Sunday, May 25, 2014

Is Educational Loan a Safer Financial Option?

Educational loans are a form of financial aid to college students in form of borrowed money from banks and other financial institutions offered to both federal or government sponsored students and privately sponsored students which are intended for educational expenses only such as college tuition, course work books, lecture notes and living expenses. They are repaid with an interest included which is calculated according to the set interest rate. Educational loans are a vital piece of the students’ financial source as they enable him/her to pay all necessary tuition fees which enable them to attend their respective classes, and eventually graduate at the end of their time in college. This ensures that they get a quality education and later a job which would then make them financially independent making something out of them.

Educational Loan

Educational loans have fixed interest rates which is a crucial advantage when compared to other loaning schemes. This is so because the student does not have to worry about rises in interest rates making the loans tougher to payback. These interest rates are also significantly lower when compared to other loans awarded in various other schemes. Payments of the loans are flexible in the sense that the loaning organization, such as a bank can organize a monthly payment plan which makes the payment of the loan far much easier and affordable. Payment also occurs after a student has completed his studies so that they are able to concentrate on their studies and not worry about payment of the loan. The interest rate takes effect after completion of the time period in school by the student and not immediately after receiving the loan. Some organizations which are involved in the issuance of the loans may sometimes decide to offer the students who may be able to pay the sum owed in lump sum the chance to pay only they principle amount they received with no interest added.

However, educational loans also have a downside. The interest rate that is charged to these loans, though small and fixed, may cause a potential burden to payment for some of the students, since any charge, however small will ultimately cause an increase in amount to be paid. Payment defaulters may be charged in a court of law and charged with defaulting payments which were agreed upon. This may result in legal procedures such as auctioning of private property. A student’s guarantor of payment as contained in the loan payment plan may be bestowed upon the burden of the loan if the defaulter is not in a situation to pay the loan long after the loan’s due date matures. Over and above the fixed interest rate for the loan, the defaulters of these educational loans may be required to pay an additional charge for the delayed payment of the loan. This makes it even more difficult for a struggling defaulter to pay his dues.

Based on the above facts, educational loans may be considered a safer and viable financial option if a student is able to obtain a loan that has a fixed and low interest rate and is sure about obtaining a job that will be able to cater for the loan payments he owes without being slapped with defaulters’ court cases and being subjected to auctions.

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Thursday, May 22, 2014

Three Reasons to Obtain Home Insurance in Phoenix

Some people believe that having home insurance in Phoenix is optional. This can be a huge mistake. A home that is damaged or destroyed can cause an array of problems. People may find that they are suddenly homeless and without any support system in place to arrange housing. Homes that lack insurance can also leave the homeowner on the hook for the home's value with the lender in addition to needing to replace or repair the structure.

Home Insurance

Don't be a retired homeless person

Retirees have often worked and saved all their lives to be able to enjoy a stress-free retirement – or so they hoped. One basic issue that many strive to accomplish is to have a paid for home. After paying mortgage payments and insurance premiums for decades, many think that they are off the hook once the home is paid for. This can backfire if the home is burned in a fire, damaged by wind or water or has flooding. These conditions may make the home unlivable for a set time period or forever. Many retirees will not have the cash on hand to make repairs or rebuild. The dream of a lifetime can be destroyed in minutes.

Keep your estate intact

Younger people don't always realize that their home will constitute the largest part of their estate when they die. For most people, this can be the biggest single purchase of their lives and something that they are likely to pass on to their children. Omitting insurance coverage for this asset can destroy any possibility of leaving something of value to one's children. For many families, the sale of the home will be the asset that pays for the owner's final expenses.

Have a way to make repairs

Fire and floods from plumbing are two of the most common reasons why a home becomes damaged. If the average kitchen costs between $20k and $30k to repair after a fire, how many people have that kind of money lying around? 

A burst pipe that happens while a family is at work or on vacation can do a lot of damage. It isn't just a matter of things getting wet and needing to dry out. The plumbing repair has to be made but there will also be an array of other issues that demand attention. Flooring, whether it is carpet, tile or laminate, will have to be removed and replaced. Depending on how high the water got, the drywall will also have to be replaced. If this is a textured wall, this has to be matched which requires someone with above average skills. Next comes paint for the walls. 

In either case, a family will not be able to live in the home while it is undergoing repairs. Having insurance will provide the money to rent another home or live in a hotel during this process.

This post was written with the help of Summit Insurance AZ.

Saturday, May 10, 2014

Understanding Forex Trading and Making Money

Forex is a technical term which is not known to many individuals because of its complex methodology. Basically, forex is derived from two words – ‘foreign’ and ‘exchange’. This is the act of exchanging one currency for another. Since the globe is infiltrated with various currencies, transaction is facilitated worldwide. Forex is affected by different factors that is why it is characterized as volatile. In order to understand the volatility of the market, you need to acquire certain forex tools and techniques so you can follow the trends and be able to make more money. If you want to trade, you have to accept the fact that losing is part of the game. Even the most successful trader experiences ups and downs and this is what this business is all about, accepting ambiguities and striving further to move on.

Forex Trading

Any person can engage in forex. Whether you are a plain housewife or a successful businessman, you are welcome in the world of trading. If you are a beginner in this business, you need to be guided by certain guidelines that will help you in making realistic decisions. When it comes to investing money, you have to be keen and intelligent. Here are ways on how to understand the business and be able to make money.

How does the system work?

Brokerage companies invite investors, businessmen and career individuals to engage in buying and selling of currencies through the internet. In the process, you will be offered some software and tools that will help you trade more efficiently. For any successful trade that you achieve, the brokerage company is given a small commission. Therefore, you have to find a reliable broker and sign up for an account. Once you have completed the process, you need to fund your account using your credit card or any financial platform. In the case of making profit, the money will be transferred into your account for withdrawal.

What are the currencies to trade?

In the world of forex trading, you have to deal with the so-called ‘currency pairs’. The four major currency pairs are: USD and Swiss Franc (USD/CHF), USD and Japanese Yen (USD/JPY), Euro and USD (EUR/USD) and British Pound and USD (GBP/USD). A pair of currency is further understood as one being the commodity and the other as money. For example, when you choose EUR/USD pair, you will have to buy Euros against the USD. If you plan to sell the currency, you will have to sell Euros against the USD. You don’t need to worry about currency conversion because the trading software you acquired will take care of this. Take note that exchanges are done automatically.

How can you make money through Forex Trading?

The most basic formula to use in order to make money is buying low and selling high or selling high and buying low. Here is a concrete example: If you buy JPY against USD where each JPY is $1.9544USD, you have to sell it at $2.0235USD. As you can see, in every JPY you sell, you earn a particular amount of profit. Hence, the amount of currency you purchased will be multiplied with the profit you gained. For example, if you bought 100JPY then your profit will be multiplied by 100. This is how you gain profit in forex trading. The only drawbacks are variables such as calamities, disasters and petrol price increase. The movement of the market is dependent on these factors therefore; you ought to know when it is the best time to trade.

Forex trading is considered as a technical form of business that requires analytical thinking and logical reasoning. It may be difficult to understand the system at first but as long as you are equipped with complete forex trading tools and strategies, you can trade efficiently. Sometimes, intuition can help you become a successful trader. If you want to make money out of forex, study the market first and search for a quality brokerage company.

Friday, May 2, 2014

The Benefits of Opening a Bank Account for Your Child

It’s never too early to learn how to be smart with money. Opening a bank account for your child is a great way to instill some financial sense in them from a tender age. In addition, it will encourage them to save for all those things they’ll want to do in life that cost money – traveling the world, going to university or buying their first car. While the interest on their pocket money may not be enough to cover their future education costs, every little counts! More importantly, though, having their own bank account will teach your child the value of money and the wisdom of saving.

Bank Account for Children

Children’s Cash Savings Accounts

Accounts for children are not very different from those offered for adults by banks and building societies. Most are simple cash accounts that pay interest on the amount deposited, usually around 2-3%. As a parent in the UK, you can open an instant access savings account for any child under 18 with a deposit of only £1. Most account holders are issued with a card and once your child is over the age of seven, they’ll usually be allowed to deposit and withdraw money from the account themselves. As well as instant access accounts, there are fixed savings accounts which offer slightly improved interest rates but require staying with the same bank or building society for an extended period. There are also regular savings accounts for children that require a regular monthly deposit but can pay interest as high as 6% or more.

Tax-Free Child Savings

Contrary to what many people think, kids are taxed in exactly the same way as adults, with every child having a Personal Allowance of £10,000 for the tax year 2014-15. Provided your child’s annual income is under this amount, they won’t be required to pay tax on it. However, banks automatically deduct the tax, so you’ll need to instruct them not to do so by filling in HMRC’s Form R85.

Junior ISAs – Individual Savings Accounts - and Children’s Bonds offer another way for children to save tax-free. Junior ISAs – which replaced the Child Trust Fund in 2011 – come as cash or stocks and shares accounts, and a child can have one or both. No tax is payable on the income or profits made and up to £3,600 can be deposited during the tax year. When your child reaches 18, the account is automatically converted to a standard ISA. Children’s Savings Bonds also offer tax-free interest and can be cashed in when your child reaches 21.

Teaching Children to be Smart with Money

While there are some clear financial gains to be made by shopping around for the best children’s account deal, the real rewards in setting up an account are the long-term educational benefits for your child. If you’re a money-smart adult who is good at budgeting and saving, it’s likely you learned these skills from someone as a child –whether from a parent, a relative or a teacher. It’s a sad truth that kids who learn to get what they want simply by saying ‘gimme’ tend to grow up as financially irresponsible adults, often with severely damaging consequences. Learning financial literacy is just like learning a foreign language so the earlier you get your kids started, the better equipped they’ll be when they need to make important financial decisions as adults.

Together with opening a bank account, financial training for your child should include rewards and incentives. For example, rather than just handing out pocket money or bestowing presents, consider paying them an allowance for performing household tasks such as cleaning their bedrooms and washing the dishes. If they want the latest Playstation or X-Box, give them task-based financial incentives to help them earn it for themselves over time. You can also give them money rather than Christmas or birthday presents and encourage them to choose how they spend – or save – it themselves.

Once your child starts to understand the value of money, try to make financial learning as much fun as possible. Keep a record of their earnings, savings and spending, perhaps by using a wall chart with stars and stickers to reward progress. When they’re a little older, start to teach them about how banking works and get them involved in understanding your bank account as well as their own. In addition, encourage them to save by teaching them about the benefits of interest and showing them statements with interest added.

Opening a bank account for your child will help to teach your kids the kind of financial wisdom that money can’t buy. Who knows, with the right encouragement they may even end up advising you on how to manage your own money better too! For more information on finance and banking opportunities click here.

Thursday, May 1, 2014

Most Payday Loan Borrowers Fight their Life to Come Out of the Debt

The CFPB or the Consumer Financial Protection Bureau, a government body aimed to look into the functioning of the lending organisations and protect the right of the consumers, has revealed that 80% of the people who take short term payday loans either get their loans roll over or they take more of payday loans to meet other requirements which come their way.

Payday Loan Borrowers

Most of the lenders who take the payday loans out of compulsion belong to the lower income group. With already stressed financial conditions, these new loans are taken simply because they are available easily and can be had within the same day of application. Moreover, since they do not require any credit checks, borrowers can qualify for them even if they have defaulted on other loans in the past or even had bankruptcy in their records.

Emergencies do come and they often strike them the most who are financially weak. Those who already have a payday loan in their kitty, when have another emergency situation to be dealt with, conveniently take another loan. This means that their coming pay check is used to the payday loan they had already taken , the next pay check is booked for the payment of the next payday loan taken by them.

It is thus evident that once you get into the habit of taking a payday loan, there is no respite from the situation. You will end up into a vicious cycle of loans which becomes impossible to come out from.
Reports by the CFPB indicate that almost 25% of the borrowers were found to go for the rollover of the payday loans. This means that they paid a much higher sum that they had originally taken and much of their payments went towards the fees and the penalties.

All this has definitely caught the eyes of the government which is trying to bring in new rules and guidelines for the payday loans and ways to curb the high interest rates and the tough repayment plan. However, with no alternatives available for the people taking to these loans to meet their urgent requirements, the government is going slow on implementing or enforcing any of these policies.

These loans are cash advances which are offered to the consumers against their pay checks . These are offered for a period of two weeks and the interest charged on them is a flat 15%. For such a small time period the interest rate does not get on the nerves of the people. In fact the lenders deliberately project the interest rates which show a lower value. If they would talk about the APR on the payday loans they would have to show the consumers a figure which would scare them away from taking the payday loans.

Payday loans have always been in the news for the wrong reasons. These are extremely popular bad credit installment loans amongst the consumers for the urgent needs they fulfil of theirs. However, there are a series of complaints against these lenders on account of higher interest rates charged from the consumers.

It was recession which pushed a lot of people into financial crisis and there it was, the pay day loans demand surged and reached the levels where it attracted most of the lenders into the business.
All is not good with the payday lenders. Several regulations and ban on payday loans in several US states has seen a lot of established lenders getting out of the business. However, Wells Fargo rules the market with maximum share today.