TOP 5 MONEY SAVING TIPS
The economic recession in America & Europe have led everyone right from middle income employee to top executives to save money. I think our careless spending and financial illiteracy have led to financial crises. It is essential for every earning individual to have the basic knowledge of how to save a part of their income. Saving money is all about controlling our spending habits and compelling ourselves to plan our finances well for the benefit of ourselves and our respective families who depend on us.
Here are some money saving tips which will definitely help you in savings.
TIP #1
Be economical & Pause for a thought
Always do CBA (Cost Benefit Analysis). Do not spend lavishly. Make a list of what you have to buy. Priorities the items mentioned in the list. The four-day wait works. If you are about to buy something which isn’t a necessity, and you have a little quiet voice somewhere whispering to you, listen to it, and wait four days before you make the purchase. It gives you time to compare prices elsewhere, or to come up with an alternative, or even to decide that you don’t need or want it.
TIP #2
Maintain Expense Register
Have Bulls eye. Always keep a close watch on your spending habits. By doing such will know you where you are spending your money. This will help in reducing your unnecessary spending. Try to cut your spending on luxuries. Drink coffee in home rather in a restaurant. A cup of coffee in a restaurant will be 5 times expensive than a normal cup of coffee at home Always maintain an expense register where you note down every single transaction you have made during the day. At least try for a month. You will notice that you can cut short various spending or postpone it.
Go through your bank statement. If you don’t already know how to do it, learn how to balance your bank statement. Work out how much money you have each month. It does NOT tell you how much money you have. A bank statement is just that: a statement from the bank telling you what has gone through your account at the bank so far that month.
TIP #3
Planning/ Budgeting
Make income/ expense register. Write all the sources of income on one side and
the expenses on the other side of register. This will help in to determine whether you are running out of deficit or you have surplus. Always plan before you go to supermarket. Make a budget for every month. Try to manage your expenses within the budgeted amount. This is essential for families and individuals and can be the fastest way to save money. You will instantly see your incomings and outgoings once you create your budget. You will not be able to save money unless you know how much money you have coming in, and how much money you have going out. Once you have prepared a budget of incoming money and outgoing money, you WILL be able to identify areas where you can save.
TIP #4
Market Research
Beware that a sale is not always sale. Before buying any product do some homework. Visit various websites & store to know the true prices of the same products. Various stores offer various discounts. Choose the store which offers you the same product at lowest price. Once you have researched the true price of a product (any product) you are in a good position to take advantage of a sale, special offer or discount and really save money. “Buy one get one free”, “50% off”, and “Huge Discount” will only help you save money if the actual price you pay is lower than you would pay somewhere else for exactly the same product.
TIP #5
Grab Discounts/ Rewards
It is always preferable to buy goods for cash rather than buying in through credit cards. As credit cards seems to be very lucrative option but is costly affair if not used cautiously. Using your debit cards or cash cards will get you much more discount than credit cards offer. There are many reward cards that pay out in cash or points that can be redeemed for travel or products. Many of these cards don’t have an annual fee. Buy goods electronically & use ECS facility or net banking facility. Various banks provide discounts & rewards for using such facilities.
…..and the lists have no ending. There are various such small steps which we can do and it will definitely help in savings. It has rightly been said that “Penny saved is Penny Earned.”
DEBT COUNSELLING: AN INSIGHT- II
(…cont.)HOW DEBT COUNSELLING WORKS?
Debt counselors assess your requirements and financial status in totality and brief you about the cost involved. The next stage is to jot down the sources of income and outflows like installments of loans, intrest, insurance premiums etc. This centre helps you to restructure the outflows so that you live a debt free life. Banks are ready for settlement of loans as they want to avoid loans from becoming NPA’s. These services are free of cost.
TIPS TO GET OUT OF DEBT
- Firstly you should inform your spouse and parents about your debts.
- Keep minimum no. of credit cards. Give preference in repayments to those whose intrest rates & principal amounts are high and then other debts.
- Go for One Time Settlement (OTS) if the bank allows the defaulter to settle all dues in one time.
- If OTS is not possible restructure your loans, premiums. Draft a letter to bank stating your inability to pay EMI and asking for restructure.
- Transfer your debt from one financial institution to another which offers you low intrest rates and flexible payment options.
- In the worst case, if you have lost all money and do not have any source of income then file a petition in the court for insolvency. The court will take over all the assets and pay all your debts in pro-rata basis.
DEBT COUNSELLING CENTRES IN INDIA
There are various banks and financial institutions which runs debt counselling centers as a part of their ‘Corporate Social Responsibility’. Where as for customers it’s a ‘Goodwill Gesture’. The banks which provide these services in India are:
· Bank of India’s Abhay (http://www.bankofindia.com/abhay.aspx)
· ICICI Bank’s Disha Financial Counselling (http://dishafc.org)
· This site is an initiative of the Indian Banks’ Association, India Cards Council and MasterCard which offers free financial education (is http://money4you.in).
· Bank of Baroda’s (http://www.bankofbaroda.com/bgpk.asp) and many more banks.
CONCLUSION
It has been rightly said that ‘Money is the root cause of all evils’. Most of the people allow the power of money to control them. Most of the people have misconception that money solves all the problems. But in fact it accelerates the problems. If we ask people why we need money? The most common answers we find that they want to get rich or ‘I’m in debt so I need money’. Debt counselling centers helps you to have a sound sleep
DEBT COUNSELLING: AN INSIGHT- I
The recent collapse of the major financial institutions & banks, sub-prime crisis had brought the ‘Debt Counselling’ in to lime light. The bankruptcy of the Bear Stearns, AIG, and Washington Mutual are the examples of the excessive credits given to the people. As a result most of the banks & financial institutions have started Debt counselling. Debt counselling is also known as ‘Credit counselling’. Debt counselling is a win- win situation for the banks as well as for its customers.
GLOBAL SCENARIO
There is variety of ways in which debt counselling has been accomplished in different countries. The first debt (credit) counselling agency was created in 1951 in US known as National Foundation for Credit Counselling (NFCC). In US, The Bankruptcy Abuse Prevention and Consumer Protection Act 2005 have made credit counselling a requirement for consumer debtors filling for bankruptcy. The debtor must complete a program within an approved non profit budget and credit counselling agency during 180 days preceding the date of filling for bankruptcy.
INDIAN SCENARIO
Globalization and financial innovation has phenomenally increased retail lending in the commercial banking sector. In recent times consumer loans, housing loans, credit cards & personal loans have registered a tremendous growth. The credit growth in these sectors grew at a Compound Annualised Growth Rate (CAGR) of 43.3% during 2001-06 as compared to overall growth of credit of 23.4% in the same period. Costly medical emergencies, retrenchment from jobs, increased intrest rates have raised debt burdens in some cases. The aggressive marketing of personal loans and credit cards to venerable sections of borrowers leads to over indebt ness and rising NPA’s (Non Performing Assets).
DEFENITION
Debt counselling can e defined as ‘counselling that explores the possibility of repaying debts outside bankruptcy and educates the debtor about the credit, budgeting and financial management’.
OBJECITVES
The debt counselling serves various purposes. They are:
1. (a) It examines the ways to solve current financial problems.
(b) It helps educating people about the cost of misusing the credit.
(c) Benefits and encourages poor and distress people to access the formal financial systems.
2 The objective was to promote financial literacy and help consumers to avoid bankruptcy.
3 It helps proactively to manage their debt via out-of- court procedures based on agreed repayment plans between creditors and the debtors.(…cont.)
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!