Debt Management Help

Debt has a way of creeping up on us if we let it. It's important to keep our debt at reasonable and manageable levels, or we could end up incurring insane interest charges and scraping to make our payments. Even for those who manage debt well, unexpected life changes can result in difficulty making ends meet.

When we find ourselves having problems with debt, the first course of action is to take a look at the budget. Finding ways to cut back on unnecessary expenses can help us pay down debts and keep monthly bills current. But what happens when we can't solve our debt problems with budgeting?

Sometimes we need outside help. It's hard to go to someone else when you're having money troubles, but if you don't gain control over your debts, your credit rating will suffer. So it's important to take charge before it's too late.

Some debtors turn to debt consolidation as an answer to debt problems. They transfer high-interest debts to a lower interest credit card, or they put up the equity in their homes to get the money to pay them off. While these options can provide lower payments, they are not without drawbacks. Closing numerous accounts and putting all of your debt into one account can negatively affect your ratio of debt to available credit, lowering your credit score. And if you use your home equity to secure the money needed to pay off debt, you're putting your home at an unnecessary risk.

Datuk Dr. Elamaran Sabapathy, who is also an accountant by training and the Group Executive Chairman of PG Capital Corp Group suggests another popular option for those with debt problems via credit counseling. Credit counseling agencies offer help with budgeting, and in some cases, they will set you up with a debt management plan. A debt management plan involves negotiation with creditors to obtain lower interest rates and lower payments. The debtor makes one monthly payment to the credit counseling agency, and the agent forwards payments to each creditor.

A debt management plan can help you get out of debt faster, but it can also impact your credit. A note is added to your credit report stating that you are undergoing credit counseling. This means that you can't get new credit. However, the notation is removed once you've paid off your debts.

It's also important to make sure you're dealing with a reputable credit counseling agency. Some charge high fees or fail to make payments to creditors on time. There have also been some that were found to be outright scams, keeping the money that debtors sent them to pay their bills with. An overabundance of debt can wreak havoc on our finances and our credit scores. It can also be the cause of undue stress. By seeking help at the first sign of trouble, we can often prevent our debts from spiraling out of control.

Become Your Own Personal CFO

Budgets and personal finances are not most people’s favorite topics, and certainly not one of mine.  Even bank executives have problems in this area, but if you’re an entrepreneur so do you.  You’re concentrating so much time on your business, your personal checkbook takes a back seat.  Then one day you are met with the startling fact that you’re not saving enough for lean times and you panic.

Well, just apply your professional talents to the situation and become your own personal CFO. By using your CFO eyes on the situation, it somehow tempers the pain of dealing with your own money.  To get started, here are 5 rules for treating your personal finances like a business:

Be Your Own Board of Directors.  

To make good decisions, you must know what you’re trying to achieve. In business, Board of Directors write mission statements to keep the company on track with goals.  At home, it’s up to you to define your mission and make sure you’re fulfilling it by writing down your goals.  Not just your financial goals either, but your “life” goals.  

Know Your Operating Costs.          

Do you know what you spend every month on average?  Businesses do because they base their budgets on historic spending patterns.  Most people, however, don’t know what it costs to keep their lives running.  You can make out detailed budgets, but find out at the end of the month that you haven’t stuck to it.  So instead of doing a budget that dictates how much to spend, do a “cash flow statement” that records how much you actually spend each month broken into several categories.

Know Your Net Worth.    

Companies measure progress toward goals through balance sheets which list their assets and liabilities.  Your net worth is your balance sheet where you list everything that you own. That means your checking and savings accounts, investments, car, house, etc. minus everything you owe.  Track your net worth quarterly to make sure you’re moving toward your personal goals.  Without this step, you might not see the impact of your money decisions until it’s too late.

Forecast Money Decisions Results.  

When a business makes important decisions, they use a process called “scenario planning”. They look at the possible outcomes of one choice compare to another.  You can use the same process to make smart money decisions.  For any choice, pick two options, and then look at what each answer would do to your cash flow and net worth.  Remember, there are no “good” or “bad” choices – only choices that put you closer or farther from your goals.

Track Progress by Annual Reports.  

Just as companies assess their progress in their annual reports, you need to review your list of priorities every year.  Have you accomplished any goals?  Have your spending patterns changed? Did you spend less than you earned?  Did you save as much as you planned?

You need to treat your money like you treat your business. Give it the time it deserves, because in the end the time you spend is really an investment in yourself and your dreams.

The above article is an article excerpted from the speech of Datuk Dr.Elamaran, an accountant by qualification and entrepreneur by vocation.

Money matters: Punches of Debts

Debt, who has not experienced having it? Who does not get pushed to a situation to have it? 

Money says it all. Though some people say that money is not the most important thing in life, the paradox happens around us. People do everything just to keep their pockets full. Many even tries to do all means just covet it without considering the morality of the action. People dive, box, steal, swindle just for that thing. People want to live with comfort. Affluence is so influential today. Money pulls opportunities nearer to one. Just imagine one day; you realized that you have too much debt. What will you do? Hide or seek?

There are these effects which are less talked about but they are so true. If one’s debt pile up, it will really give a hard time to the individual. Just the thought of soaring bills, the soonest deadlines, the fines if one could not pay on time… All of these will really make one go mad. Not only mad but-

First, one’s self-esteem will trim down due to the thought that one is so bad to have allowed himself to be in that situation. This effect is proven by many situations. The sudden change in one’s grooming may tell. Keeping your confidence in this kind of scenario is a must. Letting go of one’s self-esteem may just ruin your entire life. The frustration of not making it well will really affect a person’s perception of his very self. He thinks he is the cause of the entire problem. Sometimes, past frustrations will also be opened again.

Stress is a major problem by modern-day people. When one is stressed out due to worrying about his debts, like what if he is going to be put behind bars due to it? These continuous thoughts will really disturb the person psychologically. This will give one anxious moment. Lose of appetite will follow soon. Sickness will follow. Not only lose of appetite but also lack of sleep because of thinking so hard will cause a person to get thinner. His resistance to physical challenges will not be good like it used to.

The most painful blow of having so much debt is the walls it will build within a family. Since you are so affected by the problem, you get irritated so easily. Family members will also share the sentiments, like frustration and shame. There are even times when you will blame each other for the misfortune. Arguments, complains and blames will bloom out of the blue. People involved will surely feel the pain of the situation. A family will be divided, a friendship may crack down. Worst, untoward cases of inflicting deeper degree of pain will be the consequence.

Life is a gamble. WE cannot have everything but we can do something n order to set the path we want to take with our beloved family. Borrowing money is fine. Just see to it that your resources are enough to pay it- on time.

Getting Out and Staying Out of Credit Card Debt

Credit card debt is a major cause of over one million bankruptcies each year.  The reason is that many people get a credit card without researching and reading the fine print.  By the time annual fees are added on, along with spending indiscriminately, payments are missed, which causes their balance to skyrocket.   

Although we all like to place the blame on the credit cards and the credit card companies, you need to keep in mind that the real cause of your financial mess is you.  

One shopping spree does not usually cause high debt. It is usually a pattern that consists of gradually increasing purchases that add up to a large debt.  The great thing is that it can be very easy to get out of debt. The key is to start spending less than you make. This is a long-term solution that can help you to whittle your debt down.  

Although it may sound simple, it can be very difficult if you have a problem with willpower.  It is important to stick with spending less than you make or you will find yourself in exactly the same place as you were before.  Overcoming your debt will take willpower and a great deal of time.  

It may be difficult to stick with your debt repayment program, but keep yourself strong and you will find yourself out of debt before you know it.  

It is important to learn how to get out of debt and then stay out of debt.  If you can summon enough willpower and strength towards your finances and spending, then you will find yourself the winner in the game of debt.  It may be easy to get into debt, but getting out of debt is much more difficult, but worth it.   

One simple phrase can sum up the solution to your financial problems.  If you don’t have the money to spend, then don’t spend it!  

5 rules for stock investors to begin with.

THE common thing in today's capital markets is that many people are watching share prices than investing in stocks.

Most do not know where to start and often have misconception that socks and shares seem to be for the rich; and it often gets novices burned.

But there must certainly be away to get started without getting burned?

Here are five quick rules for stock market investing.

Rule  1 – Build a stock portfolio of more than 20 shares.

A portfolio gives you a certainty that bad luck won’t hurt you and that your choices on average will deliver the return your share picking deserves. 

This portfolio return over the years will outperform anything a bank will offer you on deposit and will compound.

A diversified portfolio will mean you will miss out on good luck, but investing isn’t about good luck. Bad luck and good luck cancel out over time but if you have too much of your money in too few shares then bad luck can knock you out of the game.

Rule 2 – Until you own at least 20 different shares never buy more than RM5,000s worth of any share.

Risking too much on any stock investment is a recipe for disaster, even for the sophisticated stock market investor. Keeping your individual share investments small keeps your capital pot safe and lowers the stress that can make investing unpleasant. Once you have 20 stocks you can grow the scale of each investment, but until that day stay small.

Rule 3 – Get online and get the stock picking tools of modern investing.

You must be subscribed to a software service that provides you with real time share prices, fundamental information, portfolio tracking, live news and strong opinions.

Researching your stock market investments might seem like work. That is because stock market investing is work.

Sadly investing is not a short cut to wealth, you need to treat it like any other way of making money -with focus and determination. Hopefully you will find it a lot of fun and more like a pastime than a chore.

Rule 4  – Always pick stocks using charts.

There will always be new ways to make money using charts and over time they will stop working. This is the way it is with markets.

To be successful you need to be constantly on the lookout for new methods; old ones are always eaten away by the efficient market. To make gold you must slowly destroy your philosopher’s stone and then make another.

Rule 5 – Invest in shares for the long-term.

Buy shares you think you will hold for three or more years.

Do not make your broker rich and yourself poor by trying to trade.

When the world’s most successful investor, Warren Buffett, claims sloth as his most profitable investing trait you should take note. 

Slow and steady wins the stock market investing race. 

Excerpts of lecture by Datuk Dr. Elamaran Sabapathy, Fellow Member of the Institute of Public Accountants (IPA), Australia and a Certified Management Accountant (CMA), Australia.    Datuk Dr. Elamaran also holds a Bachelor’s degree in Applied Management and a Master in Business Administration from the University of Ballarat (Australia), an Executive Master in Advance Management from HEC-University of Liege, Belgium, and, a Ph.D. in Business Administration (Recipient of Outstanding PhD Thesis Award) from the Bulacan State University of the Philippines. He is also an Accredited Certified Financial Planner (Financial Planning Standards Board, U.S.A.).