Financial Tips For Preparing For Big Future Purchases

You truly never know what lies right around the corner. The future is completely unpredictable and you could easily find yourself in a precarious situation before you know it. In many cases, people find themselves in a bad situation, because they’re required to spend money they simply do not have. Perhaps the expenses are associated with medical treatment? Alternatively, there may a possibility that you need to replace or repair your automobile. Whatever the situation may be, it is pertinent to prepare in advance for those big future purchases. Tips for doing just that will be provided below.

Save As Much As Possible

First and foremost, you should begin saving as much money as possible. This might seem easy, but it is simply more difficult than you could ever imagine. With the current state of the economy, most people now live from paycheck to paycheck. They do not believe it is possible to save money. This is often a misconception. Remember that it is not required that you save a substantial amount. Even ten or twenty dollars per month will add up over a long period of time. Begin saving money from each paycheck. You’ll be glad that you did in the near future.

Avoid Luxury Purchases

Unfortunately, many consumers make the mistake of purchasing items that they simply do not need. Perhaps it is a brand-new television or computer? These items are probably not necessities. Going without your television might be difficult, but it could save you a few hundred dollars. Remember to avoid luxury purchases, unless they are indeed absolutely necessary. Save the money and put it away for a rough day.

Consider Taking Out A Small Loan

Loans are generally a big no-no. Nevertheless, they can be very beneficial from time to time. When you’re in need of quick cash, you should definitely think about taking out a loan. Doing so will allow you to get access to the money you need. Just remember that loans can be a double-edged sword. Be very cautious and pay close attention to the interest rates. Also, remember that you may be able to borrow from relatives. This will often allow you to get the money you need, without worry about hefty fees. Click here to find out where to acquire loans.

Save Valuable Assets

Another thing to remember is that some of the items sitting around your home could be worth a pretty penny. When you run into a troubling situation, you may be able to use these items to your advantage. Take the items to a pawn shop or sell them at an auction. This will help you gain quick access to a good lump sum of money.

Protecting Yourself

Although insurance can be expensive, it could prove to be enormously helpful in the future. With the right insurance, you could avoid a hefty medical bill. Alternatively, the insurance could help you fix or replace a damaged vehicle. If you can fit the monthly premium into your budget, you should definitely consider investing in insurance. You’ll be glad you did when an accident happens.

ULIP Investment Plan to Manage Your Wealth

“How can I get rich?” “What is the easiest way to grow my money?” These are the questions that often run through your mind from time to time. But often, you fail to find a prompt answer to this.

However, the answer to the first question can be “Grow your money and you will become rich.” But what about the other question? How can you multiply your money?

Now, this one is a tricky and wily question. Many people believe that by commencing a new business they can grow their money manifold.

But the deal is “It takes money to make more money.”

So, not really having a considerable amount of money to invest in your pristine business, in the beginning, you can begin with investing in the capital market to multiply your money and meet your financial objects.

Investing in equity directly can be risky and perilous and would need a lot of investigation and steady monitoring of market by the one who is investing. However, there are a few other instruments at your disposal in the market that are both hassle-free and risk-free and cater income tax benefits. A few of such investments are Equity Linked Savings Scheme (ELSS) funds, Bank Fixed Deposits (FDs) and National Savings Certificates (NSCs), Public Provident Funds (PPFs) and Voluntary Provident Funds (VPFs), Unit Linked Insurance Plans (ULIPs) etc.

Among all the above-mentioned options and choices, ULIPs are the second in the list, in terms of returns, transparency, flexibility, safety, costs, taxability of income and liquidity, according to the annual assessment report by the ‘The Economic Times’ for 2015.

As per the estimation, in the past three years, returns from the ULIPs have come up to 9.8 per cent. So, let us get acquainted with the ULIPs that are persistently ranking besides some of the best plans for investment in India.

The Spectacular Rise and Fall of ULIPs:

The dawn of Unit Linked Insurance Plans (ULIPs) was considered to be an avant-garde affair in the Insurance sector. ULIP was Certainly Different, in a lot of ways, from any other available instruments of investment. On the other hand, the lion’s share of ULIP was that it effectuated a fusion between insurance and investment.

There was a time when ULIPs were the highly sold product; however gradually, the popularity of ULIPs started coming down compared to other instruments of investments such as mutual funds etc. Particularly in the year 2008, the major fall was noticed in the market.

A lot of factors contribute to the dramatic fall of ULIP. They were costly and often cannot keep up to cater the expected returns to its investors. Apart from this, the agents were ever-pursuing who drew in approaching consumers into purchasing ULIPs and promised them higher returns and did not disclose the high charges involved. So, a lot of those who were enticed into buying ULIPs were repentant heavily, making it one of the most hated investment products available in the market.

ULIPs rose to esteem again after September 2010 out of the blue, when Insurance Regulatory and Development Authority (IRDA) brought out new bylaws governing this plan of investment. According to the new regulations, ULIPs’ charges got capped, making it easy on the pocket. There was an expansion in the lock-in period from 3 years to 5 years, and the basic sum assured turned out to be 10 times the annualised premiums. These changes made by the IRDA have made them as one of the best plans for investment in India.

Why invest in ULIP?

“There are a number of investment tools, why should I invest in ULIP?” You must be wondering despite being a lot of options to invest why to invest in ULIPs. You are no alone to have this question. A large fraction of people consider buying a term insurance cover for life coverage and put their money in a mutual fund for the creation of wealth, separately. This isn’t a bad idea. However, the problem with the investment in the term plan insurance is that you get no returns if you survive until the policy term ends. Although a huge amount of money is paid to the beneficiary under a term plan only after your demise. You actually enjoy no profit if you invest in a term plan, apart from the tax benefits.

A mutual fund is an ideal investment tool. But it entails huge risks. Also, a mutual fund provides no tax benefits unless you plump for an Equity Linked Savings Scheme (ELSS) that is Mutual Fund’s special sub-category with at least 3 years of the lock-in period. So, if you wish to avail liquidity from a mutual fund, you receive no tax benefits.

Keeping all the limitations in mind, many financial confidants, these days, choose ULIP over other investment plans available in the market.

Is it true that ULIPs are actually better than other investment instruments?

Despite being fine similarities between ULIPs and mutual funds in terms of investments, there is a world of difference among the two. ULIP scores more than mutual funds in terms of tax benefits and returns. All the ULIP investors are allowed to enjoy tax benefits both on the sum assured and premiums under Section 80C and 10 (10D).

What’s more, ULIP is such an investment plan that caters life insurance cover also. So, in the case of your unforeseen demise, before the policy term gets completed, the selected beneficiary will get the lump sum assured as the death benefit. However, if you outlive the entire policy term, you will get the fund value as the maturity benefit.

How ULIP works?

ULIP, as already thrashed about, is an investment-cum-insurance plan that possesses all the best gears of both the instruments. One fraction of the premium paid by you is kept for the insurance and the remaining fraction is invested in capital markets.

You are allowed to branch out your assets among various funds reaching out from equities to debts via ULIPs. So, you are allowed to set your own strategy for investment depending on your risk appetite through this sort of investment planning. You are also permitted to freely swap your money from a high-risk fund to low-risk fund and vice-versa as per the market timings. ULIPs are, therefore less perilous as an investment plan.

A few charges might get deducted at the time of entry when you invest in a ULIP. These charges consist of fund management charge, Policy administration charge, mortality charges, surrender charges etc. You are paid back a few of these charges in the form of loyalty bonus, provided you make in investment for minimum 10 years or more.

Winding it up!

ULIP is one of the finest goal-based long-term investment-cum-insurance options. Although it was very high-priced a few years back, it has become relatively affordable, nowadays. Now, an ample number of insurers cater pocket-friendly and reasonable ULIP products, which help you in meeting your financial objectives easily and in quite a short period of time.

The Bible and Money, Who Knew?

what-does-the-bible-say-about-moneyThe last 100 years or so have seen thousands of books written about how to handle money. But the Bible–a book that dates back through millennia–contains plenty of advice that is amazingly relevant in a complex global economy today. Of course, as is often the case, many people misconstrue Biblical teachings about money–or simply ignore them altogether–if they don’t say what we want to hear. But the fact remains that Biblical advice about money is just as reliable as the best offerings from more recent times, for both believers and nonbelievers. The two main areas where this is best illustrated are addressed in this article.

Making The Most Of Your Money

Many Christians spend considerable time working with their investments. They read the Wall Street Journal, carefully watch business news networks, or frequently research certificate of deposit rates. These people may be criticized as being greedy, but that’s not accurate.There’s a thin line between greed and the desire to simply use money wisely. The underlying issue is really about why you want to make more money. Is it to fund sinful purposes like gambling or binge drinking, or are you just trying to make sure that you can provide for your family?

In the parable of the talents (Matthew 25:14-30), Jesus illustrates the point that not only does God permit wise investments, he encourages it. Remember that the story illustrates the different ways that the servants put their talents to use. Two of them invest the money and reap a return; the third hides the money away and neither loses nor gains. The master admonishes his unwillingness to make the money work for him, saying, “…you ought to have invested my money with the bankers, and at my coming I should have received what was my own with interest.” (ESV)

So it’s clear right there in the New Testament (among other places) that God wants us to grow our money, not just hold it. The important thing is that we are using the increase for positive purposes, like educating our children or helping those in need.

Meeting Obligations To The Government

There may have never been a time when more attention has been paid to the separation of church and state. The Affordable Care Act’s provisions for birth control; placement of religious objects on government property; and a Kentucky county clerk’s refusal to issue marriage licenses to same-sex couples has drawn many eyes to this aspect of constitutional and case law.

Somewhere in this swirl of debate has been mentioned the issue of paying taxes. Some believers have gone to the extreme of saying they owe no financial obligations to an earthly authority, while others have used the Bible to justify their stance on these divisive issues.

Mark 12:17 addresses taxation directly, with Jesus being asked if Christians should pay taxes to a secular government. His reply: “Jesus said to them, ‘Render to Caesar the things that are Caesar’s, and to God the things that are God’s.’ And they marveled at him.”

This is another clear-cut explanation from the Bible that the teachings of Jesus align with common sense and obedience to earthly law. You pay your taxes. Your government says so, and God is fine with it too. No excuses!

It’s long been accepted that the Judeo-Christian ethic has driven many of the laws in the U.S. But for those less familiar with the Bible, there is a lower awareness of just what other parts of life are well-guided within its pages. Common sense, honesty, and fairness are infallible, and thousands of years have proven it.

How the Financial Meltdown has Changed all the Rulesâ”or Should Have

financial meltdownBut godliness with contentment is great gain. For we brought nothing into the world, and we can take nothing out of it. But if we have food and clothing, we will be content with that. Those who want to get rich fall into temptation and a trap and into many foolish and harmful desires that plunge people into ruin and destruction. For the love of money is a root of all kinds of evil. Some people, eager for money, have wandered from the faith and pierced themselves with many griefs.ââ”1 Timothy 6:7-10 (Emphasis added)

Four years after it began, we still find ourselves mired in some level of the Financial Meltdown. We’re all sitting around waiting for politicians, economists and industry leaders to fix what’s broken in the economy, but have you noticed that doesn’t seem to be working? Maybe it’s time for us to get busy. And since we have the handbookââ”the Bibleâ”perhaps as Christians we need to take the lead.

Part of the reason that our leaders have been unable to fix the economy is purely because of the enormity of the problem. As much as we want to pin the blame for the mess on politicians, in truth the causes are so deeply rooted in our culture that fixing them defies easy solutions.

So where do we start?

 

It starts with money

I believe that we need to change our views and opinions of money, and align them with what we read in the Bible. Most of us are unaware that the traditional role of money has changed completely in just the past few decades.

In its essence, money is a medium of exchange. It’s used to facilitate trade between people and businesses and because it carries a standard value, it’s more efficient than barter. So far, so good.

But here’s the problem⦠In today’s economy, money is no longer just a medium of exchangeâ”it’s become an asset unto itself. We still use it to trade, but it’s become something much more. Success is now defined as earning, acquiring, preserving and growing as much money as possible. The end game is no longer to produce as much food, fish, minerals, shoes or widgets as possible, but to earn as much money as possible!

That’s a game changer, and it has a lot to do with the mess we’re in. Money manipulation has become more important than building a better mousetrap!

 

Money as wealthâ

What is it you think about when you see or hear the word wealth� From Biblical times up until about the end of the 19th Century this might have invoked visions of vast acres of rich farmland, a forest full of timber waiting to be cut, large catches of fish, coal mines or perhaps a thriving family business.

Do you notice something about each of these? They all refer to something tangible, something that’s being produced. Wealth was measured by what you added to the economy and community.

How do we see wealth today? Stocks, bonds, certificates of deposit, money markets, cash. Notice something about these? None of them are tangibleâ”they’re all paper. Stocks represent a share of ownership; they’re the way we own- and trade ownership in- the means of production, but are not means of production in themselves. All the rest are debt securities, which is to say that they represent a promise to pay, but nothing tangible.

The one possible wealth exception we have today, the one that actually represents something tangible, is real estate. But in the modern world there’s a caveat even with this. So much real estate has been purchased with debt (mortgagesâ) that’s often so large that the owner has little or no equity. Many property owners today are even in negative equity situations, owing more on their mortgages than their property is worth.

Wealth today is measured not in units of production as in days of old, but by the accumulation of pieces of paper.

 

Detaching money from the real economy

Here’s where we get to the root of the problem. Back when people grew, built, fixed or produced things for a living, there was a clear connection between being productive and earning a living. With the rise of money as a commodity in itselfâ”as the end game everyone now chasesâ”we’re now detached from actual production. Think about how many people work in money-related businesses, as compared to farming, manufacturing or the skilled trades.

The financial meltdown that started in 2007 has been commonly called the Financial Meltdownâ, but have you noticed that no one refers to it as the Economic Meltdownâ? That’s because the failure of what we loosely call the economy❠has been driven almost exclusively by financial factors. Could that possibly have something to do with the fact that in today’s world moneyâ”and all things closely related to itâ”have come to dominate all things economic?

When the ultimate economic goal becomes the creation of ever larger amounts of money, should we be surprised by the explosion of debt, the disappearance of real jobs, and the many Ponzi schemes that have flourished in recent years?

Those who work their land will have abundant food, but those who chase fantasies will have their fill of poverty. A faithful person will be richly blessed, but one eager to get rich will not go unpunished.ââ”Proverbs 28:19-20

 

How should Christians react to the financial meltdown?

I believe the time has come for Christians to realign our goals and set our sights on what is lasting. How do we do that? By changing our attitudes toward wealth and what it truly is.

Work. In the financial thinking of today, when we go out to look for a better job❠what we really mean is a better paying job, don’t we? That’s a pure play on money.

But perhaps if instead we sought work that we find fulfilling at a deeper level, money would become less important. Shouldn’t we be seeking our life’s callingâ”the work we’re meant to doâ”rather than just a higher paycheck? Maybe we should be asking ourselves, where can I be most productive?❠That needs to come back into the equation before work can be anything more than another component of the paper chase.

Investing. When we turn our money over to othersâ”mutual funds, investment managers, financial plannersâ”we’re asking them to get us a good return. Do we ever concern ourselves with what it is the money is invested in? We should.

We even seem content to have the money invested in exotic vehicles that we know little about, as if complication and complexity increase our chance at making a killing (they don’t). We need to invest only in what we do understand. How about investing in ourselves, investing in our own business, in the stock of companies that are either producing something tangible or providing a necessary service, in people (charity), or in our churches? Think of it as investing locally, in ventures we’re already familiar with.

Debt. If we could pick one cause to the financial meltdown that stands above all the rest, it’s debt! Culturally, we’ve come to believe that debt is benign, and once we reached that point the end result was inevitable. That needs to change. We don’t need to be borrowing to pay for entertainment, travel and consumer goods. And for those where we do need to borrow, we need to do so more conservatively.

We may need to borrow to buy houses and cars, but when we do we should 1) only buy well within our means, 2) make the largest down payment possible and, 3) take the shortest term we can afford. Paying off a loan (as opposed to rolling into a consolidation loan at a later date) should be a priority, otherwise we lock ourselves on a debt treadmill.

Family, community and church. It’s sad that we no longer think of these as wealthâ, but that’s exactly what they are. It’s equally disturbing that these very institutions that are so critical to basic life have degenerated in the great money chase of the past 50 years.

Family, community and church are the very foundations of civilized life and if we can’t invest our time, effort and money in them, then the quest to earn and amass more money will condemn us to chase that which we will never find.

What do you think that we as Christians should be doing to move the economy in a positive direction? Should we be doing anything at all? Scripture calls us to come out and be differentâ”does this also apply to economic and financial matters?

Let Savings Fall Onto Your Lap

savingsI’ve always believed that as long as your vacation is ahead of you, summer is clearly not over. It’s not unusual for me to wait until the fall, September or even October to make my yearly escape from the everyday grind. After all, I live in New York, so jaunting off during the summer months simply to lie on a beach is no enticement to me; we are frankly surrounded by beaches.

In fact, many New Yorkers save their vacation time for the winter months; that’s about when we start to get homesick for our beach-lying days. As a massive money-saver, I really enjoy the fact that my off-season vacationing can lead to a lot of savings, but most of all I appreciate dealing with a lot less crowds! Does anyone feel like Disney?

Vacation when no else is

The Travel Industry Association estimates that 23% of people report taking their vacation in the fall, which is a sharp drop from the 38% who reported a preference for vacationing during the summer months; fortunately, as the masses reduce, so do the prices. In resort areas known for their postcard-worthy beaches, the price drop is particularly noticeable. The Caribbean and Florida are two prime examples of this; hotel rates alone can see their rates drop almost 40% compared to peak season.

There are some places where tourism never seems to cease, big cities like New York and Chicago never seem to offer a prolonged period of off-season rates. But I live in New York and assume Chicago is pretty similar. Why would I want to go there?

Utilize credit cards to your advantage

I also fill out a lot of credit card applications throughout the year, simply to enhance my vacation savings when the time comes. Like many, I only associated the frequent flyer miles on my credit card with vacation savings, over the years I have expanded my repertoire, using different credit cards for everything from gas to hotel stays, each with their own built-in savings. Of course the flyer miles are probably still the best savings there is, but even with that, I no longer settle for just the typical 20,000 miles or so. Why would I when there are offers out there of up to 100,000 miles. They are not as easy to come by, but they do exist.

Do your research first

A lot of cards offer hotel programs:   these can lead to major savings, but it does take a little more work to do a proper comparison shopping on these cards. Often they will have a lot of blackout dates and capacity limitations. The ones that claim there are no blackout dates will instead have some strong capacity restrictions. Do your homework on these and you can save some serious cash. For local trips I, of course, have a gas card credit card that I use. Of course, with the high price of gasoline over the past several years, I often think it would be cheaper just to fly. Sometimes taking the scenic route can end up being the best part of your vacation. If it makes you feel any better, think of it this way:  using a gas card which earns money back means the more that you spend, the more you are actually saving. OK, so it’s a bit of a justification, but it is true nonetheless.

One other tip I learned the hard way: it you are going overseas on your vacation, make sure you use a card that at doesn’t charge a foreign transaction fee. Most do and you will end up paying more for every purchase that you make â“ a real vacation killer for me!

Credit Card Mistakes To Avoid at All Costs

credit card mistakesIn many people’s lives, credit cards tend to take on one of two roles. One is that of an indispensable ally, one that is always available to bail you out of a tough situation at any hour of the day or night. The other? Well, that is of a cruel enemy, dragging you into a deep pit of debt and then slapping you with extra fees when you are down. Even when things are harmonious in your financial house, credit cards can be fickle friends. Make one mistake â“ a single missed payment, one charge too many that pushes you over your limit or simply apply for too many cards â“ and it can have a negative impact upon your credit score. That, in turn, can result in higher interest rates and other bad news for your budget.

Here are a few of the most common â“ and not to mention expensive â“ credit card blunders that are best avoided.

Late Payments

It may be fashionable to be late to a party, but it’s downright dumb to be late paying your credit cards bills. Not only will missing a payment cause your card issuer to charge you a late fee, but it will lead to them increasing the interest rates on your account. Your payment history accounts for about 35% of your credit score and one single messed-up payment can cause your score to take a serious dive. If you are not set up to make payments online, make sure you drop your check in the mail well in advance of its due date.

Making the Minimum

If you are trying to pay a balance, you must make more than just the minimum payment. Consider this example put forth by the website, omaha.com:

With a $5,000 balance and annual interest of 14 percent, a $100 minimum payment will pay off the bill in 22 years, with $6,110 going for interest. If you pay $150 a month, the bill is gone in four years with $1,369 in interest.

Federal Laws are now in place requiring lenders to display, on every statement, how long it would take you to pay off a balance making only the minimum payment. This as well as the monthly amount you would need to pay, in order to pay off the debt in three years.

Withdrawing Cash On Your Card

DO NOT, as in ever, ever, ever, use a credit card for cash advances, except in the instance of an absolute emergency. Aside from the dizzyingly high interest rates associated with pulling out cash on your cards, there are typically additional fees. Also, interest begins to accrue IMMEDIATELY on the amount of cash withdrawn which means that you will be paying back much more than you borrowed even if you quick about it.

Paying An Annual Fee

Some rewards cards come with an annual fee and sometimes those rewards are tied to the amount you charge. So no matter how nifty the perks on your plastic, they may not be worth what you will be paying for them. Make sure you are not tempted to spend more than you normally would on your card just to get those rewards.

You should always take the time to make sure you understand the exact terms of your credit card. That way you will avoid unnecessary fees and penalties. If you are in the market for a new card, comparison sites such as credit land can be an invaluable tool. If you know how to use your credit cards mindfully, your wallet will house plastic pal instead of foes.

photo by moneyblognewz

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