Quite similar to a secured loan, home equity line of credit is a form of loan offered to you with your home as collateral. This loan, however, must not be availed for insignificant requirements. Majority of people borrowing this loan use the money for educational needs, pay medical bills, make home improvements, etc.

Repayment of this loan must be taken seriously as non-payment can cause you lose your home. You can avail home equity line of credit even if you are still making mortgage payments.

Most lenders would agree to offer you this credit, but within a limit. They will first assess the appraised value of your home and offer a percentage, say 80% on the value as home equity line. If you, however, still owe some mortgage payments, the amount is deducted from the loan amount. Let’s consider this example for better clarity.

You home’s appraised value is say around $200,000, and the percentage of the loan amount is 75%. So, you are entitled to receive $150,000 as home equity line of credit. But you still have to repay $50,000 mortgage. So, you will eventually receive $150,000 – $50,000 = $100,000.

The percentage set by lenders, however, depends on the various factors. They take in to consideration your ability to repay the loan, your credit report of course, your total income, your total debt, savings, etc.

If you are approved for a home equity line of credit, you can borrow any amount of money (within your limit of course) at any time. However, you will have to make use of special checks to withdraw money for this purpose. In some cases, lenders also allow borrowers to take money through credit card or other financial products.

Nevertheless, the particulars of home equity line of credit vary from one lender to the other. Some may ask you to withdraw ‘X’ amount every month, some may ask you to maintain a minimum balance.

However, not many people are used to this kind of spending. Personal finance budgeting is quite alien to people in their 20’s, and very few people in their 30’s actually have an effective budget. So, let’s have a look at how people can start with budgeting and from where.

1. Shopping budget
   Creating a shopping budget means cutting down on excessive shopping. However, you can’t spend more on trivial things and ignore significant things. Hence, to create shopping budget, you will have to think about things that you can eliminate. Or you can buy a cheaper budget, or find discounts. However, eventually, monthly shopping must be done with the amount assigned by you.
2. Household Budget
   There are hundred of things you will need in your house. However, if you look at it closely, there are many things that aren’t really useful. Get rid of them. Next, create a list of various kinds of bills you pay every month and think about ways to eliminate or reduce the usage. Food is important to survive; however, junk food is not. Cut down money spent on eating out. Use energy saving lights, switch to a cheaper substitute. Do every possible thing but reduce the amount spent on household every month.
3. Credit Card Budget
   Along with spending less on your credit card, it is important to repay the debt accumulated by it. Hence, spending less ensure repaying less amount. The first thing you can do is get rid of all your cards except one. More available balance encourages more spending.
4. Mortgage Management
   Have a close look at the conditions and interest rates of the mortgage provided by the financial institution. Check if they are providing the best deal for you. If not, switch your mortgage provider and select the one that offers the best deal in the market. It’s just a phone call away.
5. Auto Finance Budget
   To start with personal finance budgeting, you can have a look at your vehicle expenses. People usually don’t realize how much amount they spend on their vehicles. Gas is definitely a huge monthly expense. However, many other costs like maintenance, repairs, etc sum up a huge amount. You can reduce this cost either by traveling less by your car by using public transport or carpooling, or by getting rid of your car.

You can probably save a huge amount every month by personal finance budgeting. However, it needs discipline and dedication to succeed.

Payday loans seem to be a lucrative option for funding any of your necessities when you are short of money. You take a certain amount as loan against your monthly pay. Your lender does not ask you for your credit history and the loan is readily available at the time of need. But you should be able to pay back the loan in the specified time duration otherwise you’ve had it. Let’s see the different things that could happen to you if you are not able to pay up the loan in the time agreed upon by the lender.

In a payday loaning system, you need to first provide the lender post dated cheques for repaying the loans. If you are not being able to pay up the loan in the given period of time, you are given an extension of a week or two, failing which, a late fee/ an increased interest amount are added to your basic loan. As the time period increases, the amount of money you need to pay up to your lender increases. This is a terrible situation for you because why would you want to procrastinate the payments in the first place? Its only because you don’t have enough money to pay back the basic loan isn’t it? but if the amount that needs to be paid back increases as time passes, your debt will only pile up more and more and you’ll not be able to pay it up ever.

Ultimately, if you are not able to pay up your loan there are three things that might happen to you. Firstly, the lending company may set collection executives on you who’ll hound you till you pay up the debt. Secondly, the company can sue you in court and seize your assets. Worse still, you may be handed over to police if the checks that you give bounce back.

Another way in which you could take loans is obviously in the most popular mode of the present times and that is by using credit cards. Go for credit card loans only when you have a good credit report. If you have a bad credit, you are given two types of credit cards namely, secured and unsecured cards both of which come with penalties if you are not able to use them appropriately. Another way in which you could have an item that you cannot afford to buy is the rent-to-own. But finally, by the time you think of owning it, the item may become quite obsolete or unaffordable again due to high price charges.

Consumers Refuse To Transact With Problematic Money Lenders

Gone are the days when the borrower would fall on his knees in front of the lender for money. The borrowers have a lot of choices now. They are not ready to take any unfairness from the lenders. If a particular bank is giving problems, they would gladly move over to another bank for money.

Apart from this common measure there are a lot of ways in which the customers are revolting against unfair lender practices.

Closing Accounts/ Withdrawing Large Chunks of Money from Their Banks

Account holders are withdrawing large amounts of money from their accounts in banks with which they are dissatisfied. Poor returns and bad service are prompting clients to withdraw their monetary balances from banks and keep only small amounts of money in them. Top banks of the nation are bearing the brunt of consumer ire. Citibank, Bank of America, Wells Fargo and Chase are seeing many of their clients switching loyalties or withdrawing huge amounts of money from their accounts. People are opting for small local banks instead. Trustco Albany is a local bank that is seeing a lot of new accounts being opened with it recently. Not only the middle class Americans, but even the rich are opening accounts in the local banks of late.

Online Banking on the Rise

With bank consumers not being satisfied with big banks, online banking is fast gaining popularity with Americans. Tower Group predicts that in the coming couple of years, direct banking is going to increase rapidly. People are finding online banking more convenient. Online banking seems to be the solution to many problems that people genereally face with brick and mortar banks. The costs of maintqaing a brick and mortar bank are much more than online banks and as a result the fees are very high. Even ATM fees of online banks are much  lower in comparison to their brick and mortar counterparts.

Another measdure that consumers are taki9ng against unfair banking practices is refulsal to comply with the unfair rules. The last thing a bank would do is to argue with the clients in court about their customer policies. Apart from the government, Americans are taking personal steps for protecting themselves from the paws of  big unjust banks.

It’s quite amusing to see people coming up with similar resolutions every year. I don’t like to have such procrastinated resolutions. But, out of curiosity, I did a bit of research to find the most common ones this year.

1. Lose Weight:

   Not surprisingly, this is the number one resolution since last fifty years or more (I guess, since people knew about New Year resolution). Along with being most common, this resolution is also the most unsuccessfully kept one. People, who never worked out once a month, set up goals to works out every day. Why such unachievable targets? Rather than doing it daily, getting frustrated and quitting it for good, why not promise yourself to workout once a week?

2. Eat Healthy:

   Yet another unsuccessful resolution. How can a small decision taken on a drunken night avoid you from eating everyday scrumptious, junk food? People don’t even stick to their promises for a month.

3. Leading a Debt Free life:

   I guess, most of the ‘money-saving’, ‘debt-free’, and ‘be-rich’ books are sold in first week of January. People burry themselves with debt throughout the year and try to get out of them in January. However, some do succeed in overcoming debt.

4. Stop Smoking:

   Oh, stop deceiving. You have tried this every year, what’s so special about this year? This is possibly the best thing you could do to yourself along with saving a daily income.

5. Start budgeting:

   ‘Budget’ is possibly the most dreaded word among people trying to save money. However, people who have resolved to start a new budget, trust me, it is something that will make you more independent and clear. Instead of applying restriction to your money outflow, it is something that gives you clarity on spending decisions and financial targets. Once you star doing it, it becomes simple.

6. Seek a new job or start a new business:

   I would appreciate your decision to start a new business. It wasn’t my New Year resolution, but I once decided to start a new business and now am earning lots through my hobby. Keep doing good work and be patient. The same piece of advice goes for job seekers; don’t lose patience.

7. Spend more time with family:

   Yes, even I would like to improve on this. I just cannot spare time for my parents and wife out of my busy schedule. This requires very effective time management.

8. Saving money or making money:

   Saving money is different than getting out of debt. Saving is by choice, while repaying is by force. You cannot miss repaying loans, but you can miss out saving. Hence, many people fail to save regularly because it’s not compulsion.

9. Getting organized:

   Some want their work desk to be kept clean, some their minds. We all need to be organized one way or the other. Being organized also involves time management, which I am not quite good at.

10. Give more:

    Many people intend to give more but can just give it. The only way to do it is setting it as priority, including it in your financial target. Or you will find ways to skip it. Be motivated by read books about giving. Starters, experience the contentment of giving.

My reason for researching these resolutions was to unhide the fact that a major category among the 10 points is ‘financial goals’. Having something set as a New Year resolution means it’s being avoided in the current year. Personal Finance is a key element of our life that supports most of our activities, but we don’t do much to get it in control. We keep delaying, we always have excuses, but we want our financial targets to be met.

Another common thing that I noticed and concluded to be the reason of failure is: They wanted to do all at once. Starting and new business or working according to a budget requires planning. Losing weight means joining gym and involve in intense workout program. This is a major behavioral change in you, it takes time. How can you expect it to be easy? Go slow, and be persistent. Don’t make resolutions just because your friends did it. You are losing your trustworthiness.

Let’s make 2010 a year of success. Let’s promise ourselves to our resolutions and achieve victory over our weaknesses that’s being overpowering since many years. Let us have a New Year, a successful and a satisfying year.

The answers to these questions can be a bit less vague and confusing if you can spare some time researching about the company. Several tools can assist you to recognize the financial health of your investments. However, the best and most precise piece of information can be derived through glancing at the financial statement of any given corporation.

A Financial Statement

Figures in the statement won’t make sense if you fail to understand the meaning it’s depicting. To know the financial activities of the firm, it’s important to analyze the data scattered all over the paper. So let us first try to understand what a financial statement is and what it comprises of. It inevitably is divided in three major parts namely a balance sheet, an income statement, and a cash flow statement. Every part or section, individually, represents a unique portion of the organization’s financial image.

Balance sheet

A balance sheet reveals the funds invested in assets, amount of liabilities and shareholder’s equity. Assets generally include cash, property owned, prepaid expenditures, inventories, and other such things where money is ‘invested’. This part of the balance sheet is used to note the financial status of any organization. However, the assets column can never be analyzed without considering the liabilities payable by the company. The liability section represents the amount to be compensated by the company in the given financial year. It could include accounts payable, pending remuneration, unpaid income tax, long term debts, loans, etc.

But how do you determine the strength of the company with a balance sheet? The total of surplus assets for the year over existing liabilities is the amount termed as working capital. This working capital is used by the company to spend on the operating expenditures. If the company has enough assets to pay off the debts and spare for operating expenses, it is a good sign. However, if it doesn’t hold adequate cash to survive the debts, you should quickly liquidate the shares of this company.

Income Statement

As the name suggests, this document is a statement of company’s revenue. In some parts, it is also known as a ‘Profit and Loss Statement’.

It is divided into two parts: operating section and non-operating section. This operating section of the income statement is quite appealing for investors because it give a definite idea of the income and expenditures caused directly from the business. For instance, if a company is manufacturing cosmetics, the operating section will provide you with details of revenue generated through sales and expenses incurred for manufacturing of cosmetics.

Non-operating section reveals information about the income generated and outflow of funds on operations that are not directly linked to the company’s business. Say, if the cosmetics manufacturing company sells a locked factory, it would have an impact on the non-operating section of the Income Statement.

An income statement is used to know the gross and net profit of a company for a given period, which is enough to determine whether it’s worth investing in or not.

Cash Flow

The outflow and inflow of funds through various investments, operations, and trades are recorded in this part of financial statement. All the previous transactions like sale of goods, purchase of equipments, etc are mentioned here. This is another important portion where the auditors and investors glance to know the financial standing of a company. Adequate funds ensure the ability of a company to pay their employees, creditors, or any other party.

If the company’s cash flow shows inadequate balance, it is very likely that the business will wind up soon. A cash Flow statement is very fundamental aspect of any organization’s existence and survival.

Key notes

The reason people’s investments show a sharp depreciation is because most of they time they are carried away emotionally. ‘Kill your emotions’ is rule number 1 of investing. Do not invest in a company just because you love the products it offers, or because you just read an editorial that mentions sweet little things about the company’s culture. No, these reasons are not enough to fritter you valuable funds on. The first and the foremost reason you invested in ‘X’ company should be because you thoroughly analyzed the data that seemed favorable. Go through the income statement; compare the net profit of this quarter with last quarter and the same quarter last year. See whether the total of assets in balance sheet total is greater than the total liabilities. Can you see enough cash in the company’s cash flow that can help surviving and flourishing in the dreadful market conditions? Only then think about investing in a firm.

Look out for notes that come along with the financial statements. These notes reveal specific and significant news about the company which can be a vital piece of information for analyzing the data in financial statement. Generally, changes about to take place in the company are mention in the notes. It can include news on company’s decision to take over, merge, and be taken over, some debt being purchased by the company along with supporting reasons. These notes are nothing but precise details supporting the figures. Do not forget to read these notes. If you are investing a company, you are about to be a shareholder, which means a partial owner. So, know everything about your company.

However, it seems that the reign of credit card plunders will last just for a few more weeks. Clauses for consumer safety is noticeably mentioned in the Credit Card Accountability and Disclosure Act drafted in 2009, but will be effective from February 2010.  A savior for masses, this act has shook the credit card companies and they are now trying to acquire total benefit from customers before the act is effective.

Unexpected Rise in Interest Rates

The effort of federal government to drop the interest rates doesn’t seem to be affecting the policies of credit card companies. Research says the interest rate on credit card has jumped over 20% in the first half of 2009 while the rate is dropping in other credit programs. There are about thousands of cases of customers who noticed doubling their interest rates, even though the payment has been made on time. Thanks to the new policy, consumers would be now informed 45 days prior to any such change in the interest rates. However, it is expected that card users will be more prone to such events till February as it appears to be a golden period for the card providers.

Unavoidable Overdraft Fees

Another major issue faced by customers, overdraft fees, will be now optional for every credit card user. According to the new policy, users have to ‘choose’ if they want an overdraft facility, which was previously by default. Those who do not want to opt for such charges wouldn’t be able to spend more than their credit limit. For customers, it can be a minor change. However, you will be surprised to learn that a considerable amount of their yearly profit is generated from such fees. In the first quarter of 2009, BOA generated over $700 million just from overdraft fees. How can they simply let this source of income slip from their hands? Be prepared to notice unexpected overdraft fees every month till February, as the heat is already seen smoldering the customers.

You didn’t miss your payment? Recheck the due date

The most common concern affirmed by credit card users is an unexpected alteration of due dates. A research blog reveals that quite a few banks are consciously involved in developing a system that occasionally generates an earlier due date that causes the regular bill payers to miss the date who are then charged with late fees, which is also sometimes hiked without any explanation. Due to these late payments they are further victimized of permanent rise in interest rates. Seems a brutal plan to entrap customers? Here is another policy that will save credit card users from the nasty assault of credit providers. Under the clauses of this new act, credit card companies are required to dispatch the bill to the customer’s billing address at least 21 days prior to the due date.

Credit Limits Lowered Without Prior Notice

Credit score not only about timely payments. One of the major components that can severely affect one’s credit history is the ratio of credit availability. This ratio is calculated on the amount a customer owes against the residual amount he/she can utilize. The more you spend lowering your residual credit the low is your ratio. Unfortunately, this ratio is not controlled by you because the credit providers seems to be bothering people with high credit score by lowering their credit limits radically and unexpectedly, thus lowering the ratio. And this trend is observed mounting every quarter. But what monetary benefit will the banks derive from ruining somebody credit scores? If we rely on the recent survey to develop a conclusion, banks are likely to raise the interest rates of the customers who maintain a low credit score. In response, the new policy will compel the banks to inform the customers well in advance about the change in credit limits and with convincing reasons. Phew!

What is Universal Default?

A shocking technical error, or a deliberate practice, by card providers known as universal default is what offends most of the effected customers. What is Universal Default anyway? A customer misses a payment on ‘X’ card for which he is charged or rate of interested is hiked on ‘Y’ card, along with obvious charges on ‘X’ card. Hypothetically, both cards are completely unrelated and no reason can affect the functioning of each other. However, this simple hypothesis doesn’t seem to be absorbed gracefully by the banks. During vacations, the charges’ arising out of so called ‘Universal Default’ rises significantly. This too is being banned by the new policy which will be effective in February 2009. Till then, try not to miss payments on any card.

In this era of high-tech revolution and customer satisfaction, the part of population utilizing credit card facilities are still under the clutches of cruelty demonstrated by the credit card companies. Fortunately, the federal system has drafted a graph to eradicate the plunders of these companies. However, the period between today and February 2010 is more precarious than ever. Credit providers are trying hard to suck up every penny they can from the users by further hiking the interest rates, charging late and overdraft costs, and curbing the already-low credit limits.

1. Raise your Credit Limit
   It is hard to convince credit providers to increase your credit limit these days, due to recession. But Ken Clark, a certified financial planner, has got a smarter way to work it out. According to him, you can ask it in conjunction with a larger purchase. Tell them you want to raise your credit limit because you want to buy a new car or repair your house and you have it. However, the only criterion is to have a decent past record i.e. not missed many payments.
2. Skip a payment
   Yes, skip a payment. This is one of the benefits you enjoy if you are a customer in good standing. Sometimes, it gets difficult even to pay the minimum amount of your credit. But that’s OK; you can pay it the following month. You just have to inform your credit card provider about your delay in payment in advance and they are likely to waive off your late fee. Isn’t it great? Yeah, but I said ‘likely’, not ‘definitely’. So, it all depends on your past payment records and your relation with the credit provider.
3. Late Fee? Waive it off
   Late fees are waived off if:
   - you try paying online, but it doesn’t go through or
   - you failed to receive an invoice from the provider
   Use any of these two reasons and there are very good chances that the fee will be waived off, provided you hold a good past payment history. Even if it’s your fault, don’t worry. You may still get it waived off from the next bill. However, this benefit will help you just once, so use it when you really need it.
4. Lower your Interest rate
   This is the easiest among all. Find a credit card provider which asks for a lower interest rate. Call up your credit card provider and inform them about what you have got. Tell them that you really liked their service but you have got a better option. They cannot afford to lose you as a customer. Even they are hit by recession. So, chances are pretty high that they will come down to the competitor’s interest rate or even lower. Try it.
5. Transfer funds in your bank account for free
   When you transfer your credit card balance to your bank account, you are normally charged a fee of $50 to $75. But tell them you are going make a big purchase or Money Market Mutual Fund, and you will receive a free transfer opportunity. You can then receive a good amount of interest on your saving account balance. Great, isn’t it? However, make sure that you repay the card amount before the grace period ends, or you have to pay more interest than you received.
6. Remove surcharges charged by merchants
   It is illegal for any merchant to charge additional fee for your credit card transactions, with the exception of government offices and schools. If you see any additional fee charged by merchant, ask them to waive off the fee. If your invoice still displays the merchant fee, report the incident directly to your credit card company. As per merchant Abuse Policy, you merchant fee will be waived off.
7. Increased warranty on new purchases
   Generally, all stores offer an extended warranted on purchase of new machines like a laptop or a television. But why to but this warranty when you can avail this for free? Yes. If you use a major credit card to purchases these products, you provider will directly match the warranty up to a year.
8. Free rental car insurance
   If you are worried about the damage of your rental car, ask your card provider to pay for the insurance. However, not all companies pay for it. So, call up your credit card provider to check whether they do and whether you are eligible for it.
9. Get discounted on hotel stays and meals
   Many major credit card providers offers a discounted meal and stay in almost all hotels and restaurants in United States. These offers are generally mentioned in our welcome packet, but we hardly notice it. Also you can find relevant information on the new and existing offers in the credit card issuer’s website. Why spend more?
10. Best Value Guarantee – Get refund
    Best value Guarantee (BVG) is nothing but a partial refund of the amount you pay to purchase a new item through your card. There are very card providers which offers such benefit and on very few items. American Express Gold offers up to $250 refund on selected items. Don’t miss it if you are one of those lucky people having an AmEx card.

Aren’t these wonderful ways to save some money on your credit card?

Apart from financial literacy education, taking the advice of good professional financial planners is very important. But you need to be pretty careful in choosing a good financial advisor. You should be able to distinguish between a broker and an advisor. Don’t make the mistake of confusing the former with the latter. A broker will just push you into taking securities based on some superficial security standards whereas a certified consultant will offer you quality advice after taking the prevailing financial laws into account. So how do you select genuine and quality financial planners? Here are some ways for you to do that.

Depend on Certifications

You might have heard a lot about certifications adding to only bookish knowledge of a professional, but its not so.  Professionals possessing certifications from premier certifying bodies like Certified Financial Board of Standards are seen to be really worthy in their fields. Certified Financial Planner certificate holders are a class apart from the rest as they have the correct knowledge to pull you through the tough economic times and make you prosper. You can depend on them. They have a deep understanding of the financial markets, of financial processing and management of wealth in general. The CFBS has a website that will guide you in finding certified financial consultants.

Experience Counts

Apart from qualifications, go for those consultants who have about 10 years of relevant experience. Such professionals will be well conversant with market trends and will give you valuable advice. You can bank on advice given out of long experience because they are formulated after analyzing realistic pros and cons of a given financial strategy in the practical financial world.

Good Rapport

Your financial planner should be able to patiently answer your queries and give time to explain things to you. He should not be in a hurry to sell you things. You should be able to distinguish between a salesperson and a genuine advisor, who’s going to advice you impartially without any sales motives.

Should Take Fiduciary Responsibility

The salesperson should be able to take good fiduciary responsibility of your finances and see to it that you prosper in life.

Here are some aspects on which the survey was conducted:

Savings

When asked if they would like to save their tax returns, 40 % of men aged between 18-34 years said that they would like to save whereas only 30 percent women agreed. However in the case of people who were more than 50 years old, surprisingly the ratio reversed. 45 % men said they liked to save, whereas now 48 % women agreed to that. Should we say that men can perceive problems long before they can happen and women perceive them only when they see them happen ?

Now, when women on the wrong side of fifties were asked what they were saving for, 31 % of them replied retirement. 2nd on the list were those who were not saving up for any specific purpose. In the 3rd position were those who saved up emergencies. Next were those who saved up for vacations followed by those who saved up for health. Lastly, to my surprise a very small percentage saved up for home which is the most important concern of any woman.

When asked if they were prepared for replacement of 80 % of their incomes after retirement, 23 % if men gave a positive reply whereas 12 % of women agreed to that.

Employment

Statistics of the last three months show a rising trend in the rate of unemployment, but in general women showed a higher rate of unemployment than men.

Emergency Funds

Women who are known to be the more cautious gender were less prepared for funding any emergencies than men. 53 percent of men were prepared with monetary cushioning for a financial crisis whereas only 34 percent of women were prepared for that. Well, I think the better preparedness of men for facing any financial emergency is due to their being the traditional bread winners of the family, naturally tuned to planning for any emergencies. Women, on the other hand, being homemakers conventionally, were not perfect with their money planning or saving skills.

Credit Card Balance

Even here you get to see men being in a better position than women. 36 percent of women said they paid their credit card balance fully whereas 61 percent of men agreed to that in comparison.

As I had mentioned earlier divorces happened primarily due to financial issues.

Investment

According to a NASDAQ investment survey, both men and women make equal contributions to retirement plans like the 401(k). 70 Percent of men have a general knowledge of stocks, bonds and mutual funds whereas only 40 percent women admit having that knowledge.

You can see the info graphic for information on more factors of comparison between men and women. Men, don’t rejoice over your better financial statistics! Conventionally you’ve relegated women to the kitchen for years. It’s only in recent years that women have stepped out into the world of employment to support themselves. If you expect them to be better off than you, you’re being unfair!