How to Manage Your Finances and Get Out of Debt

What are the facts of your current financial situation? Do you have access to information about your income and expenditure, your asset and liabilities? You surely have an idea of how much you earn on a monthly or weekly basis but can you trace where it all goes? Can you calculate your net worth? Ignorance of your financial situation is no joke it is sleepless nights, it is working harder for every penny instead of letting your money work for you, it is anxiety and stress and the list goes on. You must gain control of your money!

I recall that, gaining control of my cash flow was harder than learning how to how to speak in public! At a time, I was making a five figures salary as a software engineer of a medium size IT Company and yet my personal finance was a mess! I had about three credit cards that I was seriously struggling to repay. I also had two personal accounts with two clothing shops and a bond. With every raise and bonus, my spending almost doubled! I was using more than 40% of my income to buy things I did not need. It took me a while to realize that, my financial situation depended on how much I saved and definitely not on how much I earned!

As long as you consume every cent you earn, you are caught up in a self-created trap. You must take action to reduce your expenditure and start saving. Financial freedom requires you to define your purpose.

How do you manage your finances?

Inventories: Get a note book and list all your assets, income, liabilities and expenses. Keep it up to date on a monthly or (preferably) weekly basis.

Review your expenses: Cut your expenditure by 10% for the first 2-3 months and stick to it. I know it will be very hard at first but do not give up. When you get comfortable with the current situation, add another 10% and keep doing it thereafter every 2-3 months. If you are serious about your finance, by the end of the a 12 month period, you would have cut your expenses by at least 30%!

Start saving: Save a portion of every penny you make. Begin with 1% and increase it by another percent every month for a year. Yes, you’ve guessed it right, by the end of the 12 months, you will be saving about 12% of your main income. Now add the 2-3 months living expenses (above) to build a cash reserve. Do not let expenditure rise with income. For every salary increase or end of year bonus, set an automatic transfer to your savings account.

Get out of debt: Pay off debt with the highest interest rate first (credit cards etc…) and maintain minimum payment on everything else first. Seek professional help if you have to. Make sure you only keep one credit card (strictly for emergency use).

Invest wisely: Once you are in financial control and debt free with cash reserve, you can start thinking of investing in the stock market or unit trusts. Read more about it on my site.

Small Business Savior: Online Invoicing and Accounting Solution

Invoices, tasks, more invoices, tasks, estimate requests, still more invoices. All this paperwork can surely clutter a desk quickly, and the lack of organization makes it hard to prioritize tasks. There has to be a better way.

There is. There are online invoicing solutions and cloud accounting apps that claim to help us manage all our business finances in one place. Perfect for the small business environment, yet they claim to understand the problems that many small business owners, freelancers and entrepreneurs face, and claim to strive to make the best user experiences possible.

What’s great about such online accounting solutions is that they are so simple and easy to use, that you don’t need to be a computer genius to reap the benefits. They usually can be accessed anywhere there is an Internet connection, and other than having a web browser, there are no additional technical specs needed. Some are even available on mobile devices, which is perfect for the traveling entrepreneur. Usually everything in your accounts is searchable, using lightning fast search tools, giving you instant access to all of your data whenever you need it.

In some of the online invoicing solutions account holders can add team members as necessary to handle different areas like tasks and invoices. Sections are controllable with user permissions set by the account holder, and each user will have access to only the areas necessary. Usually the financial information is kept safe and secure. A secure website’s URL should begin with “https” rather than “http”. The “s” at the end of “http” stands for secure and is using an SSL (Secure Sockets Layer) connection. Your information will be encrypted before being sent to a server. Another sign to look for is the “Lock” icon that is displayed somewhere in the window of your web browser. Different browsers may position the lock in different places.

The user-friendly dashboards offer all of your important information right in a centralized location. You and your team can see all your active tasks, keep track of your invoices and expenses, and your recent activity is readily available. The simple menu bars list useful sections, and with one click you’re on your way to even more functionality. Every invoice and estimate has section that can be edited and suited to fit each task, or you can opt to copy a previous invoice. With such online invoicing solutions you can track all business expenses, and conveniently invoice clients for those expenses right away.

A great business has repeat clientele. With really good online accounting solutions, all of your regular customers are manageable from the client screen, where you can provide estimates, set up recurring invoices, and create new tasks. Email notifications usually can be set or modified using simple email templates for new or late invoices and estimates. The ability to import your client list from QuickBooks or any other existing software or even an address book, eliminates the need to enter client data individually. Also some online invoicing solutions lets you change the name “Task” to suit your business: “case” for lawyers, “event” for caterer, etc. Usually very select solutions can be personalized to fit your business style, add your logo to your invoices, estimates and your team and client screens.

Another great feature to look for is to having instant access to all your cloud accounting reports. Profit and Loss statements, Expense Reports, and Payments Collected reports should be easily available to make your business operations smoother. Similar to the Task naming feature, in select online invoicing solutions, you can customize the “reports” name to better suit your business’s needs.

The online payment collection option makes sure you get paid even faster than usual, as clients can conveniently pay invoices online. Many such online solutions let you also enter manual payments, and keep track of all your financials without the need of a third party accountant.

All this sounds expensive, but that’s the best part online services. Some can be pretty expensive and complex to use but some are completely cost-effective for your business, and by saving your team time and money, the return on investment is enormous. There are even free plans that you can sign up in just seconds without a credit card.

These online invoicing solutions also offer free trials, and after that period you can choose the desired plan to continue service. Also, in some online invoicing solutions, account holders have the possibility of making money with the integrated “Refer” feature.

It may not be so much confidence as it is empathy. Online invoicing solution providers understand small businesses, and that’s why they’re here to help!

Are The Chinese Feeding It to the Fishes Again – High Finance and China’s Municipal Vehicles

One of the most important things in securing or raising capital is investor confidence. A high level of investor confidence can come in a number of ways. Strong quarterly sales, a positive outlook, a good credit rating, and legitimate accounting are some of the best ways. It also pays to have strong financial backers behind any of the offerings. But what happens when a government, corporation, or municipality takes advantage of the investors, trying to score large sums of capital, through trickery, fakery, and behind the scenes corruption?

Well, welcome to China’s capital markets. You see, behind the 10% year-over-year growth for the last three decades, not all is as it seems. That Great Wall of China may not be on a solid financial foundation unfortunately. After the global recession, China used stimulus monies by making possible loans through municipal vehicles for huge infrastructure projects, which put people to work building giant high-rises, power plants, dams, bridges, high-speed trains, and other things. Many applauded this effort, but in hindsight it wasn’t done on the up and up.

In China Economic Review there was an interesting article published on August 16, 2011 titled; China Downplays Local Debt, Renews Push for Bonds,” which also quotes a Bloomberg BusinessWeek article about talking about how the Chinese Ministry of Finance is claiming that the local government municipal vehicles are safe from loan defaults, and won’t cause a spike in bad loans. In reality this is a huge problem, it isn’t going away, much of the collateral of so many of these loans for malls, infrastructure, high-rise apartments doesn’t exist, and never did exist, all that exists is empty paper loans and a trail awash of corruption cover ups.

This particular article in China Economic Review stated that the Chinese Ministry of Finance is putting together a plan to allow these local governments to sell “bonds” to shore up the challenges they face with their bad loans. Approximately $1.7 Trillion in loans were made in 2010, and S&P now says some 30% maybe bad according to the article. “The finance ministry has drafted a preliminary plan that would allow designated provinces and cities to sell bonds to investors on a trial basis” a person with knowledge of the matter said.”

There was another article by Tom Orlick on August 15, 2011 in the Wall Street Journal titled “China’s Official Data Muddy Its Housing Picture,” and the article was accompanied by a couple of graphs which show the difference between China’s National Bureau of Statistics and the private estimates of China Real Estate Index System. The figures were off by so much that it was obvious that someone wasn’t telling the truth. The question to me is not which one, rather it is; why the Chinese government is putting out false statistics to stave off a total financial real estate market catastrophe.

Things in China are not as they seem, and the troubles have been exacerbated by a false sense of economic prosperity which has created an incredible real estate bubble, all backed by bogus loans, and corruption behind the scenes. When all of this collapses it won’t be pretty, but it may be a while still, as China tries to shore up its problems, by selling more bonds to cover its losses. It’s too bad China did not learn from what the United States went through. Indeed I hope you will please consider all this and think on it.