All posts by Janice

Emergency Funds: Why Is It Important And How To Build It

Personal finance management isn’t just about staying away from debt, it is planning way ahead to prepare oneself in the event when an unforeseen circumstance arises that will require for you to have access to a pool of funds. According to Bankrate.com, about 57 million Americans are just one emergency away from a financial disaster. This is a very scary thought and an extremely dire situation to be in. We never know what the future holds so it is best to be prepared for whatever life brings us.

What is an emergency fund?

Piggybank, Dollar, Savings, Banknote, Fund, Financial

An emergency fund is basically money set aside needed in the event of a financial crisis such as an illness, loss of a job, when a calamity strikes or even death. This pool of money should be enough to cover at least six to nine months worth of living expenses to give yourself ample time to recover from a financial setback.

How to build an emergency fund?

Before building an emergency fund, it is essential to identify what is considered as an emergency and how long the effect of this dilemma will last. There are small-scale emergencies such as a broken car in need of repair or an appliance that needs to be replaced immediately. Then, there are large-scale emergencies such as illness that require hospitalization and long-term medication, loss of a job or when a calamity strikes such as fire or earthquake.

After identifying what counts as a true emergency, it’s now time to plan and build an emergency fund.

Shopping, Spending, Till Slip, Purchase, Retail, Shop

  1. Review your monthly household budget. Track how much is your actual monthly income and expenses. This is a bit easier if you are single. But if you have a family to take care of, it is best to consider their needs as well and how much the cost will be on a monthly basis. Utility bills, loan payments, and monthly savings all also to be taken into consideration.

  1. Set a realistic goal and timeframe. After going over your monthly budget and have considered each of your family member’s needs, you can now set a goal on how much you wish to save in the next six months or so. If your current monthly budget only allows you to save $200 on your set timeframe, then stick to it. You may work yourself way up eventually unless you are willing to make necessary budget cuts to beef up your emergency funds right away. But if you have access to some extra cash and you got everything practically covered, including your savings, then it’s only prudent to put your extra cash on your emergency funds savings.

  1. Make your funds easily accessible. The essence of an emergency fund is having cash you can easily get your hands on in times of need, so keeping your funds in a place that will require a lot of paperwork before you can withdraw your funds defeats the purpose of having an emergency fund in the first place. Put your funds into regular savings account that you can withdraw at any time without penalty because the last thing you’ll want in a time of crisis is to deal with paperwork and pay penalties just to access your own money.

  1. Have restrictions. Know your limits. Keep in mind that your emergency fund is for serious and unexpected situations. Week-long vacations on some exotic location, Black Friday sale, and retail therapy because you want to blow off some steam or make yourself feel better after a bad break-up do not qualify as an emergency situation. Emergency funds are not also meant to be used to pay off your debts. Any purchase or trips should be thought of carefully and must be according to your budget.

No one wants to be left in financial ruins after a major setback in life. Think of your emergency funds as one way of securing your and your family’s future financially without having to resort to taking out debt after debt just to make ends meet and sustain your family’s basic necessities. Make this one of your top priorities and you will surely have a stronger foundation towards financial security.

Have a backup plan. Just in case…

 

If building up an emergency fund seems impossible due to debts that you are struggling to deal with, consider hiring the services of a professional to know about debt relief options that you can avail. Debt relief programs, as its name states, offers relief to those who are saddled with debt.  A highly-experienced debt relief counselor can help you explore options and put you in a payment plan based on your current financial situation. This way, you can take care of your debt without having to drain your monthly budget. Once you’re out in the red and have your finances back on track, you can proceed with rebuilding your emergency funds because nothing is more comforting than not having to worry about money, even in tough situations.

Reference:

Debt Relief Programs – Your Options To Get Out Of Debt

http://www.slideshare.net/Curadebt

 

A Freelancer’s Guide to Taxes

Being a home-based freelancer offers perks such as flexible working schedule, multiple jobs you can do at the comfort of your own home, and having more time with your family. But this arrangement also cost freelancers plenty. Working from home means setting up a suitable workspace at your home, buying your own office supplies and subscribing to high-speed internet services to be able to do your job and stay in touch with your clients. You will also be solely responsible for paying your own taxes. This is one of those important things you need to get right every single time because you don’t want to end up with an audit by the IRS.

 

The Basics

Freelancers are classified by the IRS as an independent contractor. This means that you are taxed on your net income as a self-employed individual. Your net income is determined by your gross receipts less all business expenses that you can deduct.

 

The IRS allows independent contractors deduct certain business-related costs to offset their expenses. According to the agency’s guidelines on Deducting Business Expenses, “To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary.” Here are some good examples of what qualifies as a business expense:

 

  1. Home Office

All freelancers need a dedicated space in their home where for business purposes. Any part of the house will do (i.e. the attic or the cupboard under the stairs) as long as you can identify that area as your home office. As a general rule, you can deduct 10% of rent, utilities, and property taxes.

 

  1. Office Supplies

Anything that is considered as office supplies such as printer paper, envelopes, post-it papers, and staples are deductible. A coffee maker doesn’t count as an office supply.

 

  1. Equipments

If you are using a smartphone and a laptop or a desktop computer solely for business purposes, then these can count as a deductible.

 

  1. Training and Education

This also counts as a deductible provided that the training you are going to take is necessary to run or for the growth of your business.

 

  1. Professional Services

Anything you spend on professional services such as payment for that web developer who updated your website or for a blogger who writes articles for you.

 

Accomplished and Compliant

 

 

If you are just starting out as a freelancer and have never filed for tax returns for yourself, it is best to hire the services of a tax professional or a Certified Public Accountant to ensure that you are fully compliant and nothing is amiss in your tax returns. As mentioned earlier, errors and discrepancies may lead to an audit of the IRS and may cause you to incur a tax debt without you even knowing it. These professionals can also offer you the best tax advice and enlighten you more with the specifics on taxes for freelancers.

Should you incur a tax debt due to a filing error or disparity on your records, keep in mind that you should never deal with your tax debt and the IRS alone. Tax relief options are available to help ease the burden it causes among struggling taxpayers. Seek the help of a tax debt relief professional as they are highly-knowledgeable with regards to the complexity of tax laws. Dealing with tax debts requires both a thorough understanding of the law and a careful evaluation of your circumstance, so it  is best to let the experts find a resolution to tax-related concerns in order to come up with the best possible solution that fits your financial standing and situation.

 

To know more about CuraDebt Tax Relief, visit:

 

http://www.curadebt.com/taxpps/

http://www.facebook.com/curadebt

 

Understanding How Credit Card Works

The use of credit cards has been a part of our daily lives for nearly two decades now. It is a rare sight these days to see people making a purchase and paying in cash upfront. Credit cards give anyone who wields it an easy access to a line of credit, and if you maintain a good credit score, it is easier to apply for another one, with a higher line of credit.

There are many advantages in using credit cards. But why is it causing so much financial problem to millions of cardholders these days? Do cardholders really understand how these plastic thingamajigs work? Let’s  have a closer look at how credit cards really work and see what exactly is causing the problem.

Credit Card Balance and Credit Limit

Your credit card balance is the amount you have charged to your credit card on the purchases you have made but have yet to repay. Every time you use your credit card to make a purchase, the amount is added to your balance.

Each credit card has a certain limit, also known as the credit limit. This is the maximum amount of credit extended to cardholders by the issuers. Once the cardholder uses up all the credit in his or her plastic, that credit card is considered “maxed out” and cannot be used until a portion of that balance is paid off.

Finance Charges and Annual Percentage Rate

A finance charge is a fee that you pay to have a credit. This is set by your credit card’s annual percentage rate or APR, which is the annual rate charged for borrowing and is quoted as a percentage.

Minimum Payment

The minimum payment is the least amount cardholders need to pay on a monthly basis to keep their credit cards in good standing. Minimum payments are recalculated, depending on your card’s issuer. Some credit card issuers calculate the minimum payment amount as two or three percent of the outstanding credit card balance. There some issuers that calculate the minimum amount by taking a percentage of the outstanding balance at the end of the billing cycle and adding the monthly finance charges.

CuraDebt, one of the leading debt relief companies in the country, stresses the importance of paying off your credit card balances in full because if you keep using your credit card and continue paying the minimum monthly payment, you may find yourself in a situation where you just keep on paying that monthly payment without actually having any significant decrease in the balance. The payment goes towards the interest. With multiple credit cards to pay, getting caught in this cycle is the perfect setup for a financial disaster.  Do not forget that other fees may be added on top of your minimum payment depending on the transactions you make on your credit card other than a simple purchase.

Credit Card Fees

Aside from using your credit cards to make purchases, you can do other transactions using your plastic such as balance transfers and cash advances. Keep in mind that you will be charged a fee for these transactions. If you use your credit card overseas, then you will be charged with a foreign transaction fee. Late fees are charged when you pay past your monthly due date.

An Important Note

Do You Understand Your Credit Card Agreement?

Did you know that you can avoid paying finance charges if you pay your credit card balance in full? As stated earlier, finance charges are applied by the issuer to the cardholder’s bill for carrying a balance. No outstanding balance means no finance charges. Paying your credit card balance in full, or paying more than the minimum monthly payment is a great way to avoid having huge credit card debts in the future.

Before signing up for a credit card, it is best to read the agreement and have each point explained to you, like how the monthly minimums are calculated and make sure that all fees are outlined in the agreement. Do this even if you already have 5 credit cards under your name. Not all credit cards are created equal so it is best to get a better understanding of you are signing up for to avoid getting caught in those financial disasters simply because you failed to understand something that is in fine print in that credit card agreement that you inked.

Source:

Debt Settlement From A Debt Settlement Company

Debt: The Good, The Bad, And The Way Out

Everyone wants to live a debt-free life. Financial problems brought about by having huge debt impacts virtually every aspect of our lives that is why we do everything we can to avoid it. Debt, in its simplest definition, is just borrowed money used for whatever purpose we have in mind. If we look at it this way, debt sounds neither good nor bad. It’s just what it is. And while it is entirely possible to live a life free from the burdens of having a debt, there are times when taking out a loan is the right decision to make.

Related image

Purpose is What Makes The Difference

As stated earlier, debt is defined as money borrowed for an intent one has in mind. This intent is what makes the distinction between a debt good and a bad debt.

They say that “it takes money to make money.” Good debt is money taken out and used as an investment to help generate income. A loan that was taken out and used to kick-start a small business is an example of a good debt. All business owners expect to earn and gain profit that would soon pay for the loan. Student loans can also be viewed as an example of a good debt. Every student sees a “return on investment” once they graduate and enter the workforce in their chosen field. Real estate mortgages, when used strategically, can also be a form of good debt. A residential property can be rented out, thus making it self-amortizing, and once the mortgage is paid off, the property owners can finally start earning from it.

Bad debts, on the other hand, are debts that are used to purchase anything that depreciates in value and do not generate any income for the debtor. These are the liabilities that have to be avoided at all cost. Cars may be a necessity but it is expensive. Unless you have the money to pay for a brand new car in cash, it would be better to put a hold on your plans for signing up for a car loan. Cars depreciate in value every year. In the event that the car owner decides to sell his car, it would be for a much lower price than its original value. Consumer loans such as credit card debts and payday loans are probably the worst kinds of debt. These debts are often used to make ends meet, or to sustain the “wants” of a person. Bad debt doesn’t do any good for parties involved: the debtor loses money in paying the interest alone, and may soon be buried in a mountain of debt, assuming the debtor no longer has the capacity to pay for it. Creditors lose money on bad debts that are no longer collectible.

Image result for good debt vs bad debt

The Backup Plan

Taking out a loan is always a risk. A fresh graduate may not find a lucrative career opportunity right away which may lead to struggles in paying off their student loan. Real estate properties may suffer damages brought about by unforeseen circumstances such as fire or natural calamities and will definitely cause a loss of income. Startup businesses may take a while before it generates the expected income. As for bad debts, these could get worse when a debtor lacks financial management skills and is stuck in the dreaded minimum payment loop.

Good debt and bad debt have one thing in common and that is they are both accruing interest. If the debtor hits a financial snag along the way, unpaid debts, along with its ballooning interest rate can be a problem.

It is essential to have a backup plan in case things don’t work out. Having ample savings to cushion one’s fall during hard times is perhaps one of the best backup plans a debtor may have. Savings should be enough to cover basic necessities and loan payments for at least three to six months. For business owners, emergency funds should be enough to cover operating costs and other expenses. This will give any indebted person time to recover and get back their finances back on track much easier than having no savings or emergency funds to count on.

In the event that a debt becomes too much to handle, an indebted person may consider entering a debt relief program. Debt relief programs, as its name states, offers relief to a person whose debt burden becomes too much to bear. These programs may offer either partial or full relief from one’s debt. Most debt relief companies offer a free consultation to their clients to see which program best fits their current financial situation and capacity to pay. Once enrolled in a program, it is best to commit to the agreed plan to have the debt problem resolved, otherwise, noncompliance to the plan may get a debtor kicked out of the program which may lead to even bigger financial problems.

Final Words

Money is best handled with wisdom and discipline, especially if that money is borrowed. Keep in mind that even those considered as good debts may turn into bad debts when handled thoughtlessly. Most of all, debts should be paid off as soon as possible. Do not let yourself get stuck in the minimum payment trap and suffer the consequences later on. Good decision-making along with sound financial management skills will make any debt less of a burden and more of a much-needed help to anyone who needs it.

Resources:

http://www.youtube.com/watch?v=dN-b8RDJp7I

http://www.allstatedebtconsolidation.com/curadebt-review.html

How To Get Out of Debt

Let’s face it: debt is a way of life for Americans. We place such a high importance on our credit scores and creditworthiness so we could get more loans and obtain more credit. We religiously make minimum monthly payments to our creditors thinking that it’s the right thing to do. We also have this mindset that as long as we maintain a good credit standing, it’s alright to get more loans or apply for more credit cards. It’s okay to swipe the plastic as long as minimum payment is made on a monthly basis. What you don’t realize is that it is turning into a vicious cycle and the next thing you know is that you have fallen into a trap of your own doing.

What do you do then, when you find yourself drowning in debt? How do you get yourself out? There are three things that can be done: change your attitude towards spending, come up with a plan, and commit to the plan.

 

Debt is not the enemy

 

Unsecured loans such as credit card debts and personal loans make up a large percentage of anyone’s debt problem.

If there is one thing you need to keep in mind, it’s neither debt nor the exorbitant interest rates and finance charges that go with it that is the problem. It is a person’s irresponsible and unwise spending habit that is to blame. We all know that once we live beyond our means, and it becomes a habit, we are headed for trouble.

Therefore, the first step to getting out of debt is to make a conscious effort to change your attitude towards spending. We’ve all heard about the cliché that we should live within our means. Try this: live below your means. Prioritize your needs over your wants, and do this willingly.

 

So, what’s the plan?

 

Now that you have decided to change your attitude towards your spending habits, it is now time to come out with a plan to get yourself out of debt for good.

To help you reach your financial goals, it is best that you keep track of your monthly expenses. Create a budget planner. Allocate a portion of your income for savings so you will have something on hand when a need arises. The rest of your money may be spent on basic necessities and paying off your debts. If your budget tracker shows that your income is not enough to cover your basic needs and your debts at the same time, it is best to consult a professional to see how to best manage your debts without having to jeopardize your necessities.

 

The solution

 

Debt relief programs are designed to help solve debt problems without having the need to take out a new loan. When you consider this option, it is best that you get the services of a reputable debt relief agency rather than solving your debt problem on your own. This is for you to be guided accordingly, and to keep you from being enslaved by your creditors. Once you get yourself in a debt relief program, stick to it. Failure to comply could mean you getting kicked out of the program and would cause even bigger problems on your part. Remember, restoring your financial health takes commitment, not a miracle.

 

For reference:

http://www.youtube.com/watch?v=KL5kmdyW5xc

http://www.advisoryhq.com/articles/curadebt-reviews/

 

Is Tax Debt Forgiveness Possible?

Owing debt to the IRS or the State is a scary situation to be in. Unlike having an unsettled credit card debt or other forms of unsecured loan, the IRS or the State can impose legal sanctions against you such as wage garnishments, levy assets, and file a tax lien to seize properties until the tax debt that you owe is satisfied.

This is why it is best to have your tax debt issues addressed as soon as possible, regardless of your current financial situation. Fortunately, you may be considered for an IRS debt forgiveness program that can help you with your predicament.

Does this mean that I don’t have to pay my tax debt anymore?

Just like any lender, the IRS will do whatever it takes to collect on what you owe. And just like any debtor, it is your responsibility to pay off your debt, especially if you have the means and the capacity to do so.

The IRS Forgiveness Program offers a resolution for taxpayers who could not pay their tax debt in one go. However, this doesn’t mean that you are no longer liable to pay the IRS and your debt has been zeroed out. Your financial capacity to pay will be assessed to see which program best suits your situation in order to for you to pay off your debt without causing any hardship on your part. In the event that a taxpayer is undergoing extreme financial hardship, the IRS may put a halt on the collection proceedings until they see an improvement in the taxpayer’s situation.

What are my options?

Here are some of the IRS Forgiveness Programs that can help resolve your tax debt woes:

  1. Offer in Compromise (OIC)

An Offer in Compromise is an agreement between you and the IRS that lets you settle your tax debt for a reduced amount.

2. Installment Agreement (IA)

An Installment Agreement lets the taxpayer pays off their tax debt in low monthly installments.

3. Penalty Abatement

Typically for first-time taxpayers, this program is usually tied up with an installment agreement to reduce the interest.

4. Currently-Non-Collectible

This program is for taxpayers undergoing extreme financial hardship. Financial hardship of a taxpayer means they could no longer afford basic living expenses and put a payment towards their existing IRS tax debt. Only a Revenue officer from the IRS can determine whether the taxpayer is indeed experiencing financial hardship or not.

Can I do this alone?

When dealing with tax debt, it is always best to seek the help of an acclaimed tax debt relief organization. Tax issues are complicated, to say the least, and can be very disconcerting to deal with.

Ask for help. Having a professional handle your tax debt is necessary as they are more knowledgeable with regards to tax laws. This is one situation where mistakes are simply unacceptable because it can be very costly and you might end up having more problems than what you already have. Also, take time to research and read reviews regarding the debt relief organization you’ll be working with. Consider the feedback from the company’s former clients and see if the good outweighs the bad.

It is one thing to know that you will not be alone in facing such a daunting problems as a tax debt, but knowing that you will be working with a team that is worth every ounce of your trust will make all the difference.

Resources:

http://www.slideshare.net/Curadebt

https://www.consumeraffairs.com/finance/curadebt.html

 

Three Ways To Earn Extra Income

pexels-photo

Do you constantly struggle to pay the bills on time? Do you want to save more money and earn additional income? In this fast pace environment where money flies as fast as time, people never run out of excuses to spend. Despite the global downtrend of the economy, the evolution of political landscape, the rise of extremism, and continuous war in the Middle East, only one thing is constant: the need for money and financial stability. To help you with your challenges, below are three suggestions on earning extra income:

stock-photo-work-part-time-ad-made-by-post-it-72442309
1. A part time job is still a job. Is your current job not sustainable
enough? Help is needed everywhere. Don’t know where to start? Find your strength and maximize your capability. As easy as it sounds, everyone has their own set of skills whether it is as simple as baking, gardening, selling, or even taking care of pets. Develop what you have and offer your services online. Scan the internet and use technology to help you move forward by marketing yourself. Think of long term results. By doing what you are good at, you don’t only make extra income but you also find joy in what you are doing. Find
a good avenue that will need your expertise and make sure you excel at it.Begin by creating a facebook page, think of a good catch phrase. For example, if you are good at baking low fat and healthy cookies, you may use“The Skinny Baker”. Next, look for a local website that can help you advertise your service for free, connect with the right people. And once you got a customer, always prepare a name card for future references. Remember the best way to market yourself is through word of mouth so make sure to treat your customers well.

pexels-photo-271473
2. Sell. Take a look at your closet, kitchen, and appliances. Make money of what you don’t need. There’s treasure in your trash. It might be a time for spring cleaning; segregate what you need and what you haven’t use for the past 6 months. Most of the time, we keep things for future use which results to hoarding and piling up of unnecessary things and at the same time, taking up needless space. You need extra income now, and what’s for future use is not a priority. Sell online or at a local marketplace. You may want to do a garage sale, an online shop, or join a forum that specialize in selling second hand items.
3. Review your finances and fine tune your income. Have you ever checked your monthly bills and checked all your subscriptions? From mobile phone subscription, TV, internet service, and other expenses. What can you compromise and what can you live without? Have a thorough check and you will surprised with what you can save. Do you really watch the 100 channels you subscribed on cable TV when you are rarely at home to watch TV? How about the unlimited calls and SMS when you can use facebook messenger? Or the gym membership when you can workout at home? Compare your actual usage and what you have signed up for, and see whether you can downgrade or find an alternative cheaper subscription.
There are numerous ways of earning extra income. To summarize it all, it is about fine tuning your priorities, finding time in believing in what you can offer and how much it’s worth, sorting out your needs from wants, and finding time to rethink it over. And slowly, you will find yourself not only earning more but organized and having clearer direction. Start now. Remember that opportunity is in your hands. It may just be the peace of mind that you’ve been longing for.

 

Sources:

http://www.youtube.com/watch?v=dN-b8RDJp7I

http://www.curadebt.com/curadebt-com-curadebt-reviews-fees-complaints

http://www.americanfaircreditcouncil.org/blog/member/curadebt/