The sign of sick financial

The poor man must have sick financial because they cannot cover the spending. They have trim down the spending but they cannot cover the spending. It is debatable that the poor must have sick but some rich people also have sick financial. Hera is this signs

1.       They can cover the spending

Though, they can make hundred thousand dollar but their spending beyond the salary. They must owe money from other people. They should back the money and someday they will be bankrupt if they cannot pay the debt.

The sick man just fulfills the want but they ignore what their need. They supposedly cut the expenses. They can begin to reduce eating out, drink coffee at café, and watch the movie at cinema.  

2.       They have so much debt.

They should pas the credit card monthly and pay the car credit, house credit and education debt. The debt more than 30% of the asset is a dangerous. They have low ability to pay the debt with the asset.

3.       Have No financial Goal

Perhaps some people abandon the financial goal and they do not care about it. They think that financial goal is useless or they think they do not need financial goals because they have no money.Either you have money or no have money, you should have the financial gals.You can start 

4.       No Investment

The investment is good for our future. It can help you when you have no jobs or when you retire. The investment can multiply our asset. The return that you will get may

5.       No Emergency Fund

The emergency fund when you get the accident. When you stop working and you should find the jobs. The emergency  will help you to finance your live when you have no jobs or salary. The amount is not more than six times your routinely spending.

What you can do after paying off the debt

The article is interested me .Live after debt. For the debtor, they must be happy after paying off the debt. They do not have to pay the debt again and so the interest. Now they can more enjoy the salary.

Off course, they can celebrate for once.They can outing out for it but they should be careful. They can be trapped at the debt again if they do not change the lifestyle.

after the debt life, you can restablish your budget now. You will get have more money because you do not have to pay the debt. You have to wise to use the money.You can save the money for the emergency fund that is six times your montly spending. This will help you to avoid the debt.

Payongg off the debt is not finalgoal. You should always think the other goal . You must have some gola that you want to reach. You can use the money to fund your goal. I believe you want to fund your kid school or buy a new car. Prioritize the golas that you need not you want.

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Understanding debt ratio : Knowing the debt that can harm you

To apply a new credit, you need to tell the debt to income ratio to the creditor. They will check on how much your debt now. They want to make sure that you will pay off the debt on right time. They want to donate their money to the debtor who are not able to pay the debt.
Some people people whose has so much debt often propose the credit to the bank or mortgage loan. They want to pay the spending for daily necessity. They have no money anymore to buy the bread, oat, meat, milk, egg or fish. For this kind people, the bank will not lend the money.
The debt to income ratio is also an indicator of the financial health. When you have so much debt, you must be not health. You should cure it by paying off the debt soon. Surely, you are forbid to use debt for paying other debt. You should find money to pay your debt.
To calculate the debt to income ratio, you need to list the debt first. Most people have mortgage loan that they should pay it every month. Let say your mortgage loan is $800 per month. Perhaps, your car in garage is a lease car from car lease company. You have to pay $ 600 per month. You also have debt to pay the motorcycle $50 per month. Compute of the debt that sums $1450.
You can check the income that you stream. Most people receive routinely paycheck from the boss. Let say, you got $ 1500 per month from your boss. Beside paycheck, your boss often give bonus to you $ 300 in average. You also have some business. Let say you got $1000 per month. Compute all of your income $1500 paycheck, $300; bonus, and $1000, business; results $2800.
To get the debt ratio to income, you should divide the debt to income. The result is $1450 / $2800 or almost 50%. This ratio is very high. I am pretty sure the people cannot pay off the debt so the financial institution will not give the debt again to him.
The maximum debt to income ratio is 35% which mean over 35% is very bad. To fix the debt to income ratio, you should increase the income. Find sides jobs to add your income. You can also develop your business to stream more income. You can also decrease your debt too.

How to make debt reduction plan

The debt can make people bankrupt. The amount of the debt increasing when we do not pay the debt on time. The debt also can load our finances. We have to make the debt reduction plan to settle our debt fast.

Here are ways to make debt reduction plan:

Tracking everything
In the middle of month, some employee confuse because the money almost loss. They do not know where the money gone up. They do not track it.
Supposedly, you should track all of your money. It help you to allocate the money to the debt payment. It is not difficult to do that. You just need to record the spending in a piece of paper or you can record it at spreadsheet. 
Base on tracking, you can make a budget. Set aside the money for the debt. To settle the debt fast you must prioritize the debt.

Balance the budget
The generic ways to balance the budget is to reduce the spending. This is not an effective ways to settle your debt. You need to pay attention to your income side. Try to boost the income to pay the debt immediately. There are so much ways to increase the income. If you cannot do it, you can reduce the spending. Use the generic product to save some dollar.

Renegotiate debt
You can ask the creditor to enlighten your debt. You can buy the interest only for temporary when you have so much money, you can pay the debt immediately. It will good when the creditor forgive your debt.

Generate income from the debt
Some people put the loan to deposit. It must be wrong steps. The loan interest is higher than the deposit interest so they must pay the interest. If you have house or car, you can generate income from them. The house or the car that you have not pay off can be hired to anyone. You can use money to pay your debt.
In my country, some public transportation use this way to get the transportation. You do not have to sell the asset but you still be able to pay the debt.

Generate income from investment
This time, you need to generate income from investment. Despite the economic downturn, you should find the investment that can makes money. There are some stock from Brazil, India, Russia, and China that can makes money. The money that you can get from investment will help you to settle the debt.

How to stay debt free

When we have so much debt, we must be worried. The phone ring often and we do not want lift the telephone up. It must be from the bank or credit company card that asks us to pay the debt down. 
That is why; we should be always debt free. Another reason to stay debt free is the cost of the debt is high. We should pay the principal and the interest that may increase in the future.
The first step toward stay debt free is to know your financial goals. Each people know what are the most important things for them. Write the goal that they can reach in short term, middle term and long term. The goal helps you to manage your money. You know very well where you spend money to some posts. On the other hand, if we have no financial goals, we spend he entire money fast. 
Second, you must build an emergency fund. Allocate six times your monthly spending that you can save at liquid investment. We can use the money when we need the money immediately. Some people use the money when they got fired. They do not have to owe money from other people or bank.
Three, do not owe other people’s money. The ultimate ways in staying debt free is not to owe other’s people money. Settle down soon your liability. The debt may increase your monthly spending. Without debt, you can save more and use the money for other purpose.
Sometimes people need debt to buy the big things such as house due our salary may be not enough to buy the house. The mortgage may help us to get the money however you should not use mortgage if you are not sure you can settle the mortgage. Some people buy mortgage but hey do not consider the money.  A person who want buy mortgage must be able to fulfill daily needs, paying bills, and other things.
Do not think you will settle the debt when you add the debt. Some people use credit card to buy mortgage. In my opinion, by using credit card you make a snow of debt that will crush you. You should increase your income before buy the mortgage. There are so much you can do o increase your income. You can do some side jobs or you can be a freelancer.

The Truth about Debt Consolidation

Due the economic tight, they need money for consume or other things. Some people borrow money to unsecured loan such credit card because the approval process is easy and they will get money soon. They   do not have to guarantee your asset to unsecured loan; however, most unsecured loan charge high interest. They use credit card to buy anything and finally the bill bubble. They are difficult to settle the debt because they have no money. A telephone call often disturb them o pay the debt payment soon and it make you mad.
Some people choose debt consolidation in order to settle the debt. They think the debt consolidation will help to settle the debt. They will pay the debt with low payment each month so they can pay off the debt and they still have money to fulfill monthly expenses.
However, some finance experts doubt in debt consolidation. Only few people are success to settle the debt with consolidation. Debt consolidation does not work for most people though the debt consolidation sounds great. We can negotiate the interest that increases your debt.
I agree with Dave Ramsey’s argument that the debt consolidation makes money off of you. Who are people want to loss in their business? I do not think there are no people who want loss in its business. So the creditor does not want to loss too. They will find a way to return back their money with the interest.  It is better than the debtor will not pay their debt.
For example you have debt $30,000 that consist a two year loan $10,000 at 12% and a four-year loan at 9%. The monthly payment for $10,000 loan is $517 and $583for $20,000. You need to provide a least $1000 a month for your debt only. It must be hard to provide thousand dollars a year.
With debt consolidation scheme, you do not have to provide $1000. Perhaps you just pay $640 per month on 9% interest by negotiating to creditor and rolling into one. However it does not mean decrease your debt but you should pay more. The lower payment means you longer the loan. You will pay $46,080 to pay off the loan. Just pay “only” $ 40,392 if you pay $1000 monthly. The difference is $5,688 that you should pay if you decide to use debt consolidation.
Do you want to pay more? Some people think they can settle the debt if the creditor ease them. To me I will settle the debt soon. I contact the creditor to pay off the debt soon. I will sell my asset such as stock mutual fund or precious metal and tight budget to reduce the monthly asset. I will not go eating out unless I pay off the debt. I prefer to pay the debt than eating out. 
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How debt influence net worth?

Some people think owe money can increase the net worth. Let Says, Mr Broderick has $ 10,000 in the certified deposit. He wants to increase the asset by owe $ 10,000 from the bank. Mr. Broderick asset look increase. He has $ 10,000 in deposit and he has $ 10,000 in suitcase. Mr. Broderick want to buy the store at the certain city to wide the market.

Mr. Broderick net worth is not increase per se. After get loan from Bank the netw worth is become zero. He has deposit $ 10,000 asset, but he has bank loan $10,000 liability.

The Bank also charge interest rate 5% years so Mr. B will pay $ 10,050 next year. Next ten years Mr. B net worth will be below zero. The liability $10,050 minus $ 10,000 equals $ 50. If Mr. B cannot get the cash from his new store, he must be bankrupt. If, on the other hand, the new store sales so many product, the asset may increase. Let say, Mr. B can make money $ 11,000 from the new stores. His networth wil increase to $ 11,000 assets minus $10,050 loan equals to $ 950.

Not all debt decreases the net worth. For a moment, debt must decrease the net worth. If we can use the debt, the net worth could increase. Before propose the loan, a businessman should make sure that the debt can be useful for business.

Borrowing money for buy a luxorious car must decrease your net worth. You cannot generate financial benefit from luxorious car. The interest rate of lease car is high and the value decreases every year.

In my opinion, the debt is difficult to lift our net worth. The interest of the debt is high so you will difficult to pay it.

Borrowing to userer or mafia is a fast ways to bankrupt. They can provide the cash quickly without guarantee but they will find you wherever you go. They are not shame to charge the high interest to the borrower.
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Five Things About Loan

You should know that loan is dangerous

A loan sometimes helps some people that need something like things, car, computer, book, etc. Some people could not pay cash for expensive things because their salary is low.

I think we should not think about loan today because we are hard to return the loan. The employee cuts so many jobs. Perhaps we suffer firing too. Of course, the unemployment needs to open a business for their live. Unfortunately, some unemployment use loan because they have no fund.

You should know some information before ask a loan to others. The information is useful to avoid you from bankrupt. The information is:

    You should know what is the purpose of loan

You should know why you loan to others. Some people use loan for needs like education, house, car, furniture, etc. People must need house for staying, car for transport, college for future. Unfortunately, most people has limited money.
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Do not use loan for unnecessary thing like buying a Jaguar, buying a bungalow, etc. You should use a loan for productive things like open a business. Make sure the business could give you return so you can pay the loan.

The global crisis make your salary is decreasing. Our ability to buy anything is also decreasing.

    You should know that you can pay the loan

You could measure your ability of paying the loan. If you feel hard to pay the loan, you should not ask the loan.  A bank will help you to determine the ability paying the loan. They will survey your financial health with notifying your salary, assets, family, child, etc.  For example, your asset is only $10,000. The bank will not lend you for $ 20,000.

If you have no ability to pay the loan, the bank will not give you any loan and reversely. A bank is a profitable oriented company so they will not give you charity.

    You should know what (who) is the creditor

Some creditor asks your guarantee like house, car, land, and other fixed assets. They will seize your asset, if you cannot pay the loan. Bank and other financial institution are selective to give the loan.

Besides bank and financial institution, you can ask loan to people. You can ask people around you like parent, family, friend, etc. They may be kind creditors. Most of people will not charge you with interest and other cost.  Some people offer you with soft loan that does not ask you with interest and cost. My Grandpa said that some people give you soft loan without returning obligation. You can return, if you could get the profit.

Borrowing with people is sometimes easy. If you could not pay the loan, you will break the friendship and fellowship.

    What is the loan

Financial institution offers various loans like personal loan, secured loan, unsecured loans, mortgages, auto loan, equity loan, etc. the loans has different characteristics each other. Mortgages is for the borrower who need house, auto loan is for the borrower who need auto, etc. we cannot use auto loan for house financing and reversely.  The types of loan i.e:

Mortgage loans: a loan for buying house or building

Personal loan: a loan for buying something

Auto loan: a loan for buying car

You should check what loan that fits on your needs. You had better ask soft loan to the financial institution. It will light your loan payment.

    The cost of loan

You should consider the cost of loan. Some financial institution set high interest for your loan. The higher loan will make you difficult to pay it. If you postpone the payment, the interest will grow over many times.

Financial institution also provides fixed rates and floating rates. A Fixed rate is the rates that set stable for example 4 % a year. The financial institution usually set higher interest to fixed rate than the floating rates. A common people think that fixed rate is cheap than the floating rate. In reality, fixed rate could be a cheap cost, if the Fed rate is down.

Besides interest, you must pay some fees like origination fee, administration fee, underwriting fee, appraisal fee, credit report fees, and processing fees.

Golden Rule for Financial Prosperity

Every world citizen wants to financial prosperity. They try to work hard to achieve a financial prosperity. Here is the golden rule of financial prosperity:


1. Stream multiple incomes
The Salary or paycheck that you receive from your boss may be not enough for you. You can find other source to support your living cost. Some employee may find side jobs that they can do after arriving home. The blogging may be also a good ways to stream few dollars.
There is trend in my country; the younger employs prefer to stop working as the employer.
2. Shelter
People who are unable to own the house must be uncomfortable. They have to hire the house or apartment to other people. If the owner expels you from house, you can do anything. They have the house.
In my country, some rich man proud for their much house. They buy so many houses at different place. They rent the house to other people.
3. Vehicle
In Java culture, a man should have a ride. That is why the motorcycle is very salable in Indonesia where the most Java lives at there. They often use motorcycle leases. We just need $50 for down payment and we can pay the residual of the credit on three years. Using motorcycle is very economist. You just need a liter of gasoline a day. However, the motorcycle is high risk. Over 60% traffic is caused by motorcycle.
Having a motorcycle may be not enough for you. A good cheap car can bring you to office. You do not have to buy a luxury car though you have million dollars in your pocket.
4. Avoid debt or loan
A man should not ask the loan or borrow money from others especially consumer debt such as vehicle, TV, and others. If you want borrow to growth the business, you can consider it.
My business guru refuses the loan proposal of his student that require loan. He said that the student should sell the asset that the student had. He wanted to borrow the student if the student has no anything.
The student must be disappointed with my guru but he did what the guru said. He sold his asset such as motorcycle, cell phone, and others. After three years, his business has grown. He has a good car.
From this illustrative, my guru want to teach that we should avoid debt.
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Protect you from high inflation

Some Asian country has high inflation. Inflation is a economic condition when the goods and service price increases. It makes the money weak. We must provide more money to buy the same things. For example, last year, you can buy a cup of coffee for $5. Today, It price is $ 5.5. The coffee price increases up to 10 percent.
Certainly, you have to provide addition cash flow. Most people prefer to cut "unnecessary" spending to keep the live. However we do not have to cut the spending if we can anticipate the inflation. Here are some steps that you can do to protect you from inflation.

1. Buy gold or other precious metal such as, silver, platinum, palladium, and else. Gold are believed as the most stable commodity in the world. No one can manipulate the gold price due it is rare and important. In this year, the gold price is skyrocketing.
We can sell the gold anytime especially gold bar. If you want to buy gold, you can use 5% to 20% of your portfolio.
2. Pay the debt off
As the consequence of inflation, the bank or other financial institution will increase the interest rate. The debtor must be hard to pay the debt off due to its interest rate.
Use cash rather than credit card. The credit card company also charge high interest to the holder. 
3. Cut some spending
This is the most ultimate to face with high inflation. You can use coupon to cut your spending meal or pampers.
Buy your meal, meat, and vegetable in bulky at grocery store. By buying at grocery, you can get discount. You do not have to the market often and it can thrift your money. Place those foods at your refrigerator for weeks. However, some food such as vegetable and fruit will be wilted in few days. Some vegetable also will be dried in a week.
4. Buys some defensive stock
The defensive stock still give you return no matter the economic condition. Shift some risky stock to defensive stock. Certainly, you should not put all money at the defensive stock only.
5. Buy actual product
I have ever bought a scooter for $ 260 in 1997 when the crisis beginning. After graduated from bachelor degree or 2003, I sold it for $360. I realized that I cannot get benefit from the scooter but I have protected my money from high inflation.