My Tax Form Info

MONEY MATTERS!

In the globalised and fast moving world everyone is busy in fulfilling their greed of earning more money. Most of the people often allow the power of money to control them. The people starts getting up earlier in the morning and working harder, but they fail to understand that ‘Money is the root cause of all evils’. There is the financial cycle which goes on and on. Every one faces it right from childhood till death. As we grow up we go to school, college, and get attached with a company or start our own business. With our growing age our thirst for money also grows up and we are now trapped in Rat Race for rest of the working days. They work for the owners of their company, for the government paying taxes, and for the bank to pay off bills and mortgage. More money does not solve the problem; in fact, it may actually accelerate the problem. Money often gets you in debts instead of helping you to get out of debts. Money often puts a spotlight on what we do not know.

It has found that with the age group of 20- 35 most of the people like to hang out in pubs, purchasing branded garments, cars, house, going for weekends with your loved one and many more. To fulfill that they work hard earn a lofty amount and spend it like anything.

The people purchases more than that of their paying capacity. Easier credit cards and loan facilities from financial institutions encourage the people. When we ask people why they need money? The most common answers we find that they want to get rich or ‘I m in debt so I need to make more money.’

The recent sub prime crisis and bankruptcy of major banks and financial institutions like Bear Stearns, Lehman, AIG, and Washington Mutual are the examples of excessive credits given to the people. To avoid these problems most of the financial institutions have started Debt Counseling for its customers as a ‘goodwill gesture’.

Debt Counseling is one of way to pay off your bills and to get out of debt. “It is a corporate social responsibility initiative.” Debt counseling centers offer advice for all categories of credit—credit cards, personal loans, home loans, and so on. Their services are creditor-neutral, that is, they help you out no matter what institution you borrowed from.

HOW DEBT COUNSELLING WORKS?

Debt counsellors make a holistic assessment of your situation, and give you an appraisal of the costs involved—interest rates, fees, all the fine print. For instance, credit cards are the most expensive kind of debt, with annual interest rates of 42% to 49.36%. When you add the charges, they work out to more than 50%. The next step is to list payments that you, the borrower, can make—dues, equated monthly installments, and so on. The centre can help you request creditors to restructure loans. So, for instance, you may end up with a longer repayment schedule but more affordable EMIs. For example a negotiated repayment at 8% simple interest over 36 months. “It’s a win-win situation for banks and customers.” Banks avert a messy recovery process, and get at least the principal back. And borrowers get help paying off dues. All of this, though, applies only if a bank is convinced the borrower is truly willing to pay off bills, and genuinely cannot stick to the original schedule. It (the initiative) has been able to discern people facing genuine difficulties from intentional defaulters.

BEST STRATEGY

Don’t pay the minimum due on your credit card; pay the full amount each month. Don’t take an expensive loan to pay off a previous loan. If you have more than one loan, pay off the most expensive one first. So it makes sense to pay off credit cards, then personal loans, then lower-interest debts. If you must borrow, do so against a security such as property or shares. Such loans (14% to 16% interest) are cheaper personal loans (19% to 21%). And lastly, if you can borrow from helpful relatives to pay off your debt, do so!