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Depending on your individual financial circumstances, there are attractive and appealing reasons for releasing your home equity for investment purposes. In fact, when left sitting there, you are incurring opportunity costs because your equity is not working for you as its monetary equivalent can, and neither is it invested in a vehicle that will generate you decent investment returns.

For your home equity to work for you by generating a rate of return, it must be converted into cash. The only way to do this is to obtain a mortgage on your home, or an equity line of credit, both of which will require you to pay interest on the amount borrowed over time.

Consider the interest payments as the employment cost of borrowing cash against your home equity for investment purposes. The only economic benefit home equity offers is that of reducing your mortgage payments.

So long as you can find investments with net returns that will exceed the cost of your mortgage interest rate, then it is a wiser decision to earn more by utilising your equity than what you pay to borrow on it. There are many investments that can easily beat the cost of a mortgage!

This largely depends on ones risk tolerance and financial objectives. Mind you, risk tolerance is also dependent on how much financial acumen one has and their understanding of what is at stake. It pays to learn as much as you can and thereby raise your risk factor within reason.

Let us consider the employment cost of releasing your home equity. You currently hold a mortgage of ?80,000 on your property that is worth ?240,000. This means that your equity is ?160,000. If you took an 75% loan-to-value mortgage, you can borrow as much as ?176,000, which will give you ?96,000 to invest after you have repaid your original mortgage. Your current monthly repayments are ?438 per month. After the re-mortgage you will be paying ?668 per month, an increase of ?230 per month equivalent to ?2760 per annum. This will be the net cost of the extra borrowing in the first year of borrowing. ?2760 over twenty-five years will be ?69,000. I have not factored in tax advantages of interest only payments.

Now, let us look at the opportunity costs for investing the ?96,000 released. At a 13% average annual rate of return, this will grow to just under two million pounds in twenty-five years. This is a no-brainer! Would you be willing to Read more…

Need to consolidate debt?

Chances are, you?re doing what you can to pay it off, as quickly as possible. You want to be debt-free.

A worthy goal, to be sure.

But what do you do in the meantime?

Having a debt management plan is just as important as having a debt reduction plan. It can save you hundreds or thousands of dollars in interest, and maybe even reduce the total amount of time it takes for you to be come debt-free.

Here?s how to do it right, without going to pricey or questionable debt consolidation firms. And forget about those debt consolidation loans! You have most of the tools you need to do it yourself.

First, promise yourself you won?t take on any more debt. Put all your credit cards somewhere besides your wallet. One of my favorite spots is the freezer; by the time you thaw the cards to use them, you?ve probably changed your mind about your purchase. Why so drastic? Because you can?t manage your debt if you keep adding to it.

Now, you need to make a list of all the debts you have. Creating a chart or spreadsheet is probably the easiest way to sort all the vital information.

List the following:

Creditor?s name
Principal currently owed
Minimum payment
Interest rate
Contact phone number
Website address with login information

Next, add any credit lines you may have open but with zero balances to the above list. (I?ll explain why later.) Fill in all the above information, except principal and minimum payment, of course.

Take your list and start calling each of your current credit card companies. Ask what their current offers are for balance transfers. Mention that you’d be willing to move your balance to another bank’s card if a better offer comes along.

Take notes on your chart or spreadsheet for each offer. Watch the fine print: ask if there are balance transfer fees, how long the lower rate period lasts, what happens to the transferred balance if you make a late payment, etc.

Be aware that a common gimmick now is to offer a very low rate for transferred balances with no fees, as long as you charge a certain amount each billing period, say $25, which is billed at a higher interest rate than your transferred balance. Since the credit card companies apply your payment to the lowest-rate balance first, you?ll accrue the higher interest rate on the monthly charges until your transferred balance is paid off.

For example, say you transfer $5000 at 1.9%. The rate goes up in 6 months unless you charge at least $25 a month by the close of the billing period. Purchases are charged at 11.9%. If you pay $200 a month on the card, it?ll take you 25 months to pay off the transferred balance (ignoring finance charges). Meanwhile, for 25 months you?re charging $25, which grows to a balance of $625 plus interest of 11.9%.

This gimmick won?t hurt you if you can get a low interest rate for purchases (say, less than 9.9%) and you make sure you only charge the amount needed to maintain the low transfer rate. When the transferred balance is paid off, have the cash on hand to pay off the purchases, too.

Okay, back to debt management.

After you?re done calling all your credit card companies, choose the one with the best offer. Transfer as many of your balances as you can to that card. If there?s not enough room, ask for a credit limit increase, or transfer the rest to the card with the second-best offer.

Note: Read more…

Today every person will find himself in the vicious circle of debts. The basic reason behind this can be that people of present generation believe in high standard of living and want to lead a comfortable and luxurious life. Due to this they start spending lavishly and extravagantly. Unnecessary spending affects their budget and forces them to go for a loan. Once the person is in the web of debt, it is very difficult to come out of it.

When the date of repayment of debt comes near, the person finds himself in the more confused and baffled situation that can affect him physically and mentally both. The person surrounded by debts may sometimes feel lack of money and time while making repayments of debts. Debt consolidation acts as a helping hand to the people in debts.

Today various debt consolidation agencies provide advice to the individuals irrespective of their credit situations regarding the ways available to consolidate their debts. Among them most popular ways are

? Debt consolidation loan
? Debt consolidation mortgage
? Debt consolidation remortgages
? Debt counseling

Debt consolidation loan

It makes an effort to merge up all your debts into one manageable loan. It makes you deal with the single creditor rather than dealing with number of creditors

Debt consolidation mortgage

Owing a home has certain advantages. One of them is that they qualify for debt consolidation mortgage that provides enough funds to payoff creditors. Rate of interest charged is very low.

Debt consolidation remortgages

Remortgage implies that the terms of mortgage are negotiated usually to include a growth in the amount borrowed. It involves a Read more…

Debt management as the name suggests is all about ways and means to manage your debts. Debt management has become very important these days when people are reeling under huge debts. This is mainly because of numerous people applying for loans or planning to get instant cash in some or the other way. As both personal and corporate debt levels are increasing each day, bankruptcy too is becoming a very common phenomenon.

However there are several ways to debt management.

? At first you must try not to spend too much of money over your usual balance.

? Secondly avoid the credit card usage as much as possible. If you are badly in need of a credit card, opt for one that has minimum interest rates.

? Nowadays the most basic and widely used method of debt management is debt consolidation. Debt consolidation refers to the consolidation of one?s debt into a single account. Debt consolidation helps taking out a loan to pay off many other debts. Consolidation companies such as ABSA, Ned bank, Old Mutual Bank, First National Bank etc. usually offer debt consolidation loans. Since the debt consolidation loans form a part of home loan they are offered at low interest rates. As a result more and more people are attracted towards these loans.

But the fact is that loan consolidation too comes at a price. Though it may relieve you of your repayment amount and terms yet finally you end up paying more by way of interest rates or service charges. So you should always think before going for debt consolidation.

? If the debt consolidation process does not suit your condition then repaying with a windfall, if you happen to receive one, or drawing up a debt reduction plan are other alternatives to it.

? You must try and understand the debt to income ratio. Debt to income ratio will help you know about your financial health. This can tell you about your debt Read more…

After working for months the idea of a family vacation can seem like the ideal reward. A week or two in a sunny climate in the middle of a cold and snowy winter is the icing on their yearly cake. Vacations are usually costly though and if your job is set a family budget, you?ll want to get the most out of each dollar you?ve allocated to the vacation fund.

There are many important factors to consider if you?ve decided to set up a financial plan that includes money for vacations. It isn?t enough to just take a percentage of each paycheck and put it in a separate bank account that you?ll turn to at the end of the year. With the proper planning techniques in place when you set a family budget you?ll be able to execute a trip that will be unforgettable.

One important consideration is timing. Most people want to venture out on a holiday at the same time each year. The travel industry refers to these times as peak periods and they generally fall in December, March and again during the summer months. The reason for this is because more people are tempted to take off on a trip when their children aren?t in school. The travel industry knows this and prices are considerably higher during these times.

Although school work is most important, planning a trip during a non-peak time and preparing beforehand might be the most economical answer. Research is fundamental when planning any trip. There is an abundance of information on the internet that can give you an idea of the total cost you will be facing for your trip.

If you do decide to travel during a non-peak time and you have children enrolled in school, there are steps you can take to assist them with their studies. Talk to their teachers and have them assign homework for the trip. This is a wonderful method of not only keeping the children up to par Read more…

When your family sits down to set a family budget you might not be considering the value that coupons and rebates hold. Those little slips of paper you clip out of the newspaper and magazine can add up to big savings.

The practice of cutting coupons is decades old. People get their scissors ready and flip through newspaper inserts and magazines cutting out coupons that help them save money on a favored product. While most coupons offer a savings that might seem minute, when you put them altogether it can add up to tidy sum.

There is a craft to cutting and using coupons and rebate forms and with a little planning while you set up a family budget, you can easily save a sizable amount of money. Factoring in the savings that you?ll garner from coupons isn?t prudent during the budget planning stage. After all, you can?t predict how much money you will save that month by using coupons. However, you can keep track of how much money you actually save and put that in a rainy day jar or a mad money bucket. That way, when you want a special treat or decide to take the family out to a nice dinner you?ll already have the financial resources to do that without it impacting the decisions you made when you set a family budget.

There are a few important rules to follow to get the most value from coupons:

Use coupons on sale items. If you do this you are dramatically reducing the price of something that you generally purchase at regular price.
Watch for ?double coupon days? at local stores. Some stores offer the consumer a chance to use their coupons at a double discount once a month. This can save a substantial amount of money even reducing the cost of certain items to almost nothing.
Trade coupons with friends, relatives or Read more…

These days, everyone?s lives are burdened with paperwork. With newspapers, magazines, bills, junk mail, and who-knows-what taking up space in their day, few people have time to look at every piece of paper that comes their way. Unfortunately, it?s becoming more and more necessary to carefully examine bills and contracts, as various penalties are finding their way into the fine print of credit card bills, home equity loan and mortgage contracts. It truly pays to take the time to read the fine print in these documents.

Up to one third of major credit card issuers now include a ?universal default clause? in their credit card terms. The UDC allows the credit card company to raise the interest rate on the account if the cardholder pays his or her bills late. This can apply even if the credit card bill is paid on time! It is important to find out if your credit card terms include a UDC, as your interest rate could be affected by whether or not you pay your telephone bill on time. This is just one of many ways that credit card companies are increasing their profits, but it isn?t one that they?re willing to advertise. When a letter comes in the mail from your credit card company that says ?change in your credit card terms? or something like it, make sure that you read it. Failure to do so could raise the interest rate on your credit card substantially.

Another ?fine print? issue that has been turning up recently is the prepayment penalty that is now being attached to up to half of all mortgages and home equity loans. The volatile nature of interest rates in the lending market has inspired many homeowners to repeatedly refinance their homes in the last few years. Lenders often hold a mortgage for only a few months before the borrower finds a lower rate and refinances, paying Read more…

Let’s face it grocery shopping can take a bite out of your paycheck. While this isn’t an expense that you can eliminate, there are ways to make it more affordable.

As you try to make ends meet you have a new appreciation for stretching $10. A good way to save money is to shop with just as much cash as you feel you will need. This is one way to ensure you do not go over you budget.

The key to grocery savings is not to be brand loyal. Always watch the grocer store circulars and use coupons in conjunction with a store sale price, or better yet find a buy one-get-one-free sale. Be a smart grocery shopper. Use all of the coupons and grocery cards you can for items you need to purchase.

Grocery Shopping Suggestions:

* Eat before you go grocery shopping so you won’t be tempted to make impulse purchases.

* Don’t forget to buy the generic or store brand for those items where a brand name is not necessary: sugar, flour, toilet paper, paper towels, napkins, etc.

* Stock up on food staples when they are on sale.

* Buy store-brand cereal instead of national brands. If your household goes through a box or more per week, you can save over $100 per year by purchasing store brands.

* When buying pre-packaged fruits and vegetables for a flat cost, i.e. 5 pounds of potatoes for $1.88, actually weigh the bags and find the bag that weighs more than 5 pounds.

* Check out the price per ounce/pound/piece. Just because it is a big box, doesn’t mean it’s cheaper! Sometimes two smaller packages are cheaper than the big box. Compare prices ounce per ounce.

* Stretch the food that exists in your cupboards. I bet you have Read more…

Americans know all too well how much it costs to use credit cards. The average household in the U.S. now has nearly $10,000 in credit card debt. Carrying such debt is fine, as long as you realize that there are costs associated with it. The interest rates aren?t particularly low and the fees charged for paying late or going over your limit can be steep. Late fees of $39 aren?t uncommon, and they are assessed if your bill fails to arrive by the due date, even if it was delayed in the mail.

The credit card companies have been listening to consumer complaints about expensive late fees and several of them have responded. American Express and Citibank have both recently introduced cards that are both advertised as having no late fees. There may be a twist involved; Citibanks?s Simplicity card carries no late fees as long as you make a purchase each month within the billing period. But no late fees? Aren?t late fees the card company?s way of making sure that you pay your bill at all? What happens if you don?t pay your bill?

That?s where the fine print comes into play. Your agreement requires you to pay your bill on time. With the Citibank card, paying late carries the usual fee of up to $39 if you pay late and haven?t made a purchase during the billing period. If you have made a purchase within the billing period, but you have still paid late, Citibank may, at its option, raise your interest rate. In fact, they Read more…

People can have different concerns relating to their businesses or their professions but one area that is common to all the earning people of a family or for themselves is the one related to finance more specifically loans.

Taking loans is no easy job, it requires huge effort on the part of the borrower and a lot of sacrifices as well. That is the prime reason that all the borrowers no matter how comfortable they feel with their loans should be familiar with the concept of debt management.

Debt management is a technique and involves the ways in which a borrower controls or keeps a check on the financial matters of his. It is an effort on part of the authorities to make sure that all the borrowers are in nice and healthy condition in terms of their finances.

Few of the techniques of the debt management are:

? Debt consolidation ? in this the borrowers of the loans take a separate loans to cover up for loans that they have already taken. This way they can get better terms and more leeway in the loan terms this helps in keeping the finances in safe hands as well.

? Debt negotiation ? in this technique of debt management the borrower try to negotiate for debts with the creditors. This allows the borrowers to get terms more favorable and to their liking.

? Debt elimination ? this requires the borrower to follow the strict policies on their part to return the loans. This technique includes several steps which the borrower must follow to lower or reduce his debts. The steps include.

? Making a schedule ? a borrower should make a schedule regarding the expenses and should follow the schedule in order to reduce debts

? Follow the schedule ? the borrowers should follow the schedule diligently in order to make it more effective.

? Reduce expenses ? Read more…