Voices in Finance

Improve Your Finances in 2012

Mike — Tue, 17 Jan 2012 18:50:13 +0000

Improving your finances is one of the best things you can do in 2012. There are so many benefits but getting started isn’t always as easy as most people hope. Here are ten different suggestions to get the ball rolling towards a brighter financial future.

Improving Finances at Home

Everyone pays some type of homeowners insurance. Just like mortgage rates, it is possible to shop around for the best deal. Not all companies offer the same premiums or the same benefits so make a few calls or check online for a better deal.

Organize your finances. From the bills that come in the mail each day to the credit card applications that make their way into your home, everything needs to have a place. Keep everything together to avoid lost paperwork. Anything that has personal information on it should be shredded once you are done with it.

Living below your means is a simple way to spend less and save more. Whatever you bring home on a weekly or monthly basis should be all that you need to live. From there, begin to weed out expenses that are unnecessary. Save the extra cash for an emergency fund.

Try not to waste less money on the food that you bring home. Every time you make a trip to the grocery store you are tempted to bring home something that you just don’t need. Try to cut out the extras and make a list before you go.

Make sure that everyone at home is on the same page when it comes to finances. The only way to make a positive difference is to work together as a team. Whether you are saving or paying off debt, everyone needs to be aware of the goal. Even refinancing with the goal of lowering mortgage rates should be discussed between the adults.

Change Your Financial Tools

Could you be missing out on work related benefits? Check to see if you have a 401K plan that you can set up. Ask about discounts on things like gym memberships. Don’t skip over the opportunity to save or spend wisely with the help of your employer.

Rethink your choice of bank. You may find that everything from the value of a savings account to mortgage rates are better at another bank. Compare what you have now to other opportunities.

Set up an automatic savings plan with your bank. Instead of relying on yourself to deposit money into the savings account each month, let the bank withdraw it automatically. It makes it much easier to save.

Check the interest rate on your credit card as well as the benefits of using it. If the interest rate is too high, consider finding a new card. If a rewards program is available, check to see what types of rewards you may be eligible for. Make sure you are taking full advantage of the benefits.

Paying off debt will easily improve your finances over the course of a year. When you aren’t making those minimum payments you keep more cash in your pocket. This means more savings or even the opportunity to invest. Check into decreasing your mortgage rates as, for most people, this is their largest source of debt.

Cashing In On Sterling Silver Flatware

Mike — Fri, 06 Jan 2012 22:38:43 +0000

If you are looking for ways to raise cash, make sure you look through your kitchen draws and cabinets for hidden treasures you never knew you had.

Silverware is common in many people’s kitchens and depending on how much silver cutlery, flatware, plates and other such items you have collected over the years, you may be sitting on a veritable silver mine!

Given silver’s skyrocketing performance in the past few years, now is a great opportunity to cash in. As of late 2011, silver has climbed to be worth over $30/ ounce, so if you have some fancy candelabras floating around, you might be surprised how much sterling silver is worth nowadays.

However, before you take out the scales and start throwing all your silver onto it, bear in mind that the spot silver price quote is for pure silver only. This means you will need to identify the purity of your silver first. But don’t worry, this should be easier then you think. All you need to do is look for hallmarks on the utensils that indicate its purity.

If you find a mark that says ‘sterling’ or 925 for example, then you have a solid sterling silver piece and it will be valuable. 925 is an indication of its purity and stands for 92.5%. Thus, if you weigh up a collection of sterling silver items and it comes to 10 ozs, what you really have is 9.25 ozs of pure silver. Using the price example above of $30/ oz, this would equate to $30 * 92.5oz = $277.5.

On the other hand, if you find your items marked as fine or 999 silver then you really have hit the jackpot as these are pure 99.9% solid silver items and their value is bang on the spot price.

In case you do not find any markings on the siverware, then most likely they are silver plated as opposed to being solid items. Subsequently their worth will not be highly tied to the price of silver.

So if you are ready to cash in, simply gather up your treasure box and look around for scrap silver dealers online or on Main St. You can even auction them on eBay if you prefer. As long as you have a rough idea of how many ounces of silver you have, you can look up how much silver is worth to ensure that you get your money’s worth.

How to Legally Save Money on Your Australian Tax Return

Mike — Tue, 22 Nov 2011 07:43:51 +0000

If you’re in business in Australia, the probability is that you’re paying more tax than you should. The problem is that most business people don’t have the time or the knowledge base to really manage their tax properly. If you ask tax accountants in Sydney, you’ll be told that most businesses really could do better and reduce their tax significantly if they adopted structured tax management programs.

The problem

The strange but irritating fact is that there are a lot of perfectly legitimate tax allowances in Australia across all business sectors, and very few people ever bother to investigate their options. That’s quite a problem, and the baffling thing is that for anyone who’s done small business accounting the basic ideas of tax minimization are pretty obvious.

For example:

Every business has an effective tax rate. The amount of tax paid is defined by the gross tax payable less allowances and deductions.

So consider a situation where a huge range of allowances and deductions are never claimed. Ridiculous, isn’t it?

Now consider the fact that these allowances generally average around 8-15% of the total tax bill and can be quite a lot higher depending on business accounting practices, the industry involved and the type of business activity. The situation has gone from ridiculous to utterly absurd.

It really is rather grotesque. The Australian Taxation Office (ATO) can’t be accused of keeping these allowances and entitlements a secret, either. The ATO, in fact, goes to notable lengths to make sure businesses are able to access information about these entitlements. The trouble is they don’t. Australian businesses are doing themselves no favours with their taxes.

The solution

Actually, if you’re doing business in Australia, you can get all the help you need with your taxes with a phone call to professional tax consultants. The magic words here are “tax minimization”, and they don’t means some idiotic tax evasion scam. They refer to fully customized “designer” tax management programs.

Tax minimization is actually two processes:

Taking advantage of all the entitlements and allowances applying to a business. This process involves a truly detailed, fully researched study of the business and creation of a working operational methodology to ensure the business claims everything it’s entitled.
Developing the first process to create an optimum level of taxation. This may involve some alterations to how business transactions are recorded (most businesses don’t even know how to record their legitimate expenses properly for tax purposes) and in some cases industry-specific practices to take advantage of tax benefits.

To give a slightly horrifying, but appropriate description- Many businesses don’t even know that the apps on their business phone systems can create quite a range of tax entitlements. If you’ve got mobile EFTPOS, ecommerce or other functions on your business phones, you’re quite literally staring at extra tax entitlements. That’s how basic, and how thorough, tax consultants can be about finding tax benefits.

Do your business a favour- talk to professional tax consultants about tax minimization, and talk to the ATO. You’ll find they’re very much on the same page.

How to Invest a Lump Sum of Money

Mike — Thu, 10 Nov 2011 12:45:48 +0000

Occasionally in life we are lucky to have a large lump sum of money through inheritance, prudent saving, bonuses, or perhaps even a lucky OZ Lotto win. It is always tempting to spend money when we have a large amount of it but it is far, far wiser to invest it in a sensible place and watch it grow so that you can reap the benefits of it for a longer period of time. Making a wise investment with your money can lead to greater wealth in the long run and this article will demonstrate how.

Property Investment

Property investment is one of the safest ways to invest your money because the market does not fluctuate massively. This type of investment is a long-term investment but it will never cease to provide returns because there is always a need for housing. As long as you make a wise investment and utilise property valuation software and surveyors, then you can expect to receive returns on your property until you are ready to sell it on.

There are several benefits to property investment over many other sorts of investments because of the control you have over its management and its stability. One of the biggest advantages, however, is the fact that you can invest an even greater amount than you actually have and borrow the rest against the property you are buying. You can invest as much as 80% more than you could alone through the aid of a mortgage, allowing you increase your standing rapidly without the need for further stringent saving.

There are several ways to invest in property but one of the most prudent and fastest returning is the investment in off plan property. This investment involves investing in an as yet unconstructed property based on the plans provided by the developer. Whilst this sounds riskier, it is a tried and tested method which enables developers to reduce their risks and investors to increase their returns.

Stock Market Investment

Undoubtedly, stock market investment is the best, fastest and most tested method of investment. You can expect large returns from the stock market but unfortunately you can also expect large losses. Managing a stock market investment is a difficult process which requires time, understanding and effort, but success in such a market is guaranteed to come with a large reward.

Unlike with the housing market, very few people grow up with a link to the stock market in their lives. The result of this is that whilst you can walk into a house and know if it is nice or not, most people cannot look at a stock trend and discern whether their investment will grow or shrink. Thus, it is vital to educate yourself on the workings of the stock market before investing in them and it is wise to consult a financial advisor before jumping in.

There are definite bonuses to investing in the stock market but it is a time consuming investment. You will, however, never need to wake up in the middle of the night to deal with a burst sewage pipe, and you will have a greater ability to withdraw your funds than when investing in property.

Invest in Something

One thing that is for certain is that an investment is a far wiser use of your money than a purchase of the Lamborghini Diablo that you have always wanted. When you are fortunate enough, or sensible enough, to have a grasp on a pot of money, do not let it sit there and do not spend it; instead plant a seed and watch your money grow.

Debt Settlement dos and don’ts – Make the entire process constructive

Mike — Tue, 01 Nov 2011 05:38:57 +0000

Soon after the Standard & Poor’s downgraded the top notch credit rating of the US and cut it by one notch (AA+), there have been grueling discussions about the impact of this harsh decision on the investor’s market. Though there were predictions of a rise in the interest rates on personal loans, there are still no signs of any drastic change in the rates. However, the debtors have already gone through a scary erosion of confidence and this has made them rush towards debt settlement firms as this is the only way in which they can repay their debts without even having to pay back the entire amount.

If this is such a famous option, then why do the financial experts advise against it? They say that debt settlement should always be avoided unless there is no other option but to file bankruptcy as this leaves a huge mark on your credit score and the taxes that you pay on the forgiven amount may offset any kind of savings that you may obtain through the debt settlement. A less drastic measure such as a debt management plan through a credit counseling agency can be a better option to resolve your debt dilemma but when you have no other option but to go for settling your debts, you must educate yourself on some dos and don’ts.

Don’t wait and be proactive: When your payments are behind by at least 6 months, your accounts tend to be charged off. Don’t wait until this moment comes. In real, a charged off account is the term that is used by a creditor when the chances of recuperating the money from the debtor is slim. If you want to contact your creditors and alter the repayment term, this is the time. Don’t delay as this may start hitting your credit score. As long as your debt account is not written off, you can certainly settle the debt and free yourself of the bondage of debt.
Don’t neglect the consequences: Any settlement for which the forgiven amount by the creditor is more than $600 becomes taxable. For instance, if a debtor was to settle a $10,000 for $6,000, the $4000 amount becomes subject to tax under the IRS. Apart from the tax consequences, this option also has a tough impact on your credit score and your future ability to borrow new lines of credit is also jeopardized.
Do prepare yourself to show the financial cards: Before your creditors agree to settle your debts, they will ask you for documentation of income, assets and all your existing debt accounts. The motive behind this is to ensure that the debtor is actually going to repay the debt after it is settled or he is just planning to save his bucks through the particular concession that is being done by the creditor.
Don’t make a promise that you can’t abide by: If your creditor is letting you pay back the amount over a stipulated period of time, make sure you set the payments at a level that can be managed effortlessly. Don’t set up an unrealistic plan. Not being able to make the payments even after the debts are settled will portray a bad reputation.

Your creditors are required by law to report your debt settlement payments to the credit bureaus and your task should be to cross-check whether or not the payments are accordingly reported to the credit rating agencies. Ensure that the debt collection agents stop contacting you once you’ve repaid your debts in full.

Author Bio: Jack is a financial writer and enjoys writing articles on the global financial situation, making money online, the stock market, debt consolidation, and mortgages along with other finance-related topics. He is also associated with some online financial communities like http://www.twitter.com/debtcc.

Tips To Prepare For Rising Interest Rates

Mike — Mon, 31 Oct 2011 06:52:24 +0000

The instability in world finances has a direct impact on everyone with debt, none more so than homeowners. Rising interest rates are unwelcome but are a fact of our financial lives, so it pays to be prepared. Most importantly, it’s vital that your know your financial limits – just being able to make your repayments now is going to turn into a nightmare if rates increase down the track, and the chances of defaulting on a loan then become much greater. It’s not just home loans than can be affected – taking into account all of your current and future finances, from cash loans to car loans, is something we should all look at to make sure we are ready.

Make extra repayments now

Reducing your debt while interest rates are lower is the best way to prepare for future interest rate rises. You can do this in two ways. Firstly, pay more than the minimum repayment on your loan, and do it regularly. This will provide you with surplus funds if rates rise and in the process will give you confidence to ride out the rates storm. Paying extra also reduces the life of your loan, which in the long run will save you thousands of dollars. Secondly, consider making a lump sum payment against your loan. If you are lucky enough to have some extra cash, use it to pay off some of your loan. It has the same benefits as paying more than the minimum amount each repayment cycle, but leaves you with the extra cash you would otherwise commit on a weekly, fortnightly or monthly basis.

Loans health check

Interest rates don’t suddenly jump overnight – there are plenty of indicators which give us prior warning, and they shouldn’t be ignored. So if everything points to interest rate rises, and especially a prolonged period of increases, then a check of your loan situation is a good idea to make sure you are getting the best product for your needs. The use of a broker can be a big advantage in this situation as they can take into account your current loan and match it against what else is available. They can then make recommendations with an expert eye on the future. It may be that switching from a fixed to a variable rate is the best bet, or consolidating several loans into one. Just remember that the fees associated with moving from one loan to another can often nullify any future savings through lower rates. Have a look around the internet as well – just like getting car insurance quotes, it can be simple and secure to get some information and advice that can put you on the right track.

Stick to your budget

If you haven’t got a home budget then it is hard to keep a track of your finances and exactly where all the money is going. So it makes good sense to formulate a budget and stick to it. A good budget that has been well thought out will reveal any cash “leaks” and identify where you can cut back on spending and potentially put it into reducing debt or making extra loan repayments. It’s also important to save money as well and any surplus funds identified in your home budget can be put away for a rainy day. Rising interest rates can also be used in your favour – when they do go higher, consider putting that extra cash into a term deposit where you will earn extra interest as rates rise.

Six Tips On How To Spend Your Marketing Dollar

Mike — Mon, 24 Oct 2011 16:18:13 +0000

The marketing campaign is crucial to selling your property. While real estate agents will have suggestions on how to spend your marketing dollar there’s many factors you need to consider. Too often, money is wasted on inefficient publicity or expensive campaigns that don’t reach the right audience. Here’s a few useful pointers:

Tip One: Don’t Duplicate Your Advertising

Too often real estate campaigns can be wasted when lavish sums of money are spent in identical areas. This applies to both print and internet. For instance, why buy large quarter page advertisements in two local magazines? Or why pour money into advertising on two very similar property websites? You need to be canny with your budget. If you are putting money into a metropolitan newspaper advertisement do you need to spend on a local weekly paper also? You need to question the value and reach of each marketing buy.

Tip Two: Virtual Tours

Virtual tours are becoming a staple of property promotion everywhere. They are also excellent marketing tools as they allow anyone anywhere in the world to view your property on their laptop. If you’ve got a terrific property investment Sydney located this allows more people the chance to discover it. If you don’t have a video camera yourself your real estate agent should be able to arrange filming of your property.

Tip Three: Social Media

Social media is another non-traditional marketing form that is really taking off. Whether it’s Facebook or Twitter or Myspace or any of the countless other social media platforms that exist, they are all fantastic ways to open up your property to whole new markets. Unlike more traditional forms of publicity, social media allows you to create more of a buzz, plus you can get instant feedback and comments from people who’ve visited the property. The other bonus is that social media campaigns cost you nothing other than time.

Tip Four: Know Your Target Audience

Think about who’s likely to be interested in your property. This may depend on factors such as location; size of property and other features. This in turn will influence where you advertise. If you have a large family friendly home then it’s no good advertising your property in single magazines. The price range of your property will also affect where you publicise. An expensive, higher end home with top of the range facilities would be of interest to executives, for example, so you should look into advertising in publications that they read.

Tip Five: Internet – which sites, Domain, etc

Internet advertising of properties is huge and a lot of your traffic will find your property via the internet. There are many options available to you. You can advertise, for instance, directly via banner ads or pop ups or rollovers. Some sites will have different rates depending on your placement on the web page. You need to research each site and find out how effective they are at generating traffic. One simple method of doing this is do a google search and see how quickly their properties come up.

Tip Six: Signage

Physical signage still has its place and is greatly effective. They cost money but are generally worth it. The more visible and prominently displayed they are, obviously the more useful they will be. Real estate agents usually organize the signs for you. Having a large billboard outside your property will be yet another way of alerting potential buyers and you need all the help you can get.

When Selling Is a Bad Idea- Understanding Property Market Reverses

Mike — Tue, 18 Oct 2011 13:12:46 +0000

According to recent studies Sydney property owners made a big mistake selling into a very cold market in the last year. About $800 million in net losses were incurred, pretty big money in anyone’s language. If you own or if you’re buying an investment property, it’s well worth your while to explore this issue to make decisions regarding your portfolio.

The simple fact is that property prices naturally move up and down. Sometimes they don’t do anything, particularly in a tight credit market. Booms don’t last forever. Property investors need to consider all angles in terms of their property values, and plan ahead for contingencies like slow markets or price slumps.

How losses happen

The losses in the Sydney property market need a lot more scrutiny. There are some very valuable lessons to be learned from this situation, and they’re particularly relevant to property investors.

All property owners try very hard, often for years, to avoid taking losses on their properties. Resistance to downward moves in property prices is always very strong.

Losses occur due to several common issues:

The owners can’t afford to hold the property: This is an absolutely textbook scenario, in which cashflow dries up or can’t match costs of holding property. The property owners are in a rock or hard place situation, in which selling involves taking a loss, but holding could be even more expensive, building up costs.

Income from rental dries up: If, as many property owners do, you use rental income to finance borrowing, you can find yourself in a very tight squeeze if the property is unoccupied for any significant length of time. Six months without a tenant can compromise a tight budget.

Property costs: Some “bargains” are only bargains for sellers. If you purchase a property that needs major outlays of cash for improvements or maintenance, these costs can sabotage your investment strategy very effectively. One major building defect, for example, can cost six figures quite easily.

The local property market hits a slow period: This affects your ability to make capital gains. The “ROI factor” kicks in and many people get out of property investments to free up capital to make better money elsewhere.

Unrealistic expectations of returns: Some people just don’t do their arithmetic when investing in property. The average increase in mainstream housing prices in Australia is 8% per year, which is just slightly above the median interest rate in recent years and not much more above the CPI. Overestimating returns is asking for trouble, and sellers often lose on this basis, underestimating costs and expecting too much of returns.

Dodging the bullets and avoiding losses on property investments

The best way to avoid taking losses on a property investment is to lock in an investment with a lot of upside and long term capital gain potential. A good example of this approach is one favored by professional investors, who’ll buy an upscale investment property off the plan as a watertight investment. These brand new buildings are less susceptible to broad market moves, because they’re a better class of property, and usually built in high demand areas.

In any market, quality keeps its value. Remember that when you’re looking at your investment options.

How Much Is Gold Worth and Oil?

Mike — Tue, 04 Oct 2011 09:01:54 +0000

Is there a relationship between how much gold is worth and the price of oil?

Some say there is and that it is linear…i.e. when the price of oil increases, so does the price of gold. One justification is that rising oil prices place upward pressure on inflation thereby stimulating how much gold is worth since a part of gold’s appeal is as a hedge against inflation.

Let’s start by looking at the historical price of oil over the last 40 odd years.

The Yom Kippur conflict of 1973 and subsequent Arab oil embargo resulted in a jump in the oil price from under $5 a barrel to over $10 which ever since then has been the floor in this market.

Just as markets were getting used to this doubling in price, 1979, the year after the Iranian Revolution saw another surge which pushed the price to $40 a barrel causing shockwaves around the world.

It was not until a substantial increase in production by Saudi Arabia during the mid-eighties that prices eased back to $10 a barrel and subsequently traded in the $10 to $30 range until the millenium after which the oil price has been constantly rising and even reaching over $100.

Now if there exists a relationship between the price of gold and the price of oil, then one would expect to see similar movements in the gold price during this period.

In the simplistic case where an increase in the price of oil leads to a similar increase in the price of gold, a graph mapping the ratio between the two should result in a line of approximately constant value.

Gold-Oil Ratio = Price of Gold (per oz.) / Price of Crude Oil (per barrel)

This gold/ oil graph results in a ratio that varies between a value of 10 and 30. This means that at times the price of gold is worth 30 times that of oil and at others, it is worth only 10 times as much.

This is hardly a straight line indicating that a strong relationship does not exist between the two. However, clearly some kind of elastic band is keeping the two together ensuring that they do not stray outside of these values for too long.

This gold/oil ratio is more useful to economists to identify at a high level when gold is generally over-bought or over-sold. For example, it the indicator hits 30, you know that gold is overvalued and a price correction may be on the cards. (On the other hand, oil may be undervalued and a price surge may be imminent…don’t you just love the free hand of the markets.)

So in conclusion, this brief analysis shows that oil and gold are tied to each other to some extent. This should not come as a surprise as they are both commodities that are of great importance to the global economy.

After all, oil is the ‘black gold’.

This Land Is My Land…

Mike — Tue, 04 Oct 2011 08:56:06 +0000

Everyone longs for their dream home, a sanctuary from the world that instils them with pride and contentment. While some people choose to buy a home that already exists, others decide to build their own home. They may hire an architect to design the home or choose from existing plans.

Building your own home does not have to be out of your financial reach. By finding an economical contractor that provides excellent work, you can often afford to build your own home. Before deciding on building a new home, it is important to consult a mortgage repayment calculator so that you know how much money you have available to you.

One of the main advantages of building a house is the fact that you can design it exactly the way you want it. By building your own home, you decide the size of the rooms, the number of bathrooms, the type of flooring in the home and every other detail.

Since you are purchasing a lot of land, you also get to choose the size of the lot. If you do not like to do a great deal of yard work, you have the opportunity to choose a lot that will not require extensive maintenance.

All of these factors make your house truly unique, helping to improve its resale value as well. If you choose to resell the home, potential buyers will be drawn to the original architecture and design of your home.

Since the home is brand new, all of the appliances and fixtures within the home are also new. They will be protected by warranty, saving you money in case the appliances or fixtures experience problems in the future.

Another important benefit is that a new home will also be located in a new subdivision surrounded by other new houses. The newly constructed subdivision is often near the best shopping centers, restaurants and schools.

Despite all of the benefits of building your own home, there are also disadvantages. Sometimes when you build your own home, the construction experiences a variety of delays.

Inclement weather, inspections, difficulties obtaining construction materials and other problems may plague a construction project. These types of problems do not occur with homes that already exist.

The contractor may have multiple construction projects as well. This may turn his attention away from your home as he directs the construction of other projects.

While you are waiting for your home to be built, you often are still paying rent or mortgage on your current apartment or home.

These expenses are in addition to the money you spend on the home currently under construction. This can cause financial hardship to people who are trying to build a new house.

If you have purchased land in a new development and you have moved into your new home, you may have to live with noise as the construction company builds the other homes in the subdivision.

New subdivisions usually require that homeowners pay homeowners’ association fees as well. In contrast, a home in an older neighborhood may not require residents to pay these types of fees.

The decision to build your own home can be an exciting but scary prospect. You have the opportunity to create a completely original home that will express your personality and lifestyle.

By weighing the pros and cons of building your own home, consulting a mortgage repayment calculator and choosing a reputable contractor, you can make smart choices concerning obtaining a new home for you and your family.