Welcome you to my personal finance blog. I hope the posts here would be useful for anyone who are interested in finance field.
Very cool article from http://www.forbes.com/sites/moiravetter/2015/06/16/hows-your-flow-cash-flow-not-profit-as-predictor-of-entrepreneurial-success/2/ on cash flow for businesses
According to the SBA, cash flow is among the top 7 reasons new businesses fail. Heed this warning and you’ll have the capital you need. Ignore it and join the 50% of all new businesses that fail in the first 5 years. A profit & loss statement can be beautiful; it can make investors feel good, it can even make you feel good if you trust what it’s telling you. A fat line of profit can be exciting—but until you collect the cash—the line is only theoretical and relatively worthless.
Entrepreneurs are rarely successful if they can’t master cash flow. Cash flow management is critical to running a successful company. Whether you plan to be in business a few years, or the rest of your life, that won’t happen until you can keep enough cash to bank roll operations or to fund growth. If there is only one document you look at religiously on a weekly basis, cash flow is the one.
Business and cash are variable
The challenge with cash flow is that business owners are all working with variables that are…well…variable. You may have bills due out and receivables due in on a particular date, but we all know those dates are relative. Customers get behind in their bills, we may get behind and when the system monitoring the ingress and egress gets out of synch, there is chaos. And chaos in cash flow has a snowball effect. It can cause entrepreneurs to quickly assume a reactionary stance—to do foolish things like borrow beyond our means, pay otherwise unnecessary fees, or ignore the discipline of spending in alignment with predictable expenses and receivables. For-self-funded entrepreneurs this can be particularly dangerous because you may be tempted to throw good money after bad to keep the ship righted, ultimately reducing reserves not on track to be recovered.
Automation is better for cash machines than cash flow
One of the early problems I faced with cash flow management came from my reliance on technology. Let’s say you use QuickBooksTM to manage your money, or any other system for that matter. Most tools have a built-in cash flow projection tool. Set it and forget it—sounds great, right? The problem with using automated cash flow projection tools are two-fold. And hint—the problems are people—not technology.
Automated cash flow tools are only as good as the data (or data enterrer.) An automated tool takes its cue from the data entered so it is important that someone is focused on getting due dates and terms accurate. If you only enter your bills every couple of weeks and you aren’t careful to enter the accurate invoice date, your starting date may revert to a system default date and the payable will be wrong in the system. If you aren’t careful to read the invoice terms (some may be due on receipt, some may be net 10 and others may be net 30) then your entered due date won’t be accurate and you won’t be able to rely on the projection your software is making.
Automated cash flow tools don’t take into account the real variables in business that you as an owner, or cash flow manager, know to be true. For example, you can invoice customers Net 30 all day long, but you know which customers will pay Net 30 and those that are religiously Net 60 payers. Automated cash flow tools rarely have the logic you know about clients built in. If you know clients are sliding into Net 45 and Net 60 but you are still relying on an automated report that calculates on Net 30, the report is irrelevant.
Financial fitness is in your hands
An entrepreneur should check the health of their cash flow as often as an amateur marathoner checks their heart rate on their Fitbit®. After all, cash flow is probably the single biggest indicator of the health of your business. So, if automated tools with preset defaults don’t allow for the variables needed for accurate forecasting—what is the answer?
A manual cash flow projection that works
Back to technology—DIY and simplified—the spreadsheet. People can demonize Excel® all they want, but I never got my cash flow under control until I began using a cash flow report I generated myself. It allowed me to account for the realities I knew about when money would go out and when I could reasonably expect it to come in. Once set up and customized to your needs, the spreadsheet approach doesn’t take much time to keep accurate providing both peace of mind and a predictable balance in the bank.
Here’s how it works:
Cash Balance. Set up the spreadsheet to show a one-quarter snapshot (in weekly columns). The first row shows your beginning cash balance.
Projected Receipts. The next section shows receipts projected to come in that add to your cash balance.
Projected Expenses. Next , setup ‘projected expenses’ that deduct from the balance. This section is important because you can enter invoices you ‘will have to pay’ allowing you to project rather than relying on a system that only knows the payables that have been entered.
Cash Remaining. The next row of the sheet shows total cash remaining in that week (starting cash balance + projected receipts – projected expenses = cash remaining in that week.) By plotting inbound receipts in the week you realistically expect checks to arrive, you get a more reliable view of when you’ll have cash on-hand. By plotting expenses (the big things: rent, wages, payroll taxes) as well as variable costs like projected inventory expenses needed to fulfill a job, you get a realistic picture of your Total Cash Remaining—week by week.
Cash in Reserves. In a final row beneath total cash remaining enter your ‘cash in reserves’ so you can plan for the weeks you may need to draw on them. Viewing this over a quarter helps you ensure that the reserve draw is in fact temporary and will be restored the next time a lump of cash comes in.
This may sound very elementary—IT IS. Or, it could sound like a huge pain—IT CAN BE. But, if you don’t have intimacy with your cash flow, you are relying on little more than luck to get your business past the magic 5-year mark.
Follow the money—in fact, chase it
There is something very comforting—in the often uncomfortable world of entrepreneurship—about knowing the story behind your P&L. Knowing something that only your banker typically knows…whether the P&L is backed up by cash in the bank that comes from good management. That being said, when was the last time you checked your cash flow? If it’s been more than a week, it may not be flowing at all.
We've all had to face that god-awful feeling of waking up to a Monday morning nightmare. The tired eyes with which we regard ourselves reflect the exhaustion that we feel so acutely. Often we will just press the snooze button, sleep on and face the ire of our boss, to whom we only feel bile.
Unsecured personal loans today have been used to cover a shortfall in finances, but must be paid back or face the penalties. I, like most people of my generation have felt the pinch of economic crisis; we've had the pressures of international economic collapse upon our slender shoulders since the days we were born.
Dogmatic spirits have flourished, while that to which ambiguity is not an alien feeling, the future is not so rosy-bright. No. It looks a little dim, it feels a little cool, but the cash loans go on, they live in another realm to whom platonic joy is an unknown theology.
“The laws of nature dictate that with every reaction there is an equal and opposite reaction, one which must be looked at through a 'scanner darkly'.“
Natural flow of cash and finance
Business works on similar principles, it provides a home for the natural flow of liquid dough. It opens its' jaws to the wealth of the poor, it gapes and frowns and munches down the clowns and fawns, the young the unborn - it eats with relish, it excretes with menace. Working out the easiest forms of finance, or credit is not something to be left undone, it should be one of the first things you put on the to do list before you begin the New Year. The basic function of instalment loans is to provide a means by which money is available to those to whom it is most needed. It should be regarded with this in mind and not as something to be used too regularly.
Sometimes a crisis will strike you down and leave you on the back streets. The truth of the matter is that often you’ll just have to suck it in and see how best you can get yourself back on the road to success.
There has been a distinct reduction in the free availability of credit now that we are well and truly within 'The Age of Austerity' Because of this reduction in credit availability, many people have found themselves short of cash and without any means of getting it. It can be a really tough situation, one that can leave you feeling distinctly unhappy, and caused un-due stress on our loved ones. There is no a very well-trodden path when it comes to trying to get the money you may need quickly - small loans online.
Available from online websites, they are a quick means of getting funding. Available 24/7 and with quick approvals, they're there for anybody who needs them, whenever they need them. As for the forms; they're easily completed and there for you whenever you want. They are for those unfortunate occasions and times when the other options are limited. Once the loan is received it is time to think carefully about how you are going to maximise the money you have at your disposal. Be careful to bare in mind the repayment schedule for personal loans, it will not simply disappear, it will be a 'ticking time-bomb' if you do not have plans to get it paid back on time.
In the United States, a recent study showed that one out of every five individuals exhibits a bad credit history. Due to this problem, people who want to buy a new home will have to apply for bad credit mortgage loans.If your credit history is less than perfect and you are trying to secure a mortgage, you may initially feel that your situation is doomed to failure.
Mortgage Loans For People With Bad Credit History
The prices of real properties are very expensive nowadays and if you have poor credit by now, the fact that you are required to be accepted and approved for such a high loan sum can be an added setback to your present quandary. The good news is that, your condition is not a hopeless case. There are several programs available today with the main purpose of helping people to acquire a bad credit mortgage financing or loans.
People who have good credit have more loan opportunities and options, although many lenders are now becoming more and more understanding about the financial difficulties that borrowers experience. Due to this, the mortgage lenders are now willing to grant home loans to individuals who have low credit scores, but at a higher cost.
Consider The Loan Interest Rate
You should recognize that the interest rates in bad credit mortgage loans are higher and the most efficient way to improve your credit score so you can obtain a lower interest rate is to enhance your credit rating.
In actual fact, bad credit loans have some advantages over traditional mortgages. The chief benefit in these mortgage opportunities is that qualifying for it even with a bad credit report is quite easy. These mortgages permit you to establish equity with your house purchase even though you have a foreclosure or have filed for bankruptcy in the past.
Even if the interest rates of these loans are higher than the prime rates, you are given the chance to purchase a new residential space with little down payment or no cash down at all. You can just look at it as paying for monthly rentals while you are taking advantage of tax deductions and home ownership consequently.
How To Get Qualified For Mortgage Loans?
There are some key points and tips that you should remember and perform so you’ll qualify for a mortgage loan notwithstanding your bad credit history. It’s essential that you get a copy of your credit score. Note that you will not lose credit points by checking your credit report. You will only lose some points if you carry out several credit inquiries for items like auto loans, credit card loans or other credit applications. If you appropriately fix any error in your credit history your credit rating can increase and the interest rate in your mortgage may be lessened.
When applying for bad credit mortgage loans, you should closely examine your credit history and make sure that your financial transactions are reported accurately. If you notice something incorrect, it’s vital that you file for a dispute with the agency promptly as well as contact the creditor that reported the wrong data or information.
“Every time you borrow money, you're robbing your future self.”
― Nathan W. Morris
Going to college requires some money but not all of the people who want to pursue their college education have the money to support themselves. If you are one of these people, you need not really despair because there are bank student loans which may help you.
Before you apply for a bank student loan, you have to first weigh your options. You have to ask yourself if you will benefit in applying for a bank loan. Before you make that loan, you have to make some researching about the different lenders and banks so that you will be able to determine what bank offers a student loan and what is best suited for you.
Why Bank Student Loans?
The purpose of most bank student loans is to help people step into the higher education process even if they do not have money. This type of loan is different from the other loans offered by credit unions or private lenders. Some of the banks which offer this type of loan set a maximum fixed rate. If you do your research about the bank, you may even get to borrow from a bank which allows you to postpone the payment after you finish your studies.
Most of these loans are granted to applicants because the latter really need to have the loan. So if you really, really need the loan, chances are high that your application will be approved. There is even a chance that the government will provide the payment for the interest of the loan while you are pursuing your studies. The interest is usually capitalized if the loan which you applied is not subsidized or if you happen to promise to give the payment once you finish your studies.
Bank Requirements For Student Loans
There are times when, though you are qualified to apply for the loan, you will need an eligible cosigner. You should also be aware that there are some loans which may or may not cover the education costs. There are loans which also come with a credit requirement and available student aid. You may even inquire in banks which are known for addressing the financial needs of students through their student loan division.
There are a lot of banks which are popular among students since they offer important aid in the form of student loans. A number of banks will try to convince you by saying that they are a lot different from the other banks because they are like this and like that. Before you get carried away by these and agree with the bank, you have to make sure if they are indeed better than the rest.
As requirement for the bank student loans, some banks will require you to meet the necessary credit rating or academic requirement. You also have to make sure that the loan is qualified, recognized, and accepted by your school. You may even search in the Internet for the sites of some banks. These sites are a rich source of information for the students who are thinking of filing for a student loan.
“I spent a lot of money on booze, birds, and fast cars. The rest I just squandered.”
― George Best
If you have a federal student loan, you may be curious about your repayment options. Luckily, federal student loans are most beneficial to those needing repayment assistance; the majority of these plans will help you lower your monthly payment at the expense of extending your loan term several years.
If you do not fit into this category and wish to consolidate and change your repayment terms to pay off your loans faster, a different way look is into a private consolidation or refinancing. As you have no need for federal repayment plans, you can adjust your loan terms, consolidate your loans, and potentially reduce your interest rate.
Depending on what your repayment goals may be, check out these federal repayment plans that can help you save on your monthly student loan payment or visit Credible to learn more about private consolidation.
Be sure to check with your loan servicer to see if you are eligible to enroll.
Standard Repayment Plan
Direct Loans (subsidized and unsubsidized) are eligible for the standard repayment plan. Subsidized and unsubsidized Federal Stafford Loans and all PLUS Loans are also eligible. Payments are fixed with a minimum of $50 per month and a total payment term of up to 10 years. This is the default plan for most federal student loans.
Graduated Repayment Plan
Like the standard repayment plans, Direct (subsidized/unsubsidized), Stafford, and PLUS Loans are all eligible. The difference is that payments start low then gradually increase, usually every two years. The payment term maximum is 10 years or up to 30 years for Direct Consolidation Loans.
Some prefer this plan since you can pay less at first, which may be helpful, if you are just getting started working. Monthly payment will never be less than the amount of interest that accrues between payments.
Extended Repayment Plan
The loans eligible under this plan are the same as for the standard and graduated plans. For extended repayment, your payments may be fixed or graduated. Monthly payments are lower with this plan, however, to qualify you must have more than $30,000 in either Direct Loans or FFEL Program Loans.
One reason some graduates choose this plan is because you can extend your payment term up to 25 years. This means monthly payments are lower, however, you end up paying more on your loan interest.
Income Based Repayment Plans
Under this income-driven repayment plan, your maximum monthly payment is capped at 15 percent of your discretionary income. Your payments are adjusted as your income changes, and the payment term is up to 25 years.
To qualify for this plan, you must demonstrate partial financial hardship. As compared to the standard repayment plan, your monthly payments are lower with income based payments. You also pay more on interest with this plan.
If your loan is not paid off after the equivalent of 25 years of making payments, the remaining balance will be forgiven. However, you might have to pay income tax on the forgiven debt amount.
Pay As You Earn Repayment Plan
With Pay As You Earn, your monthly payments are limited to 10 percent of your discretionary income. You payments are made over a term of up to 20 years, and to qualify you must demonstrate partial financial hardship. Like the income based plan, you’ll have lower than standard monthly payments.
Similar to income-based payment, you may have taxable loan forgiveness at the end of the 20-year term.
Income Contingent Repayment Plan
Direct (subsidized/unsubsidized), Direct PLUS (made to students), and Direct Consolidation Loans are all eligible under this plan. Payments are calculated based on your income, number of family members, and the amount of Direct Loan debt you have. Payments are income adjusted with a term of up to 25 years. Taxable loan forgiveness is available after completing the equivalent of 25 years of payments.
Income Sensitive Repayment Plan
The loans eligible under this plan are subsidized/unsubsidized Federal Stafford Loans, FFEL PLUS Loans, and FFEL Consolidation Loans. Monthly payment is based on your adjusted annual income with a maximum term of 10 years. Under this plan, monthly payments can vary depending on calculations made by each lender.