starting at all.

Where in the World Is Your Finance

Way back in 1971, C.P. Snow wrote about technology in the New York Times. He said, “Technology… is a queer thing. It brings you great gifts with one hand, and it stabs you in the back with the other.”

Many dealers are voicing that sentiment these days. Far too few have done anything about it. Some have learned to use computer software with skill. They use the apps on iPhones, iPads, and Blackberries. They have created an effective Web site. They use Facebook and Twitter and LinkedIn for social networking. For others, these are merely words and technologies that test their ability to conduct both business and their private lives. Dealers, already feeling the brunt of the two-plus year recession and massive changes in the car industry, are becoming increasingly concerned about their ability to not only keep up, but to even remain in the playing field.

Why should dealers bother with such things? Isn’t the old way good enough? Nope!

Customers who always shopped on the lot are now shopping on the Internet before they take a step toward a dealership. They’ve researched every model in their price range and with the features they want. They’ve read a dozen articles about how to get the best deal. They’ve become more savvy than many sales people hired by dealerships; they know their credit score; they know where they can find the best price on insurance, window tinting, undercoating, you name it. Everything once sold to them by a finance officer from the menu is for sale on the Internet.

Are you one of the dealerships where handwringing has become a daily pastime? Have you taken a close look at your bottom line? Have you noticed what would happen to your finance portfolio if you removed your sub-vent rated and nonprime customers? Have the numbers of your prime-financing customers dwindled to an all-time low? Perhaps you haven’t seen the drop in your captive financing yet, but beware, it’s coming just as surely as the first snowstorm.

Snow was right, back in 1971! The Internet can either become a beacon for drawing in more satisfied customers to your dealership and vastly increase your bottom line, or it can stab you in the back. It can be your best friend or your worst enemy. How?

Statistics show that 80% of car customers go online before they make the decision to buy and before they come to your dealership. What are they researching? Brands, models, features and, most of all, prices. Most of all, prices. The majority of Americans in today’s economy are deeply concerned about their budget. They have a fixed amount to spend on a car payment and all the other expenses involved in owning it. The vehicle they choose must fit within that fixed figure. They cannot afford to buy on whim or to make a careless mistake. They won’t take the chance of being bamboozled into buying things they don’t want, don’t need, and can’t afford by a fast-talking sales or finance manger

Where do these savvy customers get their information? One of their first sources is Edmunds, the friendly consumer-shopping guide. Edmunds has never been and still isn’t the dealer’s friend. Edmunds does whatever is necessary to achieve the sale on vehicles and products from the Internet shopper… and then refers these buyer to specific retailers to obtain a fee! Banks. Finance companies. Insurance companies. You name it.

Don’t let them get a strangle hold on your customers! If you haven’t already checked this article on Edmunds.com, perhaps you should do so right now!

Confessions of an Auto Finance Manager In the Back Rooms of America’s Car Dealerships By Philip Reed, Senior Consumer Advice Editor and Nick James

Introduction

“Congratulations, you’re getting a great deal!” the car salesman says, pumping your hand. “Let’s sign the paperwork and you’ll be on your way in your new car!”

At first you’re relieved – the negotiating is over. But then the salesman walks you down a back hallway to a stark, cramped office with “Finance and Insurance” on the door. Inside, a man in a suit sits behind the desk. He greets you with a faint smile on his face. An hour later you walk out in a daze: The whole deal was reworked, your monthly payment soared and you bought products you didn’t really want.

What happened to your great deal?

You just got hit by the “F&I Man,” also called the finance officer. He waits in the back of every dealership for unsuspecting customers so he can increase the profit for the dealership and boost his commission.

In this four-part series, written by veteran auto finance manager Nick James, you will learn the F&I man’s tricks and how to avoid them. When you’re done, you’ll be ready to safely navigate this crucial part of the car buying process, and the F&I man will never work his “magic” on you again.

– The Editors at Edmunds.com

Are you still ushering your customers into the office of your “F&I Man”? No? You have a Web site? You update it once a month? You have a tech-savvy employee who checks your e-mail messages every morning? BUT… how would you answer these questions?

When your potential customers come to your Web site, what resources do you have available to steer them away from online financing? Do you have a quick reference guide for their buying the vehicle that fits their budget and your financing terms? Is the information presented in a complete, forthright and friendly manner? Does it enlist confidence and trust? Will readers feel they’d get a no-nonsense financing deal from you?

If these online customers make a call to ask a few questions, does your finance manager answer them, or resort to the former game of “I can only reveal those options when you come in for an interview”? Does he or she become discouraged by the process of reviewing transactions over the phone? Does your Internet manager have direct access to your finance manager at all times; avoid posting rates and product pricing on your Web site; work well with your sales and finance departments? Have you utilized the I-chat technology now readily available to instantly answer your customers’ finance questions? How many phone calls to your finance department go unanswered on a daily basis? How are online customer calls being handled in your F&I office?

Reducing your finance penetration will not only effect the overall performance of your dealership, but will negatively effective your reinsurance investment. If your customers are financing with someone else, they could also be buying their other products. Take a long and serious look at the insurance products you sell, the agent who works with you, and the changes that must be made to keep you competitive with the technology available to all your customers. You must remain competitive in products offered, their quality, and their prices. Should you be considering a new partner?

What new and creative processes are you providing your current and potential customers within your Web site? Have you considered presenting your menu as a virtual finance manager? Do you have WebEx with a preloaded menu available for review with your customers whether they are onsite in your finance office or sitting in the comfort of their home? Why not?

An upfront sales approach is the best way to reestablish a thriving business in today’s technological world. Teenagers and college students are facile in the use of every conceivable tool involving the information highway. They are your future customers. They will find Edmunds and every comparable site and use the information to their advantage. Provide them with a dozen reasons to buy their vehicle and products from your dealership. Ensure them that financing their dream car with you is the only sensible choice.

Although computer use and Internet technology has been around for several decades, it has taken a giant leap in recent years as more and more consumers realize they can save themselves time and money by letting their fingers do the walking. Another great American journalist, Sydney J. Harris, who wrote for the Chicago Daily News and later the Chicago Sun-Times, died in the late 80s; but, he was savvy about where technology would take us. He said, “The real danger is not that computers will begin to think like men, but that men will begin to think like computers.”

Florida Department Of Banking

The Florida Department of Banking and Finance provides Florida consumers with information and education they need to make informed financial decisions. For example, some of its important services can be listed as follows.

  • Consumer assistance and answers to general insurance and financial questions are available through our toll-free help line. These help lines are available through regional service offices or website. The Florida Department of Banking and Finance claims that each year, our specialists handle more than 450,000 consumer calls.
  • The regional services offices are located strategically throughout the state and provide consumers with access to one-on-one guidance regarding insurance and financial issues.
  • The Florida Department of Banking and Finance offers free community outreach programs that reach thousands of Floridians each year.
  • The department has also partnered with the Department of Elder Affairs to conduct a special outreach program helping seniors with their insurance concerns. This is known as SHINE, in short. The abbreviation is Serving Health Insurance Needs of Elders.
  • The Florida Department of Banking and Finance also offers free consumer guides. They do not take a single penny from the consumer for making the guide available to them. The consumer guide has been made available by the Department on a range of topics relevant to today’s insurance and finance markets. If you want to have that consumer guide, the best way is to order or review it online. What is more, you can also get the printout of the online consumers guide.

Financing College

Financing college seems like hard work. But if you like what you do, you can have fun, too. Take a look at 4 of the weirdest ways to make a buck and earn a credit.

First of all, I want to keep this clean. You won’t find anything illegal. No crazy publicity stunts like that magician that freezes himself – David Blaine. And no wacky ideas that don’t really work for anybody, like betting on the Iditarod or doubling down on your favorite NBA team because their luck has to change…

Let’s get on to some solid ideas that might be a little kooky, but have worked for others. I’ll mention at least 4, but you should get several other ideas as you read. Financing a college degree should help you get through, not be all drudgery. With that in mind, here’s the first.

1. Wilderness Guide, also known as a fishing guide, hunting guide, trail guide, river guide, climbing guide, and so on. Believe it or not, this one happens all the time. I have family members and friends who have worked this one, and you can, too. You need to know something about an area, or know someone who does who will teach you. You can even apply for a job on the Colorado river taking groups down the rapids. If you like the outdoors, this could work for you.

2. Advertising Rep, an experience from my own past. I went to truck stops and changed the posters around. I also repped a credit card where I posted applications on or near campus. These two didn’t pay much, but I could schedule it whenever I wanted. The credit card job was only limited by my effort and imagination. You can find similar opportunities to finance your college fees if you look.

3. Party Organizer, you know, rent a house boat, hire a band, pass out fliers, charge a cover. Borrow or buy some kickin’ speakers, and collect money at the door. If you try this, be sure to follow all of the rules with regards to…refreshments. Seriously, don’t get yourself in trouble, it’s not worth it. Offer a free van to give rides home, and pay a friend to DJ.

4. Campaign Clean Up while I’ve never done this myself, I have a friend who has. He said one candidate offered him $9000 for clean up. I can’t say that is typical because he was in a large city. But it was a good fee, and you do the work quickly, for about 2 weeks after the election. You take down signs and posters, and get rid of them. Now would be a good time to start looking for customers. And if you get busy, you could employ other college students to help.

Applying BSC For Finance

Financial management is a tedious process that requires a highly technical knowledge of effective balancing and application of principles for ensuring that there is efficient distribution and handling of financial resources. Those who are in charge of such management are often required to render hours of analysis and computations in order to make sure the job is well done and that there is little or no risk of financial downfall. For this reason, extensive diligence is often required. Also, there is a constant need to monitor the performance of those having the duty of managing a company’s finances. Thus, the Balanced Scorecard (BSC) instrument finds application. Using BSC for finance management admits of several advantages that are sure to make the entire management process secure and efficient.

What are the advantages of applying the Balanced Scorecard for effective financial management? The main advantage lies in the nature of the instrument, which utilizes a balancing method of all the aspects of a company to ensure that everything is in good working order and that all aspects conveniently and efficiently cooperate with each other, ensuring that there is a maximum output with minimum input. The Balanced Scorecard instrument makes sure that the evaluator is able to consider a company’s performance in its entirety. In fact, all the company’s aspects are taken into consideration. For this reason, the user can see the company from a bird’s eye view, so to speak, in order to see all the strengths and weaknesses of a company.

Another advantage is that the entire process of financial management is made easier without sacrificing the quality of the work rendered. It is one of the features of the Balanced Scorecard to set the guides for which the user will conduct the evaluation process. The user can rely on these guides to effectively perform management duties and whatever duties may be required of the user’s function. The entire process is simplified by reason of the use of the Balanced Scorecard because of the guides that result with its usage. This will, in turn, result to lesser expenses. In every evaluation process, the first matter being decided upon is the expenses that will be incurred in the process. Because of this, some companies would even decide to forego an evaluation process if it means saving up on finances, which may be applied later on to other matters.

However, if the Balanced Scorecard is used, the user can be sure of much more savings and lesser expenses since there is already an established mode of evaluation without the unnecessary need to employ experts or conduct extensive surveys and studies to obtain the same results. Also, with lesser expenses come a lesser time period within which to complete the evaluation. In the same vein, as expenses are lessened, the simplified process also saves time and effort. This means the company will be able to get results in lesser time, giving it more freedom in planning its activities and objectives.