Finance Guide

In today`s world banking has become quite easy for consumers. They do not have to wait in queue to collect money instead have ATM or debit cards to withdraw that are banks have provided easier solutions. One such solution provided by them is credit card through which one can spend money even if one does not have money at that moment. But these day some people depend heavily on credit cards and have more than one; they start using credit cards for their routine activities which earlier they were doing for cash; this creates debt on them when they are not able to make credit card consolidation charges of a month, also defaulters got increase and people suffer from money collectors of banks.

These days almost 50% population uses credit cards for routine shopping so credit card issuing banks have also increased sufficiently. I must say that it is very unfortunate that some of these people do not pay credit card monthly payment and had to bear unnecessary interest charges which is huge about 35%to 50% in some cases .

Once you are stuck in huge debts then you are left with two options.

One is balance transferring to some other credit card which charges low interest rates and free balance transfer for at least 90 days. Other is Credit card consolidation loan in which you pay in EMI with some lower interest rates. What I would suggest you is that when you are going to take a credit card see its terms & conditions carefully such as interest charges ,balance transfer charges, offers available ,annual fee subscriptions, online facility and others which you think for you as are important. Do not use more than 3 credit cards otherwise you will always stuck in some payment and use them when you really need and not just for buying grocery.

An IVA (Individual Voluntary Arrangement) is a way of clearing unmanageable debt without declaring yourself bankrupt – something which may be particularly important for homeowners, as they’d be very likely to lose their property if they were declared bankrupt.

An IVA, on the other hand, is extremely unlikely to force the sale of their property. True, they’d probably have to commit to releasing equity* from their property towards the end of the IVA, so they could increase the amount they’re paying into the IVA.

In most cases, this would happen halfway through the final year of the IVA – most IVAs last 5 years, so they’d release equity in the 54^th month of the IVA. Once they’d done this, they would owe more money to their secured lender(s) than they used to, but the property would still be theirs.

Far from losing you your home, an IVA can actually help you stay in it. How? An important aspect of an IVA is that it’s affordable – that your payments would be set at a level you could commit to. So they’d be as high as you could afford after you’d accounted for all your ‘essential expenditure’. In other words, your payments would be based on your disposable income – the money that’s left after you’d set aside enough money for payments to your mortgage, secured debts, utility bills, petrol, clothing, food, etc.

So your IVA payments wouldn’t take up money you need for your mortgage. It’s an important point, as many people find they’re falling behind on their mortgage payments because their unsecured debts are taking up too much of their income – not because their mortgage payments themselves are too high.

The same goes for tenants. People who rent their accommodation and are in an IVA will be making payments based on what they have left after they’ve taken their rent and other essential expenses into account. So they won’t be using the funds they need for their rent just to stay on top of their payments towards their unsecured debt.

Even so, an IVA isn’t always the best solution – even for homeowners. An IVA will affect your credit rating for 6 years from the time it starts, which can make credit more expensive and/or harder to obtain for that time. Plus, some people can’t commit to the monthly payments which an IVA would require.

Others may be put off by the thought of making payments to an IVA for 5 years. Most people tend to be discharged from bankruptcy within one year, although they may be required to keep on making payments for a further two years – people who can afford to contribute money to their bankruptcy will probably be required to do so for a total of three years, from when the bankruptcy starts.

* Equity is the portion of the home’s value you owe nothing on, in the form of mortgage / secured loans. If you’re a homeowner, you can find out how much equity you have in your home by taking the value of your property and subtracting the value of any mortgage / secured loans you have.

In today’s world it is quite very important to impart financial literacy to children right from their childhood .Financial intelligence is not only about making lots of money; it is how we can save and utilize money on our hard times. Practical examples quote that there are many people who have never gone to any university for financial literacy made a lot of money and are successful; there are also people who made lots of money but gone bankrupt because of bad money habits or I would say lack of Teen Financial Literacy.

Some people think that if they would talk about money with their children they would pollute their child’s innocent mind .I think such people have forgot that in whole of their child’s life they have to learn and practice only money matters? People generally left it to colleges and schools to impart this knowledge to their children but they forget that the best teacher for any child is its Parent. The process of learning starts even before going to college or school and these institutes only supplement the child’s knowledge.

Usually parents do not dwindle to guide their child about saving money; they such keep on imparting them coaching so that they can get admission in good university and then fetch a good job. This is the reason that that you find not many Nouveau riche people.

Nouveau riche is a French word which means new money and refers to people who have earned money in short span of time or within their lifetime.

So if your child get inculcate habits of saving money in childhood then he would not find difficulties in this harsh world and may be he become a nouveau riche. So in this modern world Teen Financial Literacy has become an important issue from child’s future point of view.