Car Buyers Should Make (financial advisor) Sure They Do Their Financial Homework
No commentsBy Mark Dawson
With the new vehicle registration plates set for launch at the beginning of next month, it is important that those looking to buy a car take the time to do their research when making such a purchase.
Such is the assertion of esure car insurance which reveals that as the 58 registration plates go live on September 1st, a significant number of Britons could be putting themselves under more financial pressure at the forecourt than is necessary. Research from the firm showed that 68 per cent of drivers claim to never take the time to research the various financial options available to them - including personal loans and credit cards - when on the lookout for a new set of wheels. In particular it seems that women do not bother to ensure they are getting the most for their money, with some 72 per cent of females stating that they never investigate the finance options on offer. Among men, however, such a proportion drops to 64 per cent of men.
The firm went on to point out that just over one in ten (13 per cent) people spend more than a couple of hours getting the finance deal that is right for them when buying a car. However, esure states that not checking the annual percentage rate or the flexibility provided with such a product “can cost motorists dear”.
Figures from the insurance provider come despite many consumers holding concerns about the recent downturn in the financial markets. It pointed out that with “the words ‘credit crunch’ on everyone’s lips” it is of little surprise that just under two-thirds (64 per cent) of drivers are looking to purchase a used car rather than a new one.
However, by taking the time to do their homework when buying a car it may be possible motorists can find that they can select a cheap loan to help them with their purchase.
At present it was revealed that nine per cent of people purchased their last car using a personal loan, with 14 per cent selecting the finance deal offered by a motor trader.
It was also indicated that a significant number of people do not take motor insurance into account when buying a car, with some 24 per cent of people reporting to not look for a quote for cover before getting a new set of wheels.
Commenting on the figures, Mike Pickard, head of risk and underwriting for esure car insurance, said: “With the cost of motoring on the up, it’s more important than ever for drivers looking to change their car to make sure they get the best deal. Whether it’s bargaining on the forecourt or shopping around for the right finance package or insurance cover, an hour or two of researching at home can make a real difference to your wallet.”
People wanting an effective way in which to purchase a new vehicle might wish to consider taking out a motor loan. In doing so, it may be possible that consumers can get the vehicle of their dreams quickly and be left with an affordable rate of repayments to make. The additional monetary assistance which a loan provides could also help borrowers to purchase a comprehensive car insurance policy. A car loan might also help motorists to pay for repairs after a recent study by Zurich showed that bird lime - the technical term for droppings - causes 57 million pounds in damage for British drivers each year.
Mark Dawson writes for Loan-Arrangers .co.uk where visitors can compare loans online. With online application for everything from cheap car loans to debt consolidation loans.
Portland Refinance - Colorado Springs Refinance - Home Loan Refinance 885
By Alex Refintage
To know one’s eligibility one can fill in a loan application form with his personal details. A reasonable comparison and a good bargain will help to resolve the financial problems of the borrowers. If you intend to stay in your home for more than 10 years it is advisable to refinance your mortgage with a fixed rate mortgage rate. In this case you may try other lenders to secure the loan. The market determines the mortgage rate and the amount charged varies from one lender to another. The lowest rate will proportionately delineate all the extra costs of repayments and save a lot of money in the process. This factor is important, as Refinance is a process of mutual benefit, to the borrower and the lender. And the veritably low refinance rates available in the market today makes mortgage refinance a lesser devil to tackle than usual. It does not get affected by the unstable market of the loan industry. Accordingly, you will be advised to opt for the right refinance loan with the right mortgage refinance rate. Refinancing is popular as the interest rates on the mortgage can go as low as five percent. With the refinance loan on the same property you can easily avail a fixed rate of interest. You can refinance simply to save time and money while paying off your home and not receive any cash at all. You can refinance simply to save time and money while paying off your home and not receive any cash at all. The problem is that the average homeowner cannot access wholesale mortgage rates directly; members of the pubic must rely on mortgage brokers for access to wholesale mortgage rates. Note that with fixed rate mortgage, monthly payments will be steady. The lowest rate will proportionately delineate all the extra costs of repayments and save a lot of money in the process. If the thought of paying your high housing loan interests makes you feel queasy, then opt for refinancing and get rid of all your worries and anxieties. #1 Loan Refinance provides home loan refinance financial marketplace which connects consumers with multiple Refinance Loan Rates. If the interest rate of the refinance loan is not lower than the existing loan it is an option only for people who are really in need of money. To get your hands on this "Mortgage Refinancing Toolkit," which teaches strategies for finding the best mortgage and saving thousands of dollars in the process, visit Refiadvisor.com. It does not get affected by the unstable market of the loan industry. If home improvement is your goal, consider taking out a home equity loan. Within a matter of a couple of weeks, you can have your money in hand start living stress free. #1 Mortgage Refinancing, #1 Mortgage Refinancing, provides mortgage refinance financial marketplace which connects consumers with finance lenders who will help you develop a solid financial plan for your home. Low refinance rates reduces interest costs and helps save more money at the end of month that would. When doing so, the first thing that comes to the borrower’s mind would be, "Is this Refinance plan affordable?". You can enjoy the benefits of refinance if you can secure an interest rate 2 per cent below the rate on your current loan. Between the cost of living in California and high credit card finance and interest charges, and other monthly obligations, debt can get out of control.
Learn more about Portland Refinance Colorado Springs Refinance Home Loan Refinance
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How To Live Within Your Means
By Ann Marosy
Planning and goal setting are critical to your success if you want to become wealthy. The two key traits of people who do not become wealthy are, firstly, they tend to spend all of the money they have and, secondly, they do not know what they spend their money on. The lack of goals is the main culprit. Ric Edelman, author of The Truth About Money and Ordinary People, Extraordinary Wealth, calls this “spending unconsciously”. He says the reason why people spend without giving it much thought is they have no goals. Without goals, we live unconsciously from moment to moment, we never plan for the future, we spend all of our money, and as a result, we are unlikely to ever become wealthy.
“Unconscious spending” is more prevalent in our society than we realise. I would estimate approximately 80% to 90% of the population do it. With the exception of one or two people, the vast majority of my clients had no idea what they spent their money on until I asked them to prepare a list of their total expenditure and outgoings before our first session. In fact, many were too frightened to do the initial exercise and waited until they arrived at my office, so I could help them through the ordeal. Money matters simply scare people. They are terrified to know how out of control their finances are. Yet, this is precisely what needs to be done before we can start working on a solution.
Whilst it is important to become relaxed and carefree with our financial matters, this does not mean careless. We become carefree with money when we know that it is not a scarce resource, we work on increasing our income, we invest a little time on a regular basis to plan and review our finances, and we systemically set aside part of our earnings regularly to build our savings and investments for the future. We are careless with money when we don’t keep track of what we are spending and squander money on things that are wasteful, extravagant and not needed.
I often compare money to water, another important commodity in our lives. Both are essential and critical to our survival, however, we rarely worry about water in the same way we do about money. We systematically set aside water when it rains in dams and reservoirs to provide us with water ‘on tap’ when we need it. We are careful not to waste water, however, at the same time we can relax and not have to worry about it on a day to day basis. When we apply the same reasoning to managing money we are well on the way to becoming wealthy.
After we resolve our beliefs about money and realise that becoming wealthy is within our possibilities, the next step is to put aside a little time to set goals and do some planning. Planning does not have to be an arduous affair. It takes approximately one to two hours upfront to prepare your plan and, thereafter, an hour a month to review or revise it.
The first part of your plan is to set some goals. For example, accumulating $500,000 in income-producing assets in 15 years is not a difficult goal to achieve. If you save $170 a week into investments returning an average of 15% per annum for 15 years, you will have your half a million dollars. Goals will help you focus on the future and increase your willpower to prevent overspending. The more concrete you make your goals, the more committed you will be to achieving them. Set timeframes and break them down into manageable steps, as in the example above, to make your goals more realistic and attainable.
Along the way, however, we also need to manage our day-to-day spending to ensure that we set aside the required savings to achieve our goals. There is a simple, effective formula that everyone can apply to easily manage their finances. I call this the 40%-30%-20%-10% rule. This formula is used to measure your expenditure and cash outflows. You divide your expenditure into four categories and calculate the total of each category as a percentage of your net (after tax) income. The four categories are Fixed Costs, Variable Costs, Discretionary Costs and Savings.
Fixed Costs are your essential costs that are known and have to be paid on a regular basis. For example, mortgage or rental payments, personal loans and credit card repayments, insurance, council rates, and school fees. These costs are usually determined by your lifestyle choices, the size and cost of your house, cars and major possessions, and therefore difficult to change without making major adjustments to the way you live.
However, because fixed costs are comprised of debt and committed payments, they are critical in determining your ability to create wealth, as well as your capacity to lead a stable financial lifestyle. If your fixed costs are too high, you will probably be living from payday to payday worrying about the next large bill that arrives. If your fixed costs take up too much of your weekly pay packet, there will be less to spend on other essential costs, and often little for luxuries - unless you go further into debt.
Variable Costs include our essential living expenses, which can vary from week to week, yet you have some control over what you spend. These will include food, clothing, groceries, mobile phone expenses, medical and motor vehicle running costs, such as petrol and repairs.
The previous two categories relate to essential costs that we cannot live without. Some are controllable (variable costs) and some are set (fixed costs). Discretionary costs are expenses that are non-essential and highly variable. These costs are very much in your control and where most choice is possible about how much is saved each month. For example, entertainment, dining-out, presents, holidays and all luxury items that we love but can live without. I affectionately call this part of our budget, our ‘play money’. The problem with most budgets is they often exclude this significant element and this is why most people fail. We all need a little play money and a few luxuries in life.
Whilst working with this formula with my clients, I found that people who live within their means tend to spend their money roughly within the 40%-30%-20% rule. That is, their fixed costs are roughly 40%, their variable costs 30% and discretionary 20% of their net income. The more I worked with this formula the more I realised it was an excellent way to achieve two things. First, it provides you with a simple effective method for planning and allocating your finances, and secondly, it is the perfect method for getting you out of debt and into wealth.
The most critical category is fixed costs. The fixed costs of people who are living comfortably within their means are generally around 40% of their income. People with fixed costs above this percentage, tend to lead lifestyles that cost them more than they can afford. The size and quality of their homes, cars, furniture and other items that they have borrowed for, have forced them into excessive debt. Because fixed costs are comprised of debt and committed payments, they are crucial in determining your ability to create wealth. If you want to be wealthy, you have to be committed to dropping these costs below 40%.
When clients first come to me, their fixed costs are often 50%, 60% or even 70% of their net income. The aim is to reduce that percentage to 40% or less, over time. Creating wealth is about building strong financial foundations that cannot be shattered regardless of what we may be faced with in the future. Regrettable, strong foundations take a little time to build.
People in severe financial hardship usually have fixed costs that are greater than 65% or 70% of their net income. This is usually due to excessive debt or insufficient income. People who are in financial crisis, where they tend to live from payday to payday and seem to be going from one financial problem to the next, tend to have fixed costs between 45% to 60% of their income. If their fixed costs are approximately 40% of their income, they are living comfortably within their means, and if their fixed costs are below 40%, they usually have excess money that could easily be channelled into additional savings and investments. So the key to good financial management is managing and controlling your fixed costs.
Remember, it is all done by measuring your fixed costs: if your fixed costs are 40%, you are living within your means, if your fixed costs are above 40% you will be putting yourself under financial strain, and if they are below 40% you will be in a surplus position. Therefore, if you want to accelerate your wealth, keep your fixed costs well below the 40% mark and invest the surplus.
If excessive debt is keeping your fixed costs high, formulate a debt free plan and do not go deeper into debt. Learn to live with cash. It is far more finite and when the cash runs out, you know you definitely cannot afford to buy those extra purchases. If low income is your problem, consider all alternatives to increasing your income. These may include: part-time work, turning hobbies or crafts into cash or investing in additional training to further your career prospects.
Also, to decrease your fixed costs you may have to make some difficult decisions about the way you live. Is the house you are living in far too costly for you? Are you running two cars when one could suffice? Can you downsize anything now, which is costing you far too much money? Are you trying to live well above your present means buying clothing, accessories or electronic gadgets that you cannot afford? Are you a shop-oholic, and can never resist a bargain - regardless of whether you need it or not? Are your credit cards always to the maximum limit and you cannot afford to pay the balance? These are often difficult choices to make, but well worth it in the long run.
Remind yourself that you can have the bigger house, cars, toys, etc - later, when you can better afford them. If you get a bigger mortgage to upgrade your house or borrow for a better car, you will increase your fixed costs. By keeping your fixed costs as low as possible, you will accelerate your progress to becoming wealthy. Your plan should always aim at decreasing your fixed costs below 40% by either increasing your income or decreasing your debt, or both. Once you have achieved this, use the extra money to add to your savings and investments. This is the guaranteed way to accelerate your path to wealth.
Ann Marosy is an accountant, consultant, and former university lecturer. She was formally the Financial Controller of the Fortune 500 Company, Jardine Matheson, and Finalist of SA Executive Woman of the Year.
Ann is the author of ‘The Money Program’ book series, which includes managing the stages of wealth creation, formulas for budgeting, debt-free program and investment strategies.
For more details visit: The Home of The Money Program
Wednesday, August 27th, 2008 at 10:10 am and is filed under finance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
