Personal Finance, Loans & Insurance

Mistakes are made with money everyday by everyone when dealing with personal finances basics. Some of the most wealth people on the planet make mistakes, the middle class makes mistakes and the poor make money mistakes. Therein lies the biggest problem. The less money you have, the more damaging those mistakes are. What are some of the money mistakes people make? Let’s learn more why this happens.

1. Neglecting Your Credit Scores

Credit scores or ratings are more important today than they have ever been, especially today with more and more people defaulting on loans and mortgages. Banks that lend money are extremely cautious about to whom they will lend money.

Banks often look for low-risk customers. If you have a great credit score of 750 or above, lenders will do almost anything for your business. A high credit score also means you will get excellent rates on home mortgages, vehicle loans, personal loans and credit cards. Insurance company’s and landlords often times use credit scores to decide on quality customers or tenants, for this reason it is important to maintain your credit.

Do you know your credit? There are many resources that can give you an idea of where you stand. They will help with your personal finances basics.

2. Carrying Credit Card Debt

If you carry a balance on your credit card not only are you paying exorbitant interest rates but you may also be affecting your chances to get a mortgage or other type of loan and you are lowering your credit rating. If you want to fix your personal finances you must eliminate your credit card debt. You may need help to get rid of your credit card debt. Do so if you feel it is necessary. Leverage is important for you if you want to get a loan and you need to have good credit. The more quickly you get rid of your credit cards the less likely you will ruin your rating.

3. Too Much Home or Auto Debt

In an ideal world you should not exceed 30% of your gross income when it comes to how much you are paying for your mortgage. On that same train of thought, how much you pay in transportation expenses should never be greater than 10% of your income (those numbers include insurance, fuel and repairs). If you are higher in one or both of those categories, you are paying too much with regards to home or auto debt.

What to do? You may need to rethink where you are living. If you are unable to afford a home or apartment that has a thirty year fixed rate mortgage, you simply cannot afford the house. If you are unable to pay the 60 month loan for a vehicle, you can’t afford that car. These are easy personal finance basics you should know.

4. You Tapped Into Your Emergency Fund or You Don’t Have an Emergency Fund.

The importance of having money in hand is becoming increasingly valuable with each passing day. You should have an emergency fund. That fund can help pay for unexpected costs such as car repairs and it will even cover your bills if you lose your job. Most people aim to have an amount that is equal to 3 months living expenses. If you have a family it is wise to be able to cover 6 months. Obviously the more, the better. If you haven’t yet created an emergency fund, you should start creating one. Start by setting a goal of creating an amount of ,000 and then go from there.

You don’t have to make mistakes but everyone does. The fewer mistakes you make the better off you will be. If you stop making these 4 crucial mistakes, you will start to enjoy the financial freedom you desire. Attempting to live within your means, staying on top of your debts and your credit are the personal finance basics we should all take care of. Start by setting goals and tackle one of these things each month you will be rewarded financially in very little time at all.

Any car insurance agent knows how competitive the insurance business is. Gone are the times when a handful of agents supplied insurance to everyone in town. Now there are thousands of insurance agents competing with each other for clients. With the economic downturn many agents are having a hard time making ends meet. With so many insurers and seemingly so few potential customers, how is an agent supposed to keep the doors open? The best approach is to always have a pile of new car insurance leads on your desk. You might think this is easier said than done. Advertising costs a lot of money, and it takes time before your new clients walk in the door. Cold calling is tedious and ineffective. However, it takes new leads to make new sales. Fortunately, the situation isn’t as bad as you might think. There are a lot of drivers out there, and every one of them needs some form of insurance. So although it seems like people are reigning in their spending, they will still buy insurance. Indeed, many people are shopping around for better insurance rates, which means there is an increase in potential customers. The key to a successful insurance business is to get in contact with the people that are interested in buying insurance or changing policies. These are the leads you want on your desk, and if you have lots of these leads you will make plenty of sales. Luckily, it is easier (and more affordable) than ever before to get just these sort of quality auto insurance leads. Indeed, you don’t have to cold call or pay for advertising. Today there are services that sell quality car insurance leads. These leads are made up of people who have actively searched out insurance quotes on the internet. When you buy leads like these, you are buying leads that will convert to sales. This is by far the easiest way to make much needed sales. The best part is, you can buy as many leads as you want, so you can always have a pile of fresh leads on the desk. The key to profiting from online auto insurance leads like these, is to take advantage of them right away. Generally, when you purchase online car insurance leads, they are relatively new; they are made up people who queried about insurance very recently. That means you need to call them right away while buying insurance is still on their mind. The sooner you contact a new lead the better the odds you can close the sale before some other agent does. So if you feel your business isn’t able to compete with the other insurers, maybe its time you start using online car insurance leads. They are worth their weight in gold, and they are hands down the most effective way to boost your sales and increase your clientele right away.

Relationships in many regards are much like your own personal finances. Your relationships take a great deal of work, planning, communication, understanding, goal setting, deposits and withdrawals. Personal finances need the exact same kind of dedication, organization, understanding, goal setting, deposits and withdrawals. The two are inexplicably connected in a lot of ways and if one finds some form of hurdle the other will likely be adversely   affected. Here are several ways you can manage your money and your relationships and help both grow amazingly together.

GOAL SETTING: Where will you be in five or 10 years? This could be a ideal conversation starter for you and your partner. The great thing about this topic is managing money can easily be connected with relationship goals. Your life partner may not be happy with their current occupation and has hopes of starting their own business or planning to go back to college. Together you could discuss what steps need to happen to accommodate each others goals and not sink the financial boat. If you keep this line of discussion open you will be able to set realistic goals in money and in life.

COMMUNICATION: This is probably the most important requirement for any solid relationship. Because most quarrels  are over money it is wise to keep an open line of conversation in everything else so that talking about money comes naturally. That means that any major purchase should be thoroughly discussed. just think about how angered you would be if your mate came home one day with a 00 plasma T.V. or a 00 dress or fifteen hundred dollars in penny stocks. If you can talk about finances, that would be one less topic that could result in a fight. Communication is key in relationships and in financial planning as well.   

JOINT ACCOUNT: The age old question. Some feel that sharing a joint savings account is important because it displays a big degree of trust. Some people feel that it is wise to keep your personal finances apart from the relationship because of the freedom it creates. The issue is it may cause disruptions in your relationship. Why not have both? First you should figure out is what your expenses are and what is left over for pleasure. {In my opinion|I think a simple formula to use is each of you takes twenty percent from the paycheck every week to deposit into a personal account. That cash is for you and you alone. You can use it to buy a fancy pair of shoes, football tickets or anything you desire. The remaining 80% is placed in a joint account that covers living expenses such as food, mortgage, retirement planning, car payments etc..  This way if you choose to treat yourself, you will be using your money to do so.

STAY ON THE SAME PAGE: This is vastly important. Know what’s going on. One of you could know a bunch more about personal finances. There aren’t many things more exciting in a relationship then learning together and knowing the same things. If you both know where the money is going, in what way it is being invested and what investments to make there will always be an understanding. There is little more heartbreaking than when one person makes a solo decision and loses out. If you constantly inform each other of financial opportunities and financial decisions it will be more difficult to make silly mistakes. As the saying goes, two minds are better than one.

Relationships are always a work in progress. It is inevitable that you will run into problems and not see eye to eye with your partner all of the time. Finances are one conflict that can easily be avoided with an open line of communication, goal setting, planning and understanding. If you and your spouse can communicate honestly when it comes to finances and put the right plan in place, your relationship with each other and with money will grow stronger and stronger every day.

Are you familiar with the phrase “More Month Than Money?” It means running short of money either before the end of the month or before your next payday. It’s a condition with which most wage earners are familiar. It was my problem for many years.

I’ve been married to Lois Lane for more than forty years. We raised two daughters. I’ve had several “careers,” and, I’ve always had a decent income. What I didn’t always have was an effective way to manage my income. I’m not an accountant; just a breadwinner who, when I first got married, couldn’t make the ‘bread’ go far enough.

The Early Years

For about the first ten years of our marriage, I used trial and error money management. Even though I had a good job with a decent salary, I never seemed to consistently have enough money to both pay my bills and for day-to-day expenses. One payday we would have more than we needed; the next we would run out of money long before the next paycheck. It was a continual financial rollercoaster. Sound familiar?

Like most people, I had not received any kind of formal or informal training to prepare me for the awesome responsibility of managing my income to effectively support a growing family. I was on my own with no financial roadmap as I searched for any type of a money management method that would work for me. I was looking for a way to both pay my bills on time and to smooth out the amount of spending money available between paydays. I’m sure you can relate to my quest.

I tried budgets and found that keeping track of every penny spent was something I didn’t want to do. My budgets started off great, but they didn’t last long. I tried bill consolidation loans and, after doing several, realized that consolidation loans by themselves are not the answer. They served only to increase my debt instead of helping me to control my finances. Keep in mind that this was all happening over 30 years ago; well before the advent of personal computers. There were no software options for personal financial management. I was on my own.

My First “System”

Over the years I gradually, without any premeditated idea of what I was doing, developed a system for paying my bills which also evened out the highs and lows between paychecks. These were the two features of a money management system that I wanted. This “system” was nothing more that a consistent way of looking at my finances twice a month. I was doing this all on scratch paper with no formal structure.

It’s impossible for me to pinpoint when my very simple approach to cash flow management evolved into something I could use consistently. All I can say with certainty is that while I was paying bills one month it dawned on me that what I was doing on scratch paper could somehow be organized into formal records.

After experimenting with forms design over a couple of months, I managed to create a system of forms that replaced my scratch paper. (Remember, this was in the mid-1970′s; several years before the advent of the personal computer.) With my new forms in place, my informal system had matured to the point that I was able to pay my bills when due without financial strain, and I had a consistent cash flow for day-to-day expenses. I was quite pleased with how my own personal money management “system” had turned out. It was a process that I, nor anyone else to my knowledge, had ever seen or used.

A Friend Gave It A Try

A friend of mine at the time, Fred Thornton (not his real name), became interested in my little system of forms. I had been telling Fred how pleased I was with the effectiveness of the process. My friend was also searching for a better financial scheme. He had an excellent income, plus a generous monthly dividend from a trust fund that his grandparents had set up. Despite his above average income, Fred’s financial condition was characterized by “more month than money.” He had large credit card and charge account balances to which he forfeited substantial interest every month. In addition, Fred was constantly concerned about his ability to pay his bills. He was in the same boat I had been in. At his request, I agreed to create a set of my forms for Fred to try.

After I copied the forms and instructed Fred on the methodology of the system, Fred became very dubious that my set of forms would be any help at all. After he initialized his forms to reflect his financial situation, it was painfully clear that Fred’s finances were a disaster. According to the forms, Fred was in very bad financial straits; bad enough that he doubted his ability to ever get his finances under control. In addition to doubting the usefulness of my forms, both Fred and his wife were afraid that using the system would put unwanted restraints on their lifestyle the same way budgets tend to do.

The Turnaround Was Amazing

Despite their concerns, Fred and his wife decided to give my system of forms a try. They had nothing to lose. Their finances were in such bad shape that they doubted my system could make things worse. The results they achieved so quickly amazed all of us.

After using my system of forms for less than three months, Fred’s finances had stabilized. All of his credit card and charge account balances were under control to the extent that he no longer paid interest on any of his credit cards or charge accounts. Furthermore, Fred and his wife were very pleased that their concerns about having constraints on their lifestyle proved groundless. They were actually able to begin pursuing many interests which, prior to using my system of forms, had been too expensive. As Christmas approached that year, the Thorntons were able to do virtually all of their gift buying without incurring any debt. In the eleven years they had been married, that was the first Christmas that they got through with virtually no additional debt.

The amazing turnaround in Fred’s finances was nothing short of incredible. Because of the original set of forms I had provided to Fred, his finances quickly went from “more month than money” to “more money than month.” After using my “system” for a few short months, Fred found that he was consistently faced with the pleasant problem of having excess income every month. His income had not changed, only the way he managed it.

The Word Began To Spread

My and Fred’s success with the original set of forms was difficult to keep secret. It wasn’t long before I was receiving inquiries from both people I knew as well as strangers; some of whom were out of state. Since I couldn’t make copies of the forms and personally instruct everyone on how to use them, I decided to write a how-to book. The resulting three-ring binder, titled Payday Management System, was self-published in 1975.

Without exception, everyone who purchased a copy of that first book had the same success in gaining control of their finances that Fred had experienced. I began receiving letters from very pleased customers. Sales were slow since all advertising was strictly word of mouth. But, it appeared that, given enough time, sales of the Payday Management System could have taken off. So why haven’t you heard about that first book in the last thirty or so years?

At the time I was still very much involved in my military career and had no time to be a book publisher. Shortly after publishing the Payday Management System, I was transferred to my next tour at sea. Before heading for my ship I put the book aside. I went off to sea and forgot about it. I continued to use the money management techniques; I just didn’t have the time to share them with others.

Fast Forward To Today

It’s now more than thirty years since my personal money management system was formalized in a crude set of hand-drawn forms. Since then, the personal computer has become very much a part of a growing number of peoples’ lives. I decided a few years ago that it was time to update the original book and to convert the manual forms into a personal computer program so that I could again begin sharing this powerful money management process. I was now a software developer with much experience and figured I could easily convert the Payday Management System manual workbook to a Windows program. Boy, was I wrong.

After several years and more false starts, I completed the first version of my personal finance program in the fall of 2006. Expressing the simple techniques that comprised the original Payday Management System proved to be a far greater challenge than I first thought. Those techniques are powerful in their simplicity; and I soon discovered that preserving that simplicity in a technological venue was not easy. But, version 1.0 of the software is finally done. I’ve been using the program for several months. It makes managing our month-to-month finances very simple and easy.