Managing your Financial » part

Women & Financial Independence

Mon, 21 Jun 2010 04:04:17 +0000

Women and financial independence is quite possible but will be more difficult than a man achieving financial independence. Financial independence indicates that there is no dependence on a paycheck and that basically you are your own boss. Women having the responsibility to raise families often have to put their financial independence on hold until the family unit is feasible for business endeavors. Financial independence does not mean to have a large bank account. Financial independence indicates that the the woman can not has their own businesses.
Very few people has achieved financial independence because of the risks that have to be taken and the financial capital needed for business start ups not only for women but for men as well. . One may say that Warren Buffet the billionaire has financial independence but it appears that he works harder at forecasting the economy than being employed. Most financial independent people are either in real estate or investment banking and have their own business. Women owned businesses can indicate financial independence because they are self supporting which indicates independence and building wealth to be self sustaining.
The term rich and financial independence has been used synonymously but there are rich people who are not financial independent and financial independent people who are not rich. For the sake of everyday terms and for a goal that would put the high achiever in reach of a lucrative income, financial independent is described as owning your own business and not having a boss. Most men achieve this plateau of financial independence than women but that is no indication that there are top producing financial independent women. The numbers are scarce of women and financial independence than men in the same financial status. Being responsible for the sustainability of the business and the longevity of the business along with the customer retention is paramount of women and financial independence.
Women owned business are in the minority and there are less financially independent women than men. A generalized reason for this inequity is the fact that women are most likely wives and mother who takes care of family and supplement income with a part time job or even a full time job. Social norms still places the man as the head of the household and the one responsible for the financial stability of the family. Given this responsibility, it is the man of the household who is most likely seeking to be financially independent. Women are seeking to be financially independent but not on the larger scale as men.
Even in the workforce, a woman’s salary still trails that of a man. If a woman is seeking financial independence, there will be steeper mountains to climb to reach that goal. Venture capital to get started can be more difficult to obtain and most likely the woman would have to to get helpful information on starting a business from the Small Business Administration or the SBA. Recently, investment groups just for woman has sprung up around the country and this is one way to get venture capital to get started on owning a business and becoming financial independent.
Owning a business is a twenty four hours a day job seven days a week and there is never enough hours in a day to work on building a business for financial independence. Most likely the woman can use time management to get tasks done but must be prepared for the hard work and long hours to get a business started even after qualifying for venture capital. A woman can achieve financial independence but the work is hard and the hours are long but worthwhile if financial independence has become a lifetime goal.
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Managing Your Money

Mon, 21 Jun 2010 03:39:21 +0000

It used to be that people shied away from sharing intimate details about their financial lives.
Now, amid the rising popularity of social-networking services such as Facebook and MySpace, a crop of new personal-finance Web sites is letting users post their private personal-finance details and share advice with each other on tracking their spending and making better investment decisions.
Some of the sites, such as Wesabe.com and Geezeo.com, include many of the same features offered by popular software programs such as Intuit Inc.’s Quicken and Microsoft Corp.’s Money, such as the ability to track spending in different categories and from different sources in one place. But they also allow users to get feedback from peers that is tailored to their specific circumstances. Some allow users to rate the quality of other members’ tips or provide feedback on various products or services they’ve used.
Josh Young, a 26-year-old environmental engineer from Cincinnati, decided to try out Wesabe after reading about it in various blogs. He wanted to pay off his credit-card debt and the two car loans that he and his wife shared, and he expected the site would help identify areas where he and his wife were overspending. But he also got help from other users who shared their own tips on reducing debt and cutting spending. “One of our goals was to pay off all our debt, and we’re almost there,” says Mr. Young.
Some consumers may have security concerns about sending their personal financial information to a Web site. In general, the sites say their systems are protected against identity thieves and are just as safe as banking online. Wesabe, for its part, stresses that it doesn’t store users’ login information on its servers and screens out any personal information from the data to protect users’ privacy.
The type of information you need to enter into these sites — and how public that information becomes — depends on the site and what you want to get out of it. At Geezeo, for example, users provide their passwords for their bank and credit-card accounts, which the site uses to automatically pull users’ data into its systems. At Wesabe, users download a software program onto their computer and then enter their passwords. The program then pulls their data from the banks to users’ computers, and then uploads it to Wesabe’s computers.
At both sites, users’ data is kept private, although members can voluntarily share more information about themselves with other people. The sites will also aggregate user information to reveal spending patterns in the community — such as the average amount users spend on gas — but will not disclose individual data.
At other sites, such as the just-launched Covestor LLC, which allow investors to share their portfolio information, members manually input transaction data for their brokerage accounts or provide their account passwords to have the firm automatically track their trades. Members can choose to remain anonymous, and the actual dollar values of trades and specific holdings of each member always remains confidential, with only percentages displayed.
Still other sites, with names such as Buxfer.com and BillMonk.com, help college roommates, friends and family members keep running tallies of shared expenses. At the same time, some smaller brokerage firms, such as TradeKing and Zecco Holdings Inc.’s Zecco.com, are letting clients share information about their holdings, recent trades and investment strategies with other users if they choose.
Users of the sites can reveal as much or as little about themselves as they want to. At NetworthIQ.com, a site run by Portland, Ore.-based Fourio LLC, users’ information is kept private until they choose to create a public profile, at which time only their general net-worth statistics are made public and any personal information, such as email addresses, remain private.
An estimated two million households are expected to use these sites by the end of next year, says Jim Bruene, editor of Online Banking Report, who published a report on the sites last week. That number is expected to jump to about 16 million households in 10 years.
The sites could remain niche players, however, if they aren’t able to attract enough users, he says. “Not everybody wants to see their bank-account balances,” he says. (Dow Jones & Co., the publisher of The Wall Street Journal, and IAC/InterActive Corp. are jointly developing a personal-finance Web site.)
The target audience for these sites is younger users. “The idea of looking at a ledger and seeing a check number, that’s really boring,” says Harper Reed, a 29-year-old software engineer in Chicago, who uses Wesabe to keep track of his spending. “But being able to say, ‘I’m trying to spend less money at Amazon,’ and seeing how many people are also trying to save money at Amazon is a better way to quantify the numbers to me.”
The ability to share and compare one’s finances with others can also help motivate people to build their wealth. NetworthIQ lets users create profiles based on their actual net worth. They can then compare themselves with others by age, income or occupation, link to other users, and track their progress on a blog. About one-third of the site’s 9,000 registered users choose to make their net-worth figures public, although the data are self-reported and the users’ identity is masked.
On Geezeo, members can create discussion groups with other users about specific financial topics. The site lets members create a consolidated view of their financial accounts and use text-messaging technology to get quick balance updates from their mobile phones. Starting this week, users will be able to provide feedback on financial products, such as student loans, credit cards or savings accounts.
“This totally makes sense for the 20-something crowd,” says Brian Jones, a financial adviser in Fairfax, Va., and author of “Getting Started: The Financial Guide for a Younger Generation.” “There’s a lot of utility here because their situations aren’t that complex. This generation is very comfortable with online profiles and is very open with sharing information online.”
Katie McCaskey, a 33-year-old New Yorker, likes the anonymity of being able to discuss her personal finances online. “I recently went back to graduate school, and I freaked out about how much this degree cost me,” says the freelance artist, who now uses Geezeo to keep track of her finances. “After frustrating everybody in my family and social circle with my concerns,” she started writing a blog to swap advice on paying down debt.
Some sites also allow users to keep track of shared expenses between friends and family. Mike Zazon, a 23-year-old student in Columbus, Ohio, previously used spreadsheets to keep track of expenses that he had to split with his roommate. Now, whenever they pay bills, they post the transactions on Buxfer, which automatically divides up each person’s share and alerts others in the group by email or text message that an expense has been posted.
“It takes away the awkwardness of going to collect later,” says Mr. Zazon.

Manage Your Debt and Credit

Mon, 21 Jun 2010 03:35:18 +0000

Credit was once defined as “Man’s Confidence in Man.” But in fact, the definition of credit today is more like “Man’s Confidence in Himself.” Using credit today means you have confidence in your future ability to pay that debt. Forty years ago, your parents may have paid cash for their homes and their cars, a largely unheard-of event today. If they borrowed money at all, chances are it was from a relative or friend, and not a financial institution.
Today debt and instant credit are part of our everyday lives. The convenience of instant credit, however, has taken its toll. Many individuals use credit cards to spend more than they earn, and a few of these people actually build themselves a debt prison from which some never emerge. On the other hand, those who never use credit can be denied a loan or credit when they have a justifiable need or use for it. Using credit establishes a history of financial responsibility: Until you establish a credit history, your chances of qualifying for an important loan, such as a mortgage, are greatly reduced.
What is the balance between using credit wisely and staying out of overwhelming debt? Let’s look at the facts and some pros and cons.
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Installment Debt
Debt comes in many forms, and most types help us in our daily lives — when used responsibly. Most people cannot buy a home without some financial help, and many cannot buy a car (especially a new one) without some sort of financing. The money borrowed to purchase large-ticket items is called installment debt: The debtor pays a portion of the total at regular intervals over a specified period of time. At the end of that time period, the loan with interest is paid off.
Installment debt allows you to purchase items at a competitive interest rate: for example, 5% to 7% for a 30-year home mortgage and 8% or 9% for a car loan. The loan is paid back on an amortizing schedule, monthly payments of a fixed amount that remain constant over the life of the loan. At first, most of the monthly payment consists of interest. In later years, principal begins to be paid down.
Installment debt is easily budgeted and the debt is eliminated on a predetermined date. Even for those who may actually have the cash to purchase the desired item, installment debt can make financial sense if you can earn a higher return (after taxes) on your investment of cash than you must pay on your installment debt.
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Revolving Credit
A revolving line of credit, also called “open-ended credit,” is made available to you for use at any time. Examples of revolving credit are credit cards such as Visa, Mastercard, and department store cards. When you apply for one of these cards, you receive a credit limit based on your credit payment history and income. When you use the credit line, you must make monthly minimum payments based on the total balance outstanding that month. Some lines of credit will also have an annual account fee.
While revolving credit is a convenient way to borrow, it can also become an endless pit of minimum payments that barely cover the interest due. Many cards charge annual rates of interest of 18% or higher. As you pay off your debt, the minimum payment is also reduced, thus extending your payoff period and, consequently, the interest you pay. Paying just the minimum due on a $2,000 credit card loan could mean making monthly interest payments for 10 or more years!
Revolving credit, in addition to being convenient, eliminates the need to carry a lot of cash and can help establish you as a creditworthy risk for future loans. The itemized monthly statements also can help you track your expenses. But some people can easily yield to the temptation that the convenience of credit cards offers. Impulse buying, failing to compare costs, and purchasing large items you can’t afford are all downfalls brought on by always available purchasing power. Spending more than you earn in any given period is a dangerous practice at best, but doing it over an extended period of time can be financial suicide.
Installment Debt vs. Revolving Debt
Lower interest rates and an amortizing repayment schedule can make installment debt a much cheaper alternative to revolving credit.
Installment Revolving
Beginning Balance $2,500 $2,500
Interest Rate 10% 18.5%
Years to Repay 4 30*
Interest Cost $544 $6,500
*Paying 2% minimum monthly payment.
Sources and Costs of Debt
Source Type of Debt Cost
Banks and Credit Unions Personal, secured Low
Personal, unsecured Moderate
Mortgage Low
Credit Card Low to High
Mortgage Companies Mortgage Low
Department Stores Revolving High
Insurance Companies Personal, unsecured High

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Using Credit Wisely
To use credit intelligently, start by examining the terms of the card(s) you are currently using. Keeping track of your cards, their rates, and your current balances will help you to be aware of how you use credit cards. Increased competition in recent years has led some credit card companies to offer enticing features to attract new cardholders, including no annual fees and low interest rates for an introductory period. (And credit card companies sometimes will give their introductory rates to existing cardholders so that they won’t transfer their balances to another credit card company.)
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Eliminating Credit Card Debt
If you think you may have too much credit card debt, begin to address it by honestly evaluating your spending habits. Examine your existing expenses to analyze how your money is spent. You will most likely be able to identify the problem areas where you are more likely to spend too much or too readily with credit cards. Then, based on your current spending practices, create a realistic budget to pay off your credit card debt in the shortest time possible while not adding any more debt to it. For assistance, you may want to turn to your financial advisor, who can help you to allocate your resources wisely to address your credit card debt.
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The Role of Debt
Today, carrying installment debt is almost a fact of life. Mortgages, car loans, or small-business loans (to name a few) are part of almost everyone’s life. On the other hand, carrying credit card debt is usually not a good idea. At interest rates of 16% and up, it’s hard to justify keeping savings that could pay off that 18% department-store credit card in the bank at 2%.
Debt and credit play increasingly important roles in our lives. As the aging Baby Boomers get closer to their peak earning years, many are realizing the need to reduce debt and increase savings. Even though analyzing your spending habits and creating a budget to address your debt may seem a little overwhelming, the simplicity of the philosophy of the Depression era still stands: Never spend more than you earn. Once you have come to grips with this basic fact, managing your debt will become far easier and more rewarding.
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Summary
• Installment debt means the loan is paid off in a specified period of time by making predetermined payments periodically.
• Revolving credit is a line of credit that is instantly available through use of a credit card (and sometimes a check).
• As you pay down your debt in a revolving line of credit, the minimum payment is also reduced, thus extending your payoff period and, consequently, the interest you pay.
• Spending more than you earn in any given period is a dangerous practice at best, but doing it over an extended period of time can be financial suicide.