Important tips to get out of debt on your own terms

In present time most of the people have long term or short term debt to fulfill their financial requirement. Few of them are able to pay the amount but the rests are facing problem in paying off their debt due to financial crisis. In frustration they start moving for another debt to pay their dues but they don’t understand that they are actually increasing their balance of debt.

Here lies a question: “how can you get yourself out of this critical situation on your own terms?”

Eliminating debt is not a simple job. You would have to keep patience and to follow a few steps:

1. Make a list of debts
2. Increase your income
3. Spend less than you earn
4. Pay off debt with the difference

To follow these steps are very difficult but if you keep following it patiently, you may be able to eliminate your debt. It depends on you that how you manage the way of spending and grow your income. In this situation it is mandatory to avoid extra expenses and use the amount in paying off your debt.

In fact controlling expenses and paying off debt is very difficult task. But if you want to come out of this situation, you can make it happen. Budgeting is also an essential part of our financial planning to achieve this target. Without it you won’t be able to understand your source of income which is very important to pay off your debt. That is why you find out your source of income first, if it is not sufficient make your income increase and identify your expenses. Avoid your extra spending if it is not necessary and also try to reduce your necessary expenses if you can do.

All these efforts will make you eligible to get out of debt and live happy life.

Cash flow management: Preliminary step of financial planning

Cash flow management is the preliminary step for making financial planning. In daily life we never think about our expenses and source of income. But in Corporate houses cash flow is maintained regularly to record their expenses and incomes so that they could control their finance and keep growing in corporate world. Similarly we should not ignore cash flow management and should identify our major source of income and expenditure.

Individuals may have following source of income:

• Business profits
• Interest, dividend from investment
• Salary, bonus
• Rental income

Expenses may include the following:

• Living expenses including food, clothing, Rent, travel & entertainment
• Different kind of taxes and utilities
• Loan EMIs
• Different kinds of insurance premium
• Expenses for child’s education

In order to maintain our finance we should follow cash flow management systems which will eligible us in planning our financial goals. With the help of cash flow management not only we can reduce our expenses but also grow our income level so that we could have adequate fund to meet our financial requirement in future.

In absence of cash flow management expenses may exceed our income level and we may be trapped in financial crisis. Creating a plan is not enough to safeguard our uncertainties unless we implement it in our life to bring about a change in spending habits.
Cash flow management can help you in paying off costly unsecured or secured loans like credit card, personal loan, and home loan and also enable you to identify the areas where expenses can be reduced.
Prior to starting an investment exercise you would need to have sufficient cash which is possible only by having cash flow management systems.

Importance of loan in the today's dynamic world

If you have keen desire to purchase a home or to open a business you definitely need to invest a large amount of money.

How you can fulfill your requirement if you don’t have sufficient money to invest?

For such circumstances loans are available which can help you to achieve your goal.

At any moment a critical situation may come in your life and you may require a large amount of cash. In such a situation when you don’t want to take any help from your relatives then you can apply for loans. You can search for lenders who provide loans and can get some money for your requirements. There are different kinds of loans like personal loan, student loan, home loan, mortgage loan, business loan etc. You can take any kind of loan which is suitable to fulfill your requirement.

If you want to purchase a home or to improve your old home you can apply for a home loan. Personal loan is generally used to fulfill your personal requirement like marriage ceremony, setting up a business, educational purpose etc.

Student loan is generally available for the students who want to go for higher education but they do not have sufficient money. If you want to set up a new business and you don’t have that much amount to start it. Business loan can help you to start your new business.

You can get any kind of loan but there are various types of money lenders in the market and they have different policies. You have to analyze these policies carefully and identify that which policy is suitable for you. In this way loans can help you come out from a sudden cash requirement.

Debt settlement advice for debt relief

Are you tired of unsecured debt? Are you trying hard to get out of debt? Debt settlement is a good option for you to get out of all debts. Many people across the country are using debt settlement option to manage their debt. It can lower your payments and stop high interest rates. If you want to stop creditors call and want to free from your debt you must go with debt settlement option.

Once creditors come to know that they couldn’t be able to collect their amount they also accept debt settlement option. Not only it helps you free from debt but also gives you a new opportunity to achieve your financial goals.

You can choose your own settlements by searching internet, hire a lawyer, or use debt settlement companies. You will find different websites with several ideas which will help you in choosing appropriate settlement option.


How debt Settlement Company works for you

Debt settlement company work for you when you really need financial assistance. When they will negotiate with your creditors, you will stop paying them and start paying into a settlement account set up by the debt settlement company.

On your behalf they will contact all your creditors to set up a program that allows your repayment of the debt through affordable monthly settlement program. In order to negotiate with your creditors debt settlement company need to sign a contract with you that legally authorizes them to do so. During this process you will have to make a monthly deposit into your settlement account that will be used to repay your balance.

Once the settlement option will be accepted by your creditors you will start paying them from your settlement account. After paying all the dues your account will be closed.

Financial Planning

Financial Planning make you eligible in meeting your financial needs and long-term future goal by managing your finances properly.

A healthy financial planning protects you against unexpected illness and business loss. With the help of financial planning you can achieve your monetary goal, set your future objective and estimate your financial needs.

The main objective of financial planning is to ensure that the right amount of money is going to be invested into right investment plan.
Financial planning has different meaning to different people. For one person it may have the ideas about savings and investments plan and for another person it may have the ideas about borrowing money from banks and financial institution.

Financial planning can be made for following areas:-

o Cash Flow Management
o Investment Planning
o Insurance
o Tax Planning
o Estate Planning
o Retirement Planning

Who needs financial planning?

Everybody needs financial planning. But very few people give importance it. You can find many highly paid employees who came to under financial grief only because they did not plan for their future. Those who are earning small amounts of money they also should go for financial planning so that their limited income can be used more efficiently.
Why do you need of financial planning?
Financial planning helps you in making right financial decisions and allows you to understand that how much your decision is effective in other areas of your finances. If you buy a good investment product it will definitely help in financing your child’s higher education. You can lead a peaceful life after your retirement with the help of a sound financial decision.

Personal Loans

Personal Loan during an emergency

Many people have financial problems and at the same time you need money to remove your financial crisis. But how is it possible? It can be possible with the help of personal loans. It can help you if they are used appropriately. Then you need proper guidelines and
understanding about personal loan.

Secured Personal Loans

You can apply for secured personal loans by pledging your assets such as home, vehicle or other assets to repay the loan. Secured personal loans are more cost-effective because of lower monthly payments with lower interest rate and they also have a longer repayment term when compared to unsecured personal loans. In this case, you can get it very easily because the lender’s risk is reduced.

Unsecured Personal Loans

In this case, unsecured personal loans do not have any collateral attached to it. So you have to pay higher interest rate with higher monthly installments. If you see on the part of lender unsecured personal loans are riskier for them. That is why they will conduct throughout check on your creditworthiness. People who don’t have any property to offer collateral they can choose this alternative to get unsecured personal loans. If you fail to repay the loan, the lender doesn’t have any choice but to seek legal means to get back their money.

Points to be considered before applying for personal loans

Personal loans mean that you borrow money to meet your personal needs. You need to be considered some points before applying for personal loans. You have to understand the policies and criteria of banks and credit agencies carefully. Try to gather information about personal loan from different credit agencies and banks and use it in taking proper decision. It is very difficult task but it depends on you to compare the loans which would make a better choice. The interest rates and monthly payments effect mostly on people.

Financial and Investment Products

Financial and investment products will help you save, invest and get insurance get a mortgage. These products are issued by banks, insurance companies, financial institution, stock brokerages companies and government entities.

If you invest in shares or in mutual fund the risk is very high, depending on the market status, but liquidity is also very high. At any moment you can sell out your shares and get proceedings. If you want savings than you can choose insurance where you get your return with some bonus on the maturity. To get fixed rate of interest you can choose fixed deposit or bonds. In fixed deposit and bonds your invested money is safe and secure and you will get fixed rate of interest.




Types of Financial Products

• Shares: These represents that you purchase an ownership of a company. A company issues shares when they need finance in the interest of company’s growth. To invest in shares is subject to risk factor. You may have to bear heavy loss or gain high returns. Returns you can get in the form of dividend or profits on the sale of shares in the stock market.

• Insurance: Insurance is used for both savings and investment purpose. It provides security and financial stability against the uncertainties of your life and supports your family to grow after your death.

• Bonds: These are a kind of security which has fixed rate of interest, associating lower risk than shares have. Bonds are issued by government companies and by companies for funding to meet their infrastructure cost. At the time of maturity its face value is recovered.

• Fixed Deposits: This kind of investment is very safe to investor because banks are operated under the rules and guidelines of Reserve Bank of India. The bank can offer varying interest rates in fixed deposits with different maturity time. Interest is compounded quarterly, leading to a higher return.

• Mutual Funds: It is a pool of funds collected from a large number of investors who are interested to invest into different instruments such as stocks, bonds and short term instruments. These are maintained by fund managers.

Debt

The basic definition of debt is when you borrow some money from a lender or bank, for a specific time and then have to return it with an amount of interest. Now if you are planning to borrow debt then you need debt help. Where you get appropriate debt solution that you require. When you talk about the debt solution the first thing is that you must decide the amount of debt that you require, the next thing is the debt repayment time that would be the part of the debt negotiations between borrower and lender. Getting larger debt than your requirement is extremely pointless.

Types of debt

Learn the different types of debt that you may have.

• Unsecured Debt: An unsecured Debt does not have any specific collateral attached to it. The bank or lender can sue you if you fail the amount that you have borrowed. Credit cards and signature loan are examples of an unsecured loan. Lenders can not possess any collateral for unsecured debt, if you fail to pay, however they will hire a debt collector to persuade you to pay the debt.

• Secured Debt: A secured debt has collateral attached to it. If you fail to repay the amount that you have borrowed the bank or lender has the ability to repossess your collateral. A mortgage home loan or car loan is examples of a secured debt. The lender may pursue you for the difference, if proceedings of the assests do not completely cover your debt.

Mortgage Protection Life Insurance

Life insurance can be a lifesaver

Life insurance for Mortgage is a lifesaver—not for the policyholder, of course, but for the policyholder’s family. Mortgage protection life insurance can help your family to bear the risk of losing his home in the event of your sudden death before your home mortgage is paid off.

Financial help in case of terminal illness

Whenever you are diagnosed with a life threatening illness, Mortgage protection life insurance can be fruitful to protect your home and your family. It can be written to include the rider benefit to cover your medical costs. Under this benefit the mortgage will be paid off while the policyholder is still alive.

Mortgage protection life insurance will eliminate the payments for mortgage when the policy holder couldn’t be able to work longer or earn money due to the terminal illness. Mortgage life insurance provides a great comfort and a peace of mind to a terminally ill patient. It also helps the terminally ill policy holder’s family to relieve stress when they have a great deal on their mind.

Financial Control

Beneficiaries could use death benefit to pay off mortgage or to invest the amount such a way that he can get greater return than the interest paid on home loan.

Mortgage protection life insurance guarantees provide a roof over policy holder’s family so that they can take any kind of financial decisions. It extends the policy holder’s decision-making power after death.

Life Insurance

Life insurance secures you and your family’s peace of mind. I t can be purchased from an Insurance Company against premium on the basis of protection and financial stability after policy holder’s death. Life insurance provides fixed maturity value and death benefit which helps beneficiaries financially after policy holder’s death. Either it can be short term savings plan or long term savings plan.

It can also be a kind of long term savings plan if you buy it, which offers the option of paying the premium regularly.

In addition, Life Insurance provides extra features:

• Security for your family
• Pension Plan
• Protection for your home mortgage
• Investment Plan

Advantages of Life Insurance:

Life insurance policies like whole-life insurance, pension-life-insurance, joint-life-insurance and different kinds of ULIP plan regarding investment are essential to secure you and your family’s life. Term insurance protects your financial stability against the uncertainties of your life so that you can secure your family’s life after you died.

Some features of having life insurance are:

* Life insurance provides enough funds to secure your family.

* It can help your children to complete their education.

* Life insurance secures your financial security after you died.

* It provides protection for your mortgage loan

* Insurance proceeds can help to pay off your personal loans or business loans or to pay expenses such as final illness and funeral costs, eliminating the need to sell assets to pay off these costs.


Types of Life Insurance:

* Traditional Plan

* ULIP Plan

Disadvantages of not having Insurance Coverage

It is a traumatic experience when someone loses his loved one. But, if you also left your family without sufficient money to meet the expenses, like funeral costs and medical bills, that result from your death, then, Under any circumstances, your family might be forced to go into debt simply to pay the same expenses and they won’t be able to meet their future goals and basic living needs due to financial crisis. Your family might possibly move to a less desirable home or community and cut the living quality that you have maintained.
The moment will tell you that the lack of sufficient money can have devastating consequences for your family and it can be lasted for years. After you died your children couldn’t be able to complete their education or to go for better career due to lack of finance.
Without insurance coverage you can not save your financial stability and family’s future against uncertainties of your life and help to pay off any debt you have borrowed in past. You can not support your dependents’ to maintain their standard of living and to achieve their goals and dreams. It is essential to have insurance coverage to support your family to grow financially after you passed away.

Unit Linked Insurance Plan

ULIP is a Market linked insurance plans, which invests the premium in to the stock markets in terms of equity, debt and cash by the way of allocating units, which like any other mutual fund have a NAV but in insurance plan the customer has to pay at least three premium in consecutive first three years when the policy starts otherwise policy will be lapsed, depending on the policy features. Against the premium he gets life coverage and better return than traditional endowment plan. He can switch from one fund class to another depending on the market status if he wishes to be in. But the customer can not withdraw their fund within first three years from the policy starts.

The customer can withdraw their fund partly or completely after three years if he needs. There are many single and regular premiums having many fund options like index fund, mid-cap funds, debt fund and equity fund etc. He can also save his tax under the benefit of u/s 80CC and get exempted return on the completion of policy under the benefit of u/s 80D. In ULIP plan there is flexibility to increase and decrease regular premium depending on the customer needs. A ULIP policyholder has the option to choose fund class which he has to invest in, depending on his risk profile. If one can not take the risk to invest in equity, they can invest into a debt or balanced fund or cash fund. There are various charges in plans, like the fixed administrative charges, the fund management charges, mortality charges etc., not only in the first year but also throughout the policy term. Funds are managed by fund manager, In spite of that the customer can shift his fund from one fund class to another.

Last but not least, insure with a brand you can trust to honor its commitment and service you according to your requirements.