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Archive of posts published in the category: finance
Feb
11

Bridging Finance – Advantages and Disadvantages

The most important advantage of using Bridging Finance is that you can complete the purchase of a new property before the sale of your existing property has completed. As organising the sale of your existing property and co-ordinating the purchase of a new property can be extremely difficult and create stress and pressure. If there is enough equity in your existing property you may be able to incorporate the finance needed for all of the fees involved. A Bridging Finance Loan is a temporary home loan which enables a purchaser to buy the property of their choice without being held up by the lengthy sales process. This can be a huge plus when you find the property for you and you do not want to risk losing it through a lengthy chain in your sale. You can also use Bridging Finance to avoid moving into rented accommodation and move straight into your new home.

Bridging Finance also has the advantage of having a quick process and has many different uses. It can be used for funding auction finance, first and second mortgages, home renovation and refurbishment, new-build development and construction as well as debt consolidation. Many Bridging Finance providers offer a option to defer fees to be charged until the completion of your sale and then added to your new mortgage, this can be useful in keeping the costs down.

There are several disadvantages when using Bridging Finance that you should be aware of before choosing this route. You may be required to have sufficient equity in your current property to support the purchase of both properties. As well as this you should also note that until your existing property is sold your interest payments will keep adding up, this can lead to difficulties if you do not sell your property quickly. Taking out a Bridging Finance home loan may force you to sell your property at a price lower than you wish to due affordability. You will be charged interest on the entire amount of the new loan. A Bridging Loan is only designed for short term use to bridge the gap between your purchase and sale usually only between 6 to 12 months, obviously the shorter the term of the loan the less cost there will be to you.

When using Bridging Finance you will pay a higher rate of interest this is because Bridging Finance is seen as riskier by the lender. It can be difficult to find a bridging loan this is because the risks are high so not many lenders are involved in the bridging market. There usually is a large amount of paper work and money involved as the finance covers two properties. As the loan is short term lenders do not make the same kind of money as with a traditional mortgage. This makes providing Bridging Finance less attractive for lenders and subsequently results in there not being many available lenders in the market. So when you need a bridging loan quickly this …

Feb
5

What Kind of Questions to Ask During a Psychic Reading?

Have you ever wondered about some of the more general questions to ask a psychic when in consultation with an intuitive? If you are new to psychic readings and would like a bit of a heads up on some questions that may benefit you during a psychic consultation session then we’ve come up with a good general list for you here.

Feel free to modify these questions with words appropriate to your own personal situation, make them your own as they are just samples of general questions you may wish to utilize at some point. Sometimes it is a good idea to ensure your question is specific enough so that the psychic can tune in more deeply for you, the more specific a question often the more specific the answers that come through from the psychic can be.

You should have your list of questions handy during your psychic reading, it doesn’t matter if you are having a phone, email or face-to-face reading, have your list of questions handy on a piece of paper if you need to, just in case you think you may forget any of them. Remember you are only going to have a specific amount of time with the psychic, so prioritize your questions in order of what’s most important to you at the time too. There’s nothing worse than forgetting your most valuable question/s during a reading and discovering afterwards that you missed it out. This can happen due to the fact that one can get caught up in the excitement of the moment in a reading.

General Questions for Psychic Readings

  • I feel lost and confused, Who am I?
  • What is my purpose in life?
  • I’m not happy. Why? How can I become happy?
  • What are other people’s opinion of me? 
  • Why do I act the way I do?
  • Why do I always find myself in the repetitive situations – over and over again?

Relationship related questions for Psychic Readings

  • Tell me about my future in regards to relationships in general.
  • Tell me about my future with regards to my current romantic relationship.
  • I have met someone that I really like. Do you have any guidance about this?
  • Will I meet someone that I click with fully? When? Tell me about this person if possible.
  • I really like someone. What are their feelings towards me?
  • Someone has recently left me. Can you give me better understanding on this situation?
  • I feel my partner is unhappy in our relationship, Why?
  • I’m unhappy in our relationship, can you help me understand better?

Finance related questions for Psychic Readings 

  • Tell me about my future with regards to finance in general.
  • My financial situation is difficult at the moment. Is this going to change?
  • My financial situation is good at the moment. Is this likely to continue?
  • How can I improve my financial situation for the better?
  • I am thinking of making a major purchase. Any guidance on what will happen here?
  • I am thinking of making a
Jan
30

What Does a Legal Cashier Do? Choosing the Right Law Job

The legal cashier’s job can be ideal for someone who finds the idea of working for a solicitors or law firm appealing but doesn’t have the experience or desire to work directly on legal matters. Normally a legal cashier is responsible in one form or another for the finances of the company. As the financial needs of solicitors and law firms are quite unique, a niche has opened up for those with the skills and expertise to carry out these kinds of jobs.

There are a number of different jobs which could be described as a legal cashier:

Legal Accountant – The responsibilities of a legal accountant are in many ways similar to a traditional accountant however there are some distinct difference unique to the industry. For example the large transfers of money for house purchases and legal fees are quite different to that of a traditional business. Though the tasks carried out by a legal accountant may differ from other industries many of the skills required to carry out the role are quite transferable.

Financial Controller – typically a financial controller has a lot more strategic role than a legal accountant, they might not be as involved in the day to day, invoices, payments and bank reconciliations but are still heavily involved in how a legal firm manages it finances.

Accounts Manager – This might be a role for someone working within a legal firm who has extensive accounts experience yet isn’t a qualified accountant. They don’t have the legal ability to carry out accounts like their professionally qualified colleague but might still carry out very similar tasks on a day to day basis.

Practice Manager– a far more administrative role typically, though it may still involve aspects of a finance common to most legal cashier roles. A Practice manager would normally have responsibility for the teams responsible for the administration and non legal functions of the firm.

Legal cashiers can also often be given the responsibilities within a company beyond the financial. These tasks often include

Marketing– while legal firms might not instantly seem like they require a great deal of marketing just like every business they need new customers. For most firms they would never reach the size where they could afford or justify a full time member of staff dedicated to marketing the firm. However often the responsibility of attracting new customers can be passed to someone with the appropriate skills. Often a legal cashier has just the right mix of abilities and enthusiasm to be given the task of marketing.

HR – the responsibility for human resources is another important part of a business which a small legal firm may not be able to dedicate a member of staff. As legal cashiers often manage a large number of the firm’s staff often HR can be allocated to them.

Administration – the amount of paper work and administration that a team of practicing solicitor can create is surprising. Consequently there is a team of …

Jan
27

5 Things to Consider While Selecting a Financial Planner

Unlike someone calling himself a CPA or a physician, just about anyone can call himself a “financial planner” or a “financial advisor” regardless of their educational background and professional experience. Moreover, not all of them are unbiased in their advice and not all of them always act in their clients’ best interests.

To ensure your financial planner is well-qualified in personal finances and impartial in his advice, consider the following five things:

1. Planning Credentials: Having a highly-regarded credential in financial planning, such as Certified Financial Planner (CFP) or Personal Financial Specialist (PFS), confirms that the professional you intend to work with has acquired the education and experience necessary to serve as a financial planner. CFP and PFS credentials are awarded to only those individuals who have met the certification requirements of education and experience in planning for personal finances. In addition, they have to pass the certification examinations and agree adhere to the practice standards and continuing education requirements.

2. Subject Matter Expertise: Financial planners are planning professionals, not necessarily subject matter experts. For example, a financial planner will be skilled in tax analysis and planning,but unlike a Certified Public Account (CPA) or an IRS Enrolled Agent (EA) he might not necessarily be a subject matter expert when it comes to tax rules Similarly,a he could be skilled in chalking out an investment plan, but unlike a Chartered Financial Analyst (CFA) he may not be an authority in the subject of investments. Work with a financial planner who is also a subject matter expert in those areas of personal finance that are important in achieving your financial goals.

3. Client Specialization: Not all financial planners serve all types of clients. Most specialize in serving only certain types of clients with specific profiles. For example, a personal planner may build his expertise and customize his services to serve only those individuals and families who are in certain professions, or a particular stage of life with specific financial goals and net worth. Ask whether the planner specializes in serving only certain types of clients with specific profiles to determine whether he is the right fit for your situation and financial goals.

4. Fee structure: The fee structure largely determines whose interests he serves best – his client’s or his own. A Fee-Only professional charges only fees for their advice whereas a Fee-Based professional not only charges fees but also earns commissions, referral fees and other financial incentives on the products and solutions they recommend for you. Consequently, the advice from a fee-only one is more likely to be unbiased and in your best interests than the advice from a fee-based financial planner. Work with a professional whose fee structure is conflict-free and aligned to benefit you.

5. Availability: He or she should be regularly available, attentive, and accessible to you. Ask the planner how many clients he currently serves and the maximum number of clients he is planning to serve in the future regularly. This clients-to-planner ratio is one of the …

Jan
23

Is it Better to Buy or Lease a Car After Bankruptcy?

If you want to get approved at the best possible terms when buying a car, it’s important you know a car lender’s credit guidelines before you apply for credit…especially if you’re bankrupt.

It will save you time and frustration–but more importantly, it will help you avoid credit inquiries that may lower your FICO credit scores up to 12 points per inquiry.

Step 1 in making a lease or buy decision is to determine a lender’s credit guidelines.

You start by asking if they lend to people with a bankruptcy. If so, on what terms?

That’s right. You have to be upfront that you’ve filed bankruptcy. Don’t hide it. We have to face the fact that some dealers just won’t work with people who’ve filed bankruptcy. So our job is to find the ones that do.

Some lenders will only lease to people with a bankruptcy. Others will only offer purchase financing. Yet still others will only lend using a hybrid of the two–this is especially common in Texas.

Ask the finance director at the dealership to direct you as to what structure the manufacturer prefers.

And here’s a quick tip for you: if your bankruptcy doesn’t appear on the credit report your lender pulls–then, in the eyes of the lender, you’re not bankrupt.

The only lenders I would consider using are:

– First choice: Captive lenders (car manufacturers)

– Second choice: Banks (not finance companies)

– Third choice: Credit unions

Ninety-nine percent of the cars I’ve leased over the years have been with captive lenders. Just one was leased by a bank.

That particular deal came from a conversation I had with Amy, the finance manager at the local Land Rover dealership here in Indianapolis. I told her I was open to her financing recommendations, but I preferred financing through the car manufacturer.

I told her my current FICO scores. She immediately said that with my scores she could do better through a local bank. I signed a credit application and told her to go for it.

The next day I signed a lease agreement with that local bank. Being open to her advice literally saved me hundreds of dollars a month on that car.

So be flexible…but be careful. It seems most car dealers call all of their funding sources banks. When in reality some are banks, some are credit unions, and most are sub-prime finance companies.

Here is a list of some of the most commonly used sub-prime auto finance companies:

1. HSBC Automotive

2. Capital One

3. AmeriCredit

4. WFS Financial

You want to pass on the sub-prime finance companies–unless you have exhausted all other options. Sub-prime lenders should be your last resort.

And only use credit unions if they report to all three national credit reporting agencies. How do you find out if a credit union reports to all three credit reporting agencies?

Simple–you ask. Ask the branch manager at the credit union if they report. And after you get the loan, check all three of …

Jan
19

The Target Capital Structure

Firms can choose whatever mix of debt and equity they desire to finance their assets, subject to the willingness of investors to provide such funds. And, as we shall see, there exist many different mixes of debt and equity, or capital structures – in some firms, such as Chrysler Corporation, debt accounts for more than 70 percent of the financing, while other firms, such as Microsoft, have little or no debt.

In the next few sections, we discuss factors that affect a firm’s capital structure, and we conclude a firm should attempt to determine what its optimal, or best, mix of financing should be. But, you will find that determining the exact optimal capital structure is not a science, so after analyzing a number of factors, a firm establishes a target capital structure it believes is optimal, which is then used as a guide for raising funds in the future. This target might change over time as conditions vary, but at any given moment the firm’s management has a specific capital structure in mind, and individual financing decisions should be consistent with this target. If the actual proportion of debt is below the target level, new funds will probably be raised by issuing debt, whereas if the proportion of debt is above the target, stock will probably be sold to bring the firm back in line with the target debt/assets ratio.

Capital structure policy involves a trade-off between risk and return. Using more debt raises the riskiness of the firm’s earnings stream, but a higher propor- tion of debt generally leads to a higher expected rate of return; and, we know that the higher risk associated with greater debt tends to lower the stock’s price. At the same time, however, the higher expected rate of return makes the stock more attractive to investors, which, in turn, ultimately increases the stock’s price. Therefore, the optimal capital structure is the one that strikes a balance between risk and return to achieve our ultimate goal of maximizing the price of the stock.

Four primary factors influence capital structure decisions:

1. The first is the firm’s business risk, or the riskiness that would be inherent in the firm’s operations if it used no debt. The greater the firm’s business risk, the lower the amount of debt that is optimal.

2. The second key factor is the firm’s tax position. A major reason for using debt is that interest is tax deductible, which lowers the effective cost of debt. However, if much of a firm’s income is already sheltered from taxes by accelerated depreciation or tax loss carryforwards, its tax rate will be low, and debt will not be as advantageous as it would be to a firm with a higher effective tax rate.

3. The third important consideration is financial flexibility, or the ability to raise capital on reasonable terms under adverse conditions. Corporate treasurers know that a steady supply of capital is necessary for stable operations, which, in turn, are vital for long-run …

Jan
18

Accounting Finance – The Heart of Any Successful Business

At the core of any successful business is a well organized management. Financial accounting is a very important tool for business. Aside from knowing strategies such as bookkeeping, marketing, advertising and production, a good and stable business must also have a competent system for accounting finance.

Whether you like it or not, accounting finance is one thing you cannot dispense with in the world of business. It is a very important tool in determining where and how exactly your money is being spent. Also, it is most important in terms of taxes and other pecuniary obligations.

Good Accounting Means Good Business

Accounting ensures you how much you have, how much you owe, and helpful in assessing the value of your business. Are you generating any profit or operating at a lost? Accounting records will answer your questions. Accounting serves as the proper recording tool of the financial status of any business. Fiscal dealings are best kept right on track with an effective accounting department.

A good accounting system within one’s business is a great help in making business decisions. This also shows how credible you are with other companies. Accounting does not only place you in a very knowledgeable stance, but it gives you that confidence by being armed with the facts and figures revolving around your business. Knowledge is power.

Professional Accountants

It is to your advantage if you are an accountant by profession. But if not, you can still do your own accounting if you are operating a small-scale business. However, if you have a big company it is advisable to hire a professional accountant especially if you do not have the time and the skill for it. You must realize that there are various strategies in keeping various kinds of accounts in a business.

It is also best to check the accounting firm’s competence, credibility and confidentiality issues. It is very important that in any business, you would be able to trust your accountant with sensitive information, including profits and sources of income your business is accumulating.

Accounting standards you should know

To the untrained and unsuspecting eye, accounting principles might seem hard, intimidating and complicated, but it is in reality very simple if you get past all those figures. All you have to know in accounting are these: Accounts are always divided into three types, namely assets, liabilities and equity. Each account is unique and simple yet forms part of the very foundation your business is operating on.

“T” accounts can be managed by drawing a T like figure with a left and right section divided by a vertical line. On the left side, you can place all your debits or the so called assets. On the other side, you can list down all your liabilities or what we call credits.

The general rule is that for every liability, there must also be a corresponding asset so that a balance will be achieved. If the credit is more than your debit then perhaps you are already …

Jan
13

Rich Dad Mentality Vs Poor Dad Mentality

This is the second in a series of articles based on the groundbreaking best-seller “Rich Dad, Poor Dad” written by Robert Kiyosaki. As stated in the first article, the book compares the mindset of Kiyosaki’s father-who held several degrees and an important position in the government, but struggled financially–, with the mindset of his best friend’s father-who never even finished high school but left his son a financial empire. In his book, Kiyosaki explains that the mindset held by each of these two men, his “poor dad” and his “rich dad”, was largely responsible for each man’s financial destiny.

The following quote by T. Harv Eker, author of “Secrets of the Millionaire Mind”, refers to the concept of a rich person’s mindset: “Rich people have a way of thinking that is different from poor and middle class people. They think differently about money, wealth, themselves, other people, and life.” Kiyosaki expounds this same principle in “Rich Dad, Poor Dad”.

Below you will find seven mayor differences between the “poor dad” and the “rich dad” mentality:

1. The “poor dad” mentality states that your wealth depends on your family of origin. That is, to be rich you have to be born rich. “Rich dad” espoused the view that being rich or poor is something that you learn. You can learn to think in ways that will support you, and you can raise your financial IQ by reading books on finance, talking to financially successful people, and attending seminars and lectures. When you have the right belief system and the necessary knowledge on how to create, build, and protect wealth, you will become rich even if you were not born into a wealthy family.

2. “Rich dad” taught Kiyosaki that he should get a job to learn and to acquire the necessary skills so that he could go on to start his own business. “Poor dad” saw his job as his source of income for life. While “rich dad” taught Kiyosaki to strive to become financially independent, “poor dad” taught him to depend on his employer for his financial well being.

3. When faced with an opportunity, “rich dad” would ask himself: “How can I afford this?” This forced his mind to think and to come up with creative solutions to be able to take advantage of the opportunity that had presented itself. Instead, when presented with an opportunity, “poor dad” would dismiss it by saying: “It’s too bad I can’t afford this.”

4. While “poor dad” stressed scholastic education, “rich dad” always stressed financial education.

5. For “rich dad” the main cause of poverty or financial struggle was self-inflicted fear and ignorance. “Poor dad” blamed the economy and the job market. That is, “rich dad” always took responsibility for himself and felt that he created his circumstances, while “poor dad” often felt like a victim of the outside world.

6. As for risk taking, “rich dad” taught Kiyosaki to learn to manage risk. “Poor dad” taught him that when it came …

Jan
12

Causes and Effects of Deficit Financing

As we know, the major sources of public revenue are taxes, fees, prices, special assessments, rates, gifts etc., etc. If during a given period of time, the government expenditure exceeds government revenue and the deficit is met by borrowing, it is called deficit financing or income creating finance. In order to have a significant expansion effects therefore, a program of public investment should be financed by borrowing rather than by taxation. This kind of borrowing or loan expenditure is popularly called deficit financing.

Deficit financing is said to have been practiced if state adopts any one or all the methods mentioned below:

(a) The government draws upon the cash balances of the past.

(b) The government borrows from the central bank against government securities.

(c) The government creates money by printing of paper currency and thus meets the expenditure over receipts.

(d) The government borrows externally.

Deficit financing was considered to be a very dangerous weapon by the classical economists. The modern economists are, however, leaning towards it and recommend it to be used for accelerating economic development and achieving high level employment in the country.

The problem to be solved here is:

(i) Whether income creating finance should be adopted for increasing total effective demand.

(ii) If deficit financing is desirable for ensuring high level of employment, then to what extent should it be carried out.

(iii) What are its good and bad effects?

Deficit financing is being practiced by advanced as well as underdeveloped countries. The advanced countries use it as an instrument of increasing effective demand whereas the underdeveloped countries employ it for increasing the rate of capital formation.

The scope of deficit financing for accelerating economic growth in backward economy is very bright as they are caught in a vicious circle of underdevelopment. They use funds for investment when the resources of the country are not adequate to initiate the processes of take off. So arises the need for deficit financing.

The underdeveloped countries are confronted with the following problems:

(i) The rate of growth of population is faster than the rate of economic development.

(ii) The state revenue received through taxes, fees, etc., is not sufficient to provide full employment to the labor force.

(iii) The per capita income is extremely low and so is the capacity to save.

(iv) Foreign loans for development purposes are not without strings and are also not available in desired quantity.

(v) There is a dearth of stock of capital in the country.

(vi) People lack initiative and entrepreneurial ability.

(vii) People are mostly extravagant and there is less voluntary savings.

(viii) A greater portion of the population lives in villages and are contended with their lot.

(ix) The government cannot incur the displeasure of the people by enhancing the tax rates beyond a certain limit. It cannot also impose additional taxes for the same reason.

(x) Thus there is too much evasion of taxes.

Under the conditions stated above, the reader can easily visualize the state of affairs …

Jan
6

Importance of Financial Stability Ratios

Common ratios to judge the financial stability of a business concern are gearing ratio, current ratio and liquid ratio. Gearing ratio shows the extent of a firm’s reliance on debt to fund its activities. As the proportion of debt climbs (especially if it exceeds 65 percent of total funds for most businesses), the greater the risk of financial distress. This is the downside of financial leverage – It increases the financial risk.

Current ratio measures the number of times the current assets of a firm cover its current liabilities. This is a measure of solvency: the capacity of a firm to pay its debts through the normal cash cycle, selling inventory on credit, collecting debts and paying creditors. This ratio must normally exceed 1:1 and should be closer to 2:1. It should also be noted that an excess of current assets will result in poor asset utilization.

Liquid or quick ratio is a more tighter measure of short term financial stability. It measures the firms ability to pay its current liabilities from its liquid assets. Liquid assets are cash or near cash resources. In practice liquid assets include cash, bank, short term securities and accounts receivable, the assets that be readily converted into cash to meet immediate calls for payment from lenders and suppliers.

Accounts receivables are normally included in liquid assets, as they may be sold to a finance company at a discount for later collection from debtors. This is called debt factoring. Debt factoring is not common in all the countries. Debt factoring is used as a means of managing the cash flow from operations, rather than trying entity’s funds up in accounts receivable. In arriving at liquid assets, the principle exclusion from current assets is inventory. As this may take some months to sell – and then often to credit customers – it can be many months before cash is collected from inventory. Among the current liabilities may be some debts that may not be due for many months. These may be excluded in calculating the liquid ratio. Examples include tax payable and a current portion of long term debt, both of which may not be due for some months. However, such adjustments should only be made if the repayment dates are known and are over six months later than balance sheet date.

One common (but risky) adjustment in calculating the liquid ratio is to exclude bank overdraft from current liabilities. This is not recommended. When a liquid ratio declines towards (or below) the 1:1 level (including overdraft), this is most likely time that the bank will require repayment – on demand. Hence, an overdraft should only be left out of this calculation when the firm is perfectly liquid – When it does not matter anyway!

As these ratios are based on the statement of financial position, they represent only a ‘snapshot’ of the financial stability of the business, taken at one point in time. These ratios can be manipulated by referring payments or delaying purchases until …