Tag: Finance

Many of us believe the only reason they are broke is the fact that they don’t make enough money, while that’s certainly true for many people. The reality is that we refuse to re-evaluate ourselves to improve our finances by making better life choices. I was definitely in this situation, convinced that I did not have enough money to purchase items I desired, but I realized that it was all about my mental attitude.

Here are 5 of the main reasons that were keeping me broke and how I fixed them.

The wrong friends

Friends whose mentalities differ from yours can impact negatively on your finances. Friends who tend to encourage you towards lavishness will only keep to you broke. I used to hang out with those type of friends, after which I realized they were impeding on my financial goals. I hence slowly distanced myself to end up with a few closed ones. Another way to fix your situation is by letting your friends know that you are on a tight budget. Perhaps you will realize you need to find yourself real friends who will understand and value money as much as you do.

Unable to manage money properly

I always broach the subject when discussing money. If you are earning enough but can’t handle it properly, you will still end up broke. Knowing how to manage your money is not solely about saving it. We should have a separate savings account to cover emergencies, making that money work for you. When I learned how to handle my income, I was able to create my business without having to resort to a loan.

Not learning new skills

If you are not adding new skills to your artillery and using them daily, you’ll be stuck inside a box with no chances for expansion. Learning new skills brings positive outcomes, which leads you to tackle all kinds of tasks that may result in a higher income. You can also make use of those skills for a side business of your own. I signed up for online courses to learn new skills and apply the knowledge to my own business. I increased my revenue and became more responsible for doing so.

A toxic work environment

Your job might be contributing to your broke status by not allowing you to expand or by not giving you a break. If your job is continually pestering you even when you are not at work or when you are at home on the weekend, they are using your personal time for their growth. It is a typical example of a toxic work environment that you may want to get rid of. To maximize your brain’s capacity in learning new skills, you need to cut off from your daily hectic work routines; get a break!.
Further, you could make use of your free time to delve into a personal project. Sadly, I had a terrible experience working in a toxic job, besides not teaching me anything new, nor improving me professionally or personally, the person in charge tried to take over my life. I could not make plans because I never knew when I was off since the schedule was made out one day ahead. Also, on days off, I used to receive many phone calls and text messages asking me to help someone or to answer questions they could have answered themselves just by looking at the spread sheet. Due to this situation, I was not expanding nor growing and was forced to quit.

Being broke depended solely on my income

Most of us believe just I did, that they are broke because they don’t earn enough money. The reality I learned was that I made enough to cover my bills, buy groceries, cover all the necessary expenses, and ended up with $100 in my pocket that I chose to waste. I chose to be broke. What you decide to do with those extra $100 is your responsibility. You may use this extra cash to purchase books and educate yourself, invest it on the stock market, save it for a side business, or even create a website to present your skills to the world. Whenever I have money left over, a little extra income I save it to pay off the mortgage loan my partner and I took out because that is the only debt we have. By paying more than we are supposed to pay each month, we lower the amount of interest we have to pay. That way, I spent on something that matters, and I can potentially save as much as thousands of dollars in the long run.

Being broke can be exhausting, demoralizing, and cause embarrassment. However, after learning all those lessons, you can now use your experiences to pave your way towards financial independence.

Many times, we’ve been in a financial situation where we need money to start or complete a project. That’s why we get the help of loaning an amount from either the bank or some other financial institution. Many people who are confused about what is a loan, well it is a lump sum of money that you borrow with the expectation of paying it back either all at once or over time, usually with interest and they are a fixed amount, like $5,000 or $15,000. The interest rate varies from the amount of money you are taking from the bank. There are some factors that they do consider before loaning you an amount these are your income, debt, credit history, and a few other factors. Some loans are the most common because the amount is higher, and the interest rate is lower; such investments are home loans and student loans. It is important to know that there are different types of loans you can borrow and we are going to talk about that today in details.

What are Open-ended and Closed-ended Loans?

These are loans that you can borrow over and over. The credit cards and lines of credit are the most used types of open-ended loans, these have a credit limit, which is the maximum amount you can borrow at one time. Depending on your needs, you can use all or part of the credit limit. It is normal that the more purchase you make, the quicker the credit decreases. As for closed-ended loans, these are the one-time loan that cannot be borrowed again once they’re repaid. As soon as you make a payment on the closed-ended loans, the balance goes down. If you don’t have any credit, then you can use the closed-ended loans, but if you need more money, then you would have to apply for another loan and go through the same approval process all over again. The common types of closed-ended loans are mortgages, auto and student loans.

What are Secured and Unsecured Loans?

These are loans that rely on an asset as collateral for the loan, and in the event of the loan default, the borrower can take possession of the asset and use it to cover the loan. Know that the interest rates for secured loans may be lower than the unsecured loans. However, it is good to know that the asset may need an appraisal in order to confirm its value before you can borrow the amount that is up to the value of the asset. An example of a secured loan is a title loan. As for unsecured loans, these do not require an asset for collateral. Unsecured loans depend fully on your credit history and your income so that you can be qualified for the loan. If you don’t pay an unsecured loan, then the lender can exhaust the collection options that include a debt collector or a lawsuit to recover the amount.

5 Types of Loans

Here are the five most common types of loans apart from home and student:

  • Auto loans – These are mostly used so that you can buy a new or used car and it normally takes years to pay off. An auto loan can be financed through a bank, credit union or a car dealership and these have the lowest interest rate.
  • Personal loans – These are types of unsecured loans and are mostly offered by the bank. It is normally based on the borrower’s creditworthiness and high scored are preferred. The money from a personal loan can be used to pay off any bills or debts. Interest rates for personal loans vary from 9% to 12 % depending on certain financial institutions.
  • Credit cards – These are essentially loans that the borrower and the bank agree to be repaid at a later date. It is one of the easiest loans to use.
  • Cash advances – Known as short-term loans that are offered by credit card companies. Short-term lenders are payday lenders and tax-preparation companies. These offer money against an expected refund.
  • Small business loans – These are banks that offer small businesses to start their business by providing a loan that would have variable rates and the payment can be made from five to 25 years.

Loans to Avoid

There are certain types of loans that one should avoid taking even if in dire need of it! They are like predators and take advantage of the consumers. These are:

  • Payday loans are short-term loans that are borrowed using your next paycheck as a guarantee for the loan. These loans interest rates are pretty much high, especially when it comes to annual percentage rates, and it can be difficult to pay off.
  • Advance-fee loans are scams to trick you into paying money. These use different tactics to convince borrowers to send money to obtain the loan, but the lender will have to pay an upfront fee to obtain the loan. There is a risk in this type of loan and is normally avoided by anyone.

If you’re looking for a reliable source where you can manage your finances, then do consider FLAME Mortgages. They are your experts in finance loan and mortgage. As a family-owned and operated business, they do know the real problems when it comes to mortgaging and financial crisis. The management assists you from scratch in order to get a better understanding of your needs and financial goals.

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