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Consumer Credit – Is It Good For The Economy?

Consumer loan, also termed as consumer credit or consumer lending, such as those by, is money lent (typically on a nonsecured basis) to a borrower or a person for numerous purposes, whether it’s for family, personal or household use.

Regulatory agencies of the government monitor these types of loans to ensure they comply with regulations on consumer protection like the Truth in Lending Act.

One of the most significant element that drives the economy is credit. Since credit brings about a rise in spending, it therefore also increases the levels of income in the economy which in turn directs to a higher gross domestic product (GDP) and thus result in a speedier productivity growth. If and when credit is utilized to acquire resources that are productive, it adds to the revenue and aids in progress of the economy. Moreover, credit further steers to the generation of debt cycles.

The Economy Benefits from Consumer Debt

Consumer debt also termed as consumer credit is what you owe, contrasted with what the government or a business owes. It could be borrowed from financial institutions, credit unions, as well as the federal government. It’s not easy for consumers to perceive debt as a piece of good fortune, since it signifies that they have a responsibility to pay off their lender from their salaries and earnings. It could as well denote acquiring charges in interest that are costly. However, debt could essentially be a positive aspect from the stance of the whole economy.

Consumer debt in the United States rose 5% to $4.09 trillion in May 2019. That exceeded the record of $4.07 trillion in June 2019.

$3.016 trillion was accounted to fixed-payment loans or non-revolving debt rising to 3.9%. Majority of these non-revolving debt is on auto and education loans wherein school debt reached $1.598 trillion and auto loans at $1.161 trillion in March 2019. On the other hand, credit card debt amounted to $1.072 trillion, rising 8.2% which topped the record of $1.02 trillion in 2008.

Consumer debt is a factor in the growth of the economy.  Provided that the economy raises, debt is more quickly paid back in the future, since your education lets you secure a job that pays better. That generates an ascending cycle, improving the economy all the more.

Downside of Debt

Although debt could be beneficial to the economy, it could be harmful as well, particularly for the borrower. If the economy is subjected to recession, you may lose your employment and may encounter defaults. This could mess up your credit rating, as well as your capability in the future to obtain loans. Even though the economy continues to be boom, you could acquire too much debt not because of poor spending practices but because of unforeseen and unwanted circumstance such as medical bills.

The wisest approach to evade the disadvantages of debt is to settle it every month. Moreover, save up at least six months’ worth of expenditure. This will protect you and give a breathing space in case of recession, unemployment, or unexpected expenses.

The Impact of Lenders to a Country’s Economy

Banks act as a bridge between people who need money to be used for investment and those who have spare. As industry and business demand huge investments, private financing is typically not enough for their requirements. Basically, these people are borrowing non-corporate as well as corporate loans from banks and commercial institutions.

Lending Options

In addition to banks, these can extend to retail loans among consumers who are seeking for mortgage, consumer durables and even to farmers who seek for farm credit to keep their agriculture alive. In regards to home loan buyers, buying a house at the start isn’t possible because it demands a significant amount of money and they find it more convenient to pay back the loan for a period of 30 years in lower monthly installments.

As for farmers, they find it more convenient in repaying the loan after making harvest and seeking for another loan or personal loan from Zebra loans for their next crop. Basically, the cycle just continues.

Then again, there are some people who opt to save and earn interests from the extra money that they have. Most of the time, these people are:

  • Salaried
  • Middle Classes
  • Small Savers and;
  • Corporate Institutions and Government Deposits

Simply speaking, these are at individual or micro level.

Credit Options of the Economy as a Whole

If we are going to look at these loans from a macro level, then we’ll find that banks are lending their money after statutory liabilities have been met. They are earning profit to keep their operations.

As a matter of fact, even governments are borrowing from RBI in an effort to meet budget deficits.

It is even borrowing from IMF as a way to meet balance of the imbalances of payments. Then again, governments are borrowing from World Bank or WB as well as its associates similar to IDA and ADB or Asian Development Bank for development purposes. Therefore, the credit serves as lubricant in keeping up with the continuous growth of the economy.

In spite of the positive impact it brings, there are elements of bank lending that could adversely affect the economy if it fail to recover. The unpaid bad debt is referred to as Non-Performing Advances which must be regulated to make sure that it is within the tolerable limit. If not, several banks will start to fail and the depositor’s money would be unpaid.

Turning Bad Credit in an Acceptable One with Tradelines

With so many consumers these days that are suffering from mountain of debt as well a bad credit, a lot of different companies have now started to mushroom. They seem to have a common denominator. It’s the fact that they’re promising to help boost your credit scores. Basically, you can see it for yourself by seeing personal tradelines for sale check this site out.

Take it in a Grain of Salt

On the other hand, no matter how good and well-placed advertising sounds promising or regardless of the promises that these companies made for you, it is imperative to be mindful about the risks of incorrectly using this approach of credit repair.

The most notable concern with this approach of repairing credit is the point that you have to put your social security number and your name as well as other personal and private information on a stranger’s financial account. While for some, it is not that big of a deal but think of this, you will have no control on how that person will pay their bill as soon as you’re added. In the event that the person you are assigned to for whatever reason has started paying late once you are added to their account, it will only add more damages to your already tainted credit report.

Do Your Research or Else…

This is the primary reason why it is imperative to do your homework on choosing the best tradelines to work with. Only these companies can ensure that your account will get improvement after signing up for their service.

Of course, the search process will not be easy, which is why your due diligence is extremely important. But so long as you do things correctly, you’ll be just fine.

The three biggest consumer reporting agencies started to catch up with the trend and their techniques changes along the way. Thus, paying 200 to 500 dollars to be added on someone’s established tradeline may not buy much of the score increase you seek. But your money can certainly be spent effectively.

Other Alternatives

Rather than allowing a fly-by-night to persuade and sell you on increasing your credit score using tradelines, consumers may check out other affordable options such as a self-credit repair kit. The repair kit will help them not just to increase their scores by eliminating negative balances but also, it will assist them in slowly improving their credit scores.

Working Capital : What is It and How is It Determined?

Working Capital has been defined in several different ways. Some call it the lifeblood of a going concern. Others define it by describing it as the amount of seed money invested in a business for purposes of meeting the day-to-day needs of “a going concern.” Some others refer to Working Capital as the Net Worth of a business, using the formula:

Working Capital = Total Current Assets – Total Current Liabilities

Yet for those who have very little or no idea about Current Assets and Current Liabilities, Working Capital as a concept may be difficult to discern. .

Understanding the Concept of Working Capital Elements

A business is a “:going concern” if it is in constant operation to generate sales. As such, its Working Capital will keep the business running continuously. The value of which is determined by the Current Assets and Current Liabilities of an entity.

Current Assets

Available business funds used to support the selling activities and to purchases sellable goods are simply labeled as Cash. If the business is a trading concern, the sellable goods are called Merchandise Inventory. Inventory may have other descriptions, such as Raw Materials, Raw Materials in Process or Finished Goods, Inventory by any other name is a Current Asset since they will likely be sold and converted into Cash within a short period of time.

In some instances, goods are sold on credit; denoting that the sale will not immediately increase available Cash. in such cases, sales on credit be distinguished by being classified as Account Receivable. Ideally, Accounts Receivables are collected within a short period of time so that they will immediately become part of Current Assets. .

When a “going concern” is having a good run, more than enough cash may be amassed. If so, it is a good practice to place extra funds in short-term investment instruments such as stocks, or bonds. That way, even excess money can have a chance to grow while invested. Collectively, they are classified as Marketable Securities. They can easily be sold or converted into cash, they also form part of the Current Assets of the business.

Take note that for an asset other than Cash, to form part of the Working Capital of a business, it must be Current or one that can be easily liquidated in cash form.

Current Liabilities

Current Liabilities include trade credits that allow businesses to procure inventory and other business necessities on short-term bases. Credit purchases do not earn interest for as long as the obligations are settled according to the terms of credit, which can be as short as 10 days or 180 days at the most.

In cases when a business is unable to generate additional cash funds by way of sales, fund may be secured by way of short-term loans. Payment terms include interests, and amortized monthly up to 12 months. Inasmuch as there is a need to settle obligations periodically in less than a year, they are also classified as Current Liabilities.

Total Current Liabilities are then deducted from the Total Current Assets when determining how much Working Capital is being used by a business.

Risks of Getting a Business Loan

Nowadays, the number of people who are venturing in to businesses are getting larger for each passing day. They choose to retire from their work and start to build their business. The reality is that, like most things in life, being a business owner does not always work out exactly how you expect it to work. The popular belief among entrepreneurs is that successful business owners control their time, so they can go on a vacation anytime they want.

If you think that it just simple, then you are wrong. You will not be able to start a business without a money or capital. However, most people want to take a risk and will apply for a small business loans to fund their business. While there are a lot of loans being offered by banks and institutions, it is important to vertaile lainoja and look for legit borrowers. However, there are also downside from getting a cash loan, so it is very important you consider them before signing on the dotted line and taking the money.

Here are some risks of getting a lone to fund your business: 

1. There is not always equality when creating online loans

If you are interested to apply for a loan, then you probably researched it online and you will notice that there are some loans that have unique terms. Instead of regular interest charges, they demand fees that you must also pay which will reflect on the beginning of your term. Meaning, yo will not be able to save during the pre-paying loan. Others also have high interest rates. 

2. Having Too Much Debt– Do you think you will be okay upon borrowing money? do you think you need not worry about getting bankrupt. Successful businesses even go bankrupt at some point. Also sometimes, there are some who made a business decision to borrow money more than they could afford. Always have a look at the financials behind the loan to make sure you will repay it easily.

3. Deciding to Risk your Assets- entrepreneurs put their asset on the line once they decide to invest on something. If you borrow money for your business you may have to put up collateral like your car or your home.

One must think carefully prior to making such a huge decision. Just because there is money to borrow anywhere does not mean you should. Always evaluate your finances and your financial capability to pay off your debt.

Points-Taken Before Hiring a Tax Lawyer

When hiring a tax attorney or any specialty lawyer requires thorough consideration. There are numerous things to be taken into account. This is true especially if you are working for big and established companies or websites such as WOT.

Let me give you light on when and how you can find the right person for this job.

Purpose of Having a Tax Lawyer

The very first thing that you have to take into mind is the purpose why you need a tax attorney in the first place. Could be that you need assistance in a court case or you just need someone who can assist in performing accurate calculation of taxes and filing returns? This is extremely crucial for any business, right?

Oftentimes, people are randomly hiring the top lawyer their money can afford without having to ask themselves these questions. Yes it is true that lawyers have invested great amount of their time studying and practicing law. But please bear in mind that these professionals aren’t jack of all trades. There are lawyers who are suited best to handle out of court settlements while others excel in court.

Thus, prior to hiring a tax lawyer, think of it thoroughly and clarify the reason why you need their service.

Lawyer’s Qualifications

Of course, you wouldn’t dare to hire a lawyer who is not qualified to get the job done in the first place. After all, what’s the point of paying them top-dollar if they will fail eventually?

Thus, prior to taking the tax lawyer onboard, see to it that you have taken the time to read their qualifications. This way, you will be able to judge whether they are the right person for the job and for your company or not.

In most cases, achievements and experience weigh a lot than the qualifications that the lawyer has on paper. Think twice before making your decision.

How much the Lawyer is Charging?

Oftentimes, there’s no issue with regards to tax lawyers that assist in calculating taxes as well as income tax returns. It is because it is common understanding that they will be there to help you out twice a year.

But for tax lawyers whose job is to help you win cases like tax evasion and fraud, they might be charging a fixed price for the entirety of the case or per sitting. If the lawyer charges you per session, there is a big chance that you would not have the fund to pay for their service after couple of sessions. No one can just foresee how many times you have to be in the court for a single case.

So between the two, the former is basically a more practical option.

Why You Should Hire an Accountant for Your Business

Whether you are planning on starting a big or small business, you have been probably thinking of ways on where and when to start, where to get your resources, accomplish legal requirements such as business permits, and of course getting enough funding. If you try searching the internet for companies that offer these services, you will find thousands of results. Tucson incorporation services is a company that offers quality services such as  handling personal and business taxes, payroll, legal document preparation, notary services and other services alike. They are known to provide great services and they also helped small businesses when it comes to starting and keeping it running smoothly.

The most important among the above mentioned services is the handing your business finances. You may want to just do it yourself instead of hiring someone or a company that will do the accounting services. If you have accounting background or knowledge about business finances, then it it is fine to do the work. However, if you lack experience in managing finances then it is better to avail accounting services.

Below is the list of duties an accountant may fulfill for your business:

Ways an Accountant Can Help a Small Business Owner during:

The Start-Up Process- of course when starting a business there are many actions that must be taken as well as systems to set up and implement in order to have a strong foundation that will lead to the success of the business. Hiring an accountant will decide on the best business structure depending on the type and size of your business. Moreover, financial analysis in your business plan will also be assisted by the accountant. He/she makes sure that the procedure will comply to the rules and regulations of the government.

Regular Business Operations- during the regular business operations, an accountant will help you in keeping track of the sales, purchases, income, payment. These should be monitored and recorded. The accountant or the staff of the company you hired will take over the organization and recording of the financial transactions. In addition to that, if you hired employees for you business, the processing of their paychecks will be made easier. Tucson Incorporation Services also manage this.

Business Growth- If you manage to keep your business running and you decide to level it up because you think that you are ready to grow your business, your accountant will also be a great source when it comes to giving advice about the process.

These are just some of the important things to consider prior to starting your own business. However,  the assistance you need still depends on the type of business you want to venture in to as well the the size.


The Importance of Financial Management to Business

Almost all businesses go through the cycle of earning and losing money especially during the period of start up.  This is when owners see the significance of financial management. During the early stage of starting a business, it is important to have enough money for marketing campaign in order to successfully connect to your market and establish a successful image of your business or service. Once the business is established, owners mus have enough cash to pay employees and suppliers. To avoid the shortage of funds, it is important to have financial projections prior to the ope-rationalization of the business.

As time passes by, a business will grow and mature. Hence, more funds will be needed. A crucial planning and budget is needed. Deciding to whether to get funds internally or borrow from outside such as online cash advances is a decision that must be made by the owner or the manager of the company. In addition, financial managers play a vital role when it comes to seeking funds at the lowest cost of controlling the release of money. 

To have a deeper understanding of what financial management is. Financial management is defined as the strategic planning, organizing, and controlling of financial undertakings in a company or management. Specifically, financial management aims to: 

-Maintain enough supply of funds for the organisation.

-Ensure shareholders of the organisation to get good returns on their investment.

-Productive and efficient utilization of funds.

-Reach out to investment opportunities to invest in.

Why is FM Important?

Regardless of the type of business that you want to venture in, it is important know the proper financial management. Some other reasons include the following:

  1. Promote financial planning in companies;
  2. Helps the company in making critical decisions;
  3. Increase profitability of organisations;
  4. Provides economic stability;
  5. May help in encouraging employees to save money

Two of the most important ways to manage finances will be discussed: Bookkeeping and Financing. Bookkeeping is the method of tracking the everyday financial activities of a company such as daily expenses and sales and compiling the results into reports to identify the profit and loss. This is important because it lets you know whether you are making money, losing money or just break even. Another way is financing. There are some cases where businesses avail some financial support such as business credit cards or business loans. This is necessary when sales is not good and there is a lot of catching up needed.

The Risks Of Peer-To-Peer Lending

Peer-to-peer lending, also known as P2P lending such as the mintos review, is a popular alternative that is without the use of a traditional credit union.  Majority of loans given by P2P lenders are personal loans, wherein borrowers could use it for different of purposes and intents from consolidating debts to starting a small business, or for home improvements. Peer-to-peer lending occurs when individual investors are able to directly lend to borrowers, frequently via online P2P lending platforms.

It’s worth assessing P2P lenders if you are in need of a loan. Rates for P2P loans could be remarkably low, especially if your credit standing is good.  And although your credit standing isn’t perfect, you may still be approved for a loan that’s affordable with these lenders online.

The investor and the borrower both gain from the P2P model. As the lender obtains higher interest rates, the borrower gets lower interest rates as compared to what would be offered if either one went through a credit union or commercial bank.

What are the risks?

The major concern for each investment decision is the risks versus the rewards. But, with the advertising rates of peer-to-peer lending platforms which range from 3% to 19%, the rewards could easily and clearly be envisioned. Yet, the challenge correlates to evaluating the risk level that is acceptable or good enough to the reward. The nature of lending or loaning money to businesses and/or individuals forms unique possibilities of risks compared to the usual asset classes that savers or investors had better be aware of. It is an investment to be loaning money via P2P lending platforms; hence funds aren’t protected by insurance firms like the FSCS. Eventually, without coverage, the capital and interest of investors are at risk.

  • Market Risk

These risks associate to macro-economic factors that might affect the capability of a borrower to pay off their loan or for the investment capital to be regained post default. This is similar to set income investments, there also exists an interest rate.

  • Interest Rates

If the rate of interest were to increase, the rate of interest paid off by a borrower may not look appealing as compared to other types of investments.

  • Credit Risk

Borrower default might be caused by economic factors or by a poor initial credit choice. Investors are recommended to differentiate across a huge quantity of borrowers to make certain that the effects of the defaulting of one borrower are nominal on the investment as a whole. Even after diversification, a large number of borrowers defaulting on their loan obligations continue to be a risk.

These are just three of the risks of investing in the sector of peer-to-peer lending. The illiquid make-up of lending implies that investors ought to be ready to commit for the duration of the term or be informed of the secondary market of the P2P platforms. A Borrowers who default on their loans is an evident risk that investors have to evaluate.

The Principles of Retirement: Building Residual Income isn’t Late

The moment you retired, your strategy and risk profile will definitely adjust. This is to check out other ways of making money and maintain the lifestyle you had when working. The thing when it comes to making investments after retirement is, you’re speculating to get lump sum representing your years of labor and the accumulated amount of hard work.

Invest While You Still Can

However, once you reached that point, you begin to realize that your income is limited than when you were working and regularly making money. And soon you think that investing becomes too risky. Fortunately, there are basic principles that must be followed to prevent major mistakes and make the most of your hard earned money.

Number 1. Analyze Your Portfolio

Something that you must keep in mind is, nothing will be easy. The learning curve will be difficult, especially without decent support of a regular monthly salary. Your main objective is to make smart investments whenever you can.

The moment that you take the leap of faith to retire, you automatically accepted the fact that you have no other options available. Unless, you return to being an employee.

Number 2. Adaptability

It is crucial to figure out how much cash you need every single month and calculate the annual total income required to pay for all your bills and still, have enough to live on and do things you wish to do in retirement years.

As a brief guide, if you can limit your drawdown to 4 percent of less of the total sum of money you have in your retirement and still be able to draw the same amount on the subsequent years with adjustments by inflation rate, then you can live off of your savings for the next 3 decades without compromising your savings.

Number 3. Understand Your Investments

There are literally countless of ways to invest today than before. Right now, few popular alternative investments include Gold ETFs, REITs, intellectual property rights and even trading cryptocurrencies like Bitcoin on VIP signals.

Of course, you must know that not all these investment options are suitable for your circumstances or risk profile. Still, it will need your time, effort and undivided attention to understand what is the best investment scheme for you and how you can maximize it.

Starting and Growing a Business : Important Things to Consider

So you have a great idea for a startup business and the only thing that is holding you back is your need for additional business funds. First off, start by being a wise investor yourself, by exposing you and your assets to as little risk as possible. Do not throw all your eggs into one basket, so to speak, once you decide to turn your business idea into a full fledge business venture.

Just a piece of unsolicited advice, start small, maybe as a home-based business at first. As much as possible, veer away from the notion of securing a business loan to avoid being burdened with interest expenses and other financing charges. Your initial goal is to prove the viability of your business, then evaluate other aspects that need room for improvement or expansion.

Once your startup business picks up, and shows signs of potential growth, then you will have made your startup business a venture worth investing on. That is the first thing that most most business fund providers look into when looking for a good investment product.

At that stage, it would be unwise to wait until you have raised additional funds for expanding your home business, into something that has more form and structure as a business enterprise . Your goal this time is not lose the momentum for business growth, even if you have to seek additional funding from outside investors or financing institutions.

Potential Sources of Funding for Growing Your Startup Business


Love Investors

When looking for outside investors, look for them first in your circle of family and friends. If there is anyone willing or interested, let them in as investors. Doing so will put less strain and money-pressure on you and your business. Agreements with love investors are after all less constricting, when it comes to repayment terms and conditions.

However, try not to destroy their faith in you, because it will do you more harm than good. Building a good reputation in handling business obligations, even with informally contracted love debts, is valuable; especially if you want to grow your business further.

Banks and Other Financing Institutions

Keep in mind that banks and other lenders often require a specific period in which you have already operated a business even with minimum success. Lenders also want to make sure that they will be investing on a venture that has great potential to pay, not only the principal but also the interests that come with financing. This is why business reputation is worth more than the dollars you earn or keep by not honoring your obligations and commitments.

SBA Microloans

If you are a member of a minority group, or a business woman or a veteran, checkout your eligibility for a microloan being extended by the government’s Small Business Administration (SBA). The SBA is actually a program that coordinates with non-profit, community-based lenders who are willing to grant loans ranging between $500 and $50,000 at a minimum interest rate and up to a maximum term of 6 years.

Still, in light of the easy terms by which microloans are granted, you have to apply for one as early as possible. There are many like you, also seeking to obtain funds for a startup business, which means it will take time before your application gets processed.

Business Capital Investors

Business capital investors are different from lending institutions because the funds they intend to infuse will be in the form of semi-fixed investment, such as having a share in the ownership of a company, usually as a stockholder or as a bondholder.

Although they have greater capacity in providing larger funds, they also want to make sure their investments will grow by taking part in the decision-making processes. In case they are not satisfied with how the business is being run, capital investors have the option to pull out their investment when deemed necessary.

How Much Savings Do You Really Need For Retirement

Are you in your 40’s and may be confused about how much you need to retire? Or the idea of ​​saving such a lot of money is too much to handle? Nonetheless, if you have a reliable plan, you still have plenty of time to save.

Know Your Savings Needs

Put as many funds into your retirement savings as possible. Should you start off saving for retirement living in your twenties, the general rule said that you could still live comfortably when you save about 10 % to 12 % of your net income. If you start at the age of forty, the general rule suggests that you should raise your savings to about 15% to 20%.

Sounds a little overwhelming? Then try to do this: instead of centering on the percentage of the actual wage you must save, consider exactly how much you really want on an annual basis on your retirement then multiply what you have in mind by 25 to end up with the amount you have to save. For example: In order to live on the retirement of $40000 annually, you will need to raise $1M for your retirement portfolio.

Savings from Investments

While a million dollars is a lot to consider, it may not always necessarily have to come from your take-home pay but it can come from wise investments. The longer the span of time your money is invested in the retirement fund, the more likely it is to grow. Need Money Now for a great investment? There are many options for you if you are considering a take-out a loan to put on an investment. Your best bet is to speak with a financial adviser.

In reality, by way of an aggressive financial savings approach, you are able to produce a $1 million portfolio within 17 to 20 years. The bottom line is that when your money is invested for the longest time, you can take more benefit from compounding interest. After some reasonable time, compound interest will help you to double or triple your hard earned money.

Savings from Side Jobs

If your job at present is not sufficient for you to save at least $1,500 to $2,000 each month, you may want to look for other ways to come up with some extra income. Consider small means to earn that extra income. For as little as $100 per week, you can raise a good amount of savings for retirement.

Future Income on Current Investments

In addition to earning more, spending less and building your $1 million-portfolio, you can also look for sources of income in retirement.

While many of us are earning more and spending less, you can still consider other sources of income while in retirement. For instance, if you have a fully paid mortgage, renting out the home for a short and long term lease is feasible. Rental income can be used to live in a cheaper rental space.

Bottom Line

There are many elders who are on delayed retirement because they may have insufficient funds or could realize unforeseen needs for retirement. Nonetheless, this could be avoided even if you are past 40 years old. While delayed retirement is not too bad, there is a myriad of ways to fund your retirement and to even earn an extra while in retirement.

Learne more about business and investment from this... Life of Starting a Startup - such an informative and fun to watch video. This explains the mechanics well, implementing is easier said than done. Applies to tech startups that have a ridiculously high market potential.