“I pay for everything in cash, I never finance anything” or “I’ve never had to take out a loan, I don’t believe in it”. Every so often, I encounter this type of feedback from a business owner. More »
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“I pay for everything in cash, I never finance anything” or “I’ve never had to take out a loan, I don’t believe in it”. Every so often, I encounter this type of feedback from a business owner. The attitude usually goes along with a strong, hands-on work ethic for an owner which has built their business from the ground up. They have worked long hours, suffered through the ups and downs and sacrificed family time and vacations to make their business survive. Their belief is, if they cannot pay for something with cash then they do not need it.
I respect the energy and devotion but I also take note that the strategy seems to apply to small, family owned businesses with a small number of employees which have remained flat in their growth and have stopped expanding years ago. Expansion and reaching new markets are not typically part of their business plan and they are happy with a fixed income often servicing the same clientele they have for years.
The downside of never financing anything is the limited amount of expansion which can occur. In essence, they cannot grow beyond what is in their bank account at any moment in time. For example, a small business with $100,000 of capital desires to purchase a new $40,000 machine which will speed up production or bring them into a new market or simply replace an old machine; if they decide to pay cash that will leave them with $60,000 in cash reserves. If they encounter an emergency which requires $30,000 then that will leave them with little cash cushion in their account. They have also limited themselves in the case if another opportunity should surface at the same time they would not be able to take advantage of it like paying early for inventory to get a good discount.
The other negative of never borrowing is that your business will not have any established comparable credit so in the case when you do decide to finance anything, the likelihood of getting approved is marginal. A lender will not be able to assess your ability to pay back debt since you have never had any. Some business owners feel it should be viewed positively that you have never had to borrow but in the finance world it is not a positive. No credit history equals no loan.
The mantra in financing is ‘it is easier to finance equipment than it is money’ which is primarily true. Yes, you can get low cost capital from your bank if you have an established credit line but that line will have a limit. It is not a good move to use your credit line to finance an asset or equipment because that line should be used as either a last emergency resort or for short term borrowing. Finance rates are now in the 4-6% which can be stretched out to 5 years and sometimes longer. Many times, when expanding in a careful and planned manner, the finance payment will be less than the added revenue of your new equipment. This is true of energy and cost efficient industrial machines, solar systems and LED lighting.
Financing equipment for your business offers you the opportunity to expand, create more profit and reach new markets and clients. For those that want to know the benefits of never financing anything it is this; you will never owe anybody anything, no monthly payments, no interest and no chance of borrowing more than you can pay back but in that perceived safety there is also some risk and missed opportunity.
There was a time, not too many years ago, when relationship articles were the hot topic. They still are, but they’re not the hottest topic anymore. In its place is now money and security.
One of my publishers, whose opinions I greatly respect, was talking to me about the kinds of articles that most people are reading these days and we thought that with people so concerned about wanting to meet and marry their soul mate, that they were the articles most people gravitate toward. We were wrong.
I was looking over the stats of the articles that I’ve written over the last four years (over 900 articles) and what I discovered is that relationships, which used to be the prime focus of people, has been steadily losing ground to articles about money.
People are now more concerned about financial security than meeting their soul mate. There is more of a here today, gone tomorrow, way of looking at their lives. And business articles, which used to be a big drawing card, don’t seem to have the same impact that they used to.
Today’s hot topics center around getting money for nothing. People have always been attracted to articles about getting a lot of money without having to work for it, but lately, it’s been almost a mania, as evidenced by all the people who set up gofundme websites. This concept is now called crowdsourcing. I call it panhandling or standing there with a begging bowl in your hands asking strangers for money.
I had heard a story about a lazy, spoiled, twenty-one-year-old girl, who is in excellent health, setting up a gofundme website asking people to donate money so that she can go to Japan on a two-week vacation. The hands out, begging bowl concept, annoyed me so much that I wrote an article about it. And, wouldn’t you know it, but the number of people who read that one article climbed much higher and much faster than most of my other articles.
People take a look at Bill Gates and Warren Buffett and all they can see is the billions of dollars they have and they want to have what those two men have. They don’t see all the hard work that went into accumulating that wealth, nor do they see the kind of hard work they do to sustain their wealth. They just see a lot of money and they think they are entitled to the same riches.
Sad to say, but we’re living in a lazy, selfish, society these days and we’ve lost our moral compass along the way. We need to get back to the things that are really important before our whole society comes crumbling down around us.
There are literally hundreds of article and books devoted on budgeting money carefully. I will write on two methods that help me budget money carefully in hopes that others may be able to use this knowledge to help them in their future endeavors.
Method #1: If You Use A Credit Card, Always Check Your Statement Online At Least Once A Week
Most Americans probably own and use a credit card whenever they make purchases, either because it’s convenient and/or because they can get reward points for it. Most Americans are probably aware of the countless stories and articles about credit card debt. However, most credit card debt could be avoided if one pays attention every week to their credit card statements every week.
Whenever I look at my credit card statement every week, I can see how much my balance is as well as what I am spending my money on. When you take a look at what you are spending money on, you can see what expenses you are acquiring that are not always necessary such as eating out or buying things you might not need. It is always important to keep track of your purchases so you can understand where your money is going and if you are making purchases that you can try and trim down a little. The main takeaway from this method is always be aware of how much you are spending.
Method #2: Always Be Aware Of How Much Money Is In Your Bank Account
Most banks will allow you to see your statement online. This is very useful as it allows you to access how much money you have in your account at all times. You should always be aware of how much money you have so that you know how much you can spend. Financial problems often occur when people spend money and are not aware of how much they are spending and how much money they actually have to spend. The main takeaway from this method is always be aware of how much you have available to spend.
Credit has never been easier to get.
We are bombarded with offers every day – no interest on credit card balance transfers, interest free finance for household furniture, big screen TVs and appliances and low low rates to buy that new car.
It’s no accident that just after Christmas, your friendly bank starts peppering the media with offers of interest free periods on balance transfers. This is crisis time for many people. The cards have been maxed out to have a good Christmas and the debt hangover is just starting to hit. The first post Christmas payments loom and there is no cash to pay them.
The no interest option on the credit card balance transfer seems like a godsend and is eagerly embraced, but all it is doing is kicking the stinking debt further down the road of reckoning. When it comes time to start paying interest at rates at between 19 – 21%, there is still no cash, and the debt is kicked further down the road by getting more cards and doing the debt shuffle.
The Debt Shuffle
The debt shuffle is getting Cash advances drawn against remaining balances to make the minimum payments on other cards and for other monthly payments. This is where the fees and charges become turbo-charged. High fees apply to get the cash advance and interest rates kick in immediately at 21%+ calculated daily.
Effective Rates over 50% on cash advances
The fees and charges on cash advances deter you from repaying if you may need to redraw and get hit with the fees again. Cash advance fees mean that the effective interest rate on cash advances is very high. If you were to get a cash advance of $10,000 on a credit card the usual fees are around 3% being $300 and interest in the advance of 22%. If that advance were repaid after one month the fees and interest paid would be $483. The effective interest rate being a massive 57.96%. The usurious rates charged by the banks can’t be hidden behind the smug self-congratulatory smiles of their over-paid CEO’s.
91 years to repay
The true horror story of credit cards is that making the minimum payment on the card, means that the debt is unlikely to ever be repaid. When you are 50 you could still be paying for that trip to the US you took when you were 25, if you only make the minimum payment.
Actual numbers: On a credit card debt of $37,809 making the minimum repayment it would take 91 years and 3 months to repay the debt. Interest charged would be a massive $181,292.
What Next? Just do it.
Many people in a debt crisis suffer form paralysis by analysis. They will read endlessly about what to do or simply shut off. There are solutions. You can be debt free, you can take back your life and you do not need to go bankrupt.
Accounting helps to know the financial health of the business. It makes the record management easy and avoids errors made while recording the transactions. It encourages to take wise decisions for the business betterment in future.
Accounting is termed as a way to communicate the financial health of a business or organization in profit or loss. It is a way of managing the assets, liabilities, cash flow, and to decide business running in profit or loss.
Accounting knowledge makes us understand financial records, like the balance sheet, profit and loss statement. This statement gives correct information whether the business is running in profit or loss. This allows you to make correct decisions to manage financial problems or concern occurred in business, in particular, time span. It helps in audit and payment of tax return. Updation of records avoids inaccuracy at the time of closing at the end of the year.
Accounting services help to take wise decisions for better future of your company. It keeps a proper record of the loans were taken and payable, money transactions, salaries to the employees, and other items that are added to the expenses. It also analyzes trends useful to make changes in policy to increase profit and cash flow.
Accounting services help in loan repayment. It depicts the risk involved if loan repayment is not made on time. Statements have generated that shows when to repay the loan and the correct time to pay off the credits.
Accounting plays a vital role in employee management like payment of salaries, bonus, and other allowances are given to employees, sick leave management, travelling benefits to the employees of the company. It takes knowledge of accounting terms and principles to interpret employees annual reports to track employee growth.
Useful to detect fraud, carelessness from the bank and other payable parties. In bank loan payment. if any differences occurred, the accounting statement detects and avoidable errors in the future.
Cash flow is the rate at which money enters and exits from your business. By checking the financial statements, it can be seen that cash flow is positive or negative. If the cash flow is negative then business needs to grow more and manage all the financial records.
Some advantages of accounting are:
Accuracy: Accounting system is designed to give accurate results. Once the data is saved in software, all the calculations of additions and subtractions, are done automatically by the software.
Data Access: With accounting software, secured data can be accessed by any office staff outside the office premises. It also provides online accounting solution.
Reliability: As the calculations are accurate, the financial statements prepared by software are highly reliable and records are maintained accurately.
Speed: Using accounting software, the process of accounts preparation and updation becomes faster and easier. Accounting statements and reports can be generated instantly at the click of a button.
Security: The data stored and records made are free from natural disasters and calamities like earthquakes, fires, floods, arson, and terrorist attacks. In the case of any disasters occurred, the system can be quickly restored from other computers and the data can be retrieved.
Cost-effective: Using software to save data saves more time and money as paperwork requires more time and accuracy. The calculations made by software gives faster results and records get saved permanently.
Recent data shows that Americans struggle to save money. We could blame the economy, the government, or the latest weather forecast but at the end of the day, savings come down to understanding your personal cash flow, and managing your budget properly.
Bad money management leads to the accumulation of debt. When you have no savings, and you have an emergency come up, the natural reaction is to use a credit card. This results in ever growing debt accounts, and shrinking or non existent saving accounts.
When I started making better financial decisions I knew I had to create a budget that would work for me and start saving as soon as possible. I set a goal of saving $1,000 as fast as humanly possible without reducing my lifestyle. The best way to save money is by taking money that you are spending on something and moving it to your savings account instead. I found a few ways to save enough money on recurring expenses to save $1,000 in just two months!
Call your cellphone provider – My monthly cellphone bill was $180 per month. I had grown so used to paying that much for my service that it didn’t seem like a lot. After multiple security questions and a few minutes of analyzing different options, I was able to lower my cellphone bill to $105! That’s $75 in savings every month or $900 a year.
Cut the cord – I’m sure the CEOs of Comcast, Time Warner, and Verizon are nice guys, but given he choice of keeping money in my pocket or putting it in theirs, my pocket will always win. Called the cable company in 2011 and cancelled my service. I have not had cable since then. That’s $100 saved every month or $1,200 per year.
Cook at home – On an average day outside of the home, I spend $25 eating out. That’s an $8 protein shake at the gym, a $9 chicken bowl at Chipotle, $5 coffee at Starbucks, and coffee and a pastry at my favorite Cuban spot in Miami. If I were to do that 3 times a week for a month it would add up to a whooping $300! Cook at home and save money. I figure I can cook a meal for about $2.50 – including the protein shakes. Three meals a day, three times a week, over four weeks come out to $90. You can save about $210 per month by not eating out, more if you eat out more often. $210 per month come out to $2,520 per year.
Buy in bulk – This includes purchasing a membership at a whole sale club like BJ’s, Costco, or Sam’s. My Costco membership has saved me thousands of dollars over the years, and as an added feature, it gives me 2% cashback at the end of the year. By purchasing all my main grocery items in bulk I can easily save 30% on my monthly grocery bill. My grocery expenses dropped from around $550 per month to a little under $400. Naturally, this number fluctuates as prices are not fixed, but on an average month I can save $100 on groceries, or $1,200 in a year.
Adjust the lights – It’s very easy to waste energy and inadvertently pay for electricity that you didn’t need to use. Living in Florida it becomes very easy to over spend in cooling expenses. Using the dryer while your AC is running, or even leaving the AC running on your preferred setting while you are away can result in increased energy consumption. Adjust the use of the dryer, dishwasher, and lights throughout your home and you will see a big difference. My electric bill went from $200 per month to $147 over the summer – it is usually lower during the “winter months”. $50 per months add up to $600 a year.
In five simple steps you can save $500+ starting in your first month. In 3 months you can easily save $1000 or more and make yourself ready for any emergencies that may come your way.
Forex market is the best place to invest money and trade globally. It is the largest market where traders exchange over 5 trillion of dollars daily. There are numerous options in which traders can inv…
Forex market is the best place to invest money and trade globally. It is the largest market where traders exchange over 5 trillion of dollars daily. There are numerous options in which traders can invest and earn money. But, the system is really complex and need strategic planning for success quickly. Market value of Forex get influence with the fluctuation of economies. It is essential for traders to analyze market condition and make decision in investing in the platform. Aspirants and seasoned traders compete in the same platform, hence expert need to be hired by new traders. But, even aspirant traders can achieve success in forex trading getting suitable strategies. Special services and equipment is required in achieving success in trading quickly. Brokers and experts are needed to analyze Forex market and deliver suggestion for changes in the trading successfully. Special strategies are required to trade successfully in the forex market. Let us look at the important strategies to succeed in trading.
Broker is an asset for aspirant trader to help in trading successfully. Brokers can manage account and help in avoiding loss in the trading. It is essential for traders to analyze market condition before investing in the platform. Traders investing in the platform without knowledge of trading and risk factors face huge losses financially. It is essential to take count of risk factor, money management and other strategies to achieve success quickly. Hire online forex broker to create suitable strategies for traders in platform quickly. Brokers can manage account, optimize and deliver lots of profits in the trading. But, it is essential for traders to hire suitable brokers with expertise. Otherwise, it would be simply waste of money for traders without getting desired profits.
Demands for forex trading services have increased manifolds in market now. To meet the demands of the new traders, several companies are offering the services online. But, it is essential for traders to select right companies having smart technology and services. Using of smart technology helps in executing deals quickly and avoid loss of money in trading. Online forex trading companies are true guide for aspiring traders to deliver information about the market. Companies have special advisors and brokers to help in guiding traders to invest in the right areas. Selecting right company is really important for traders to achieve success in trading. Good trading strategies, expert help, and nice platform to trade help to achieve success in forex market.
Traders get several options of trading to choose and invest according to preference. It is essential to choose right option in which one has expertise and knowledge. Choosing randomly would lead to numerous problems for trade without knowledge the market. Analysis, market value, risk factors and other indicators need to be accounted in trade precious metals online successfully. It is being chosen by traders as it has higher liquidity and more chance of earning profits. Gold, silver, and other metals can be trader in Forex market successfully to earn lots of profits. ButArticle Submission, it is essential for traders to choose right time and indicators for success. Take help of our expert traders to succeed in forex market at affordable price now.
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A coward is a hero with a wife, kids, and a mortgage. Marvin Kitman