Why You Fail in Some of Your Finances

Regardless of how well-versed you are in your profession, talking about finances and budgets make your head ache. I admit it makes my head ache too, but I achieved financial success by taking the hard way, that is, self-improvement. Here are a few things you’ll need to understand about why we fail in finances.

1.    Money is Objective

Objectivity is a difficult issue especially if you are an investor of a business you co-founded with one or many friends. Money has an objective value dictated by the markets daily, and if you do business with friends, the aspect of money’s objectivity is thrown out of the window. In any kind of deal, make sure that the money you get is the money you deserve from your labour, production, manufacturing, and everything else.

2.    Basic Terms

When I was in my 20s, some financial terms were very foreign to me, but I understood their function very well, so I went for them without any knowledge about the proper terms. I went bankrupt instantly when I made my first investment. That’s when I learned that we should know what compound interest, flexible rates mean; you’ll never really know how they work until you see them in action.

3.    Pre-Existing Bias

I failed miserably on the last investment I made because I believed news about things I believed was going to happen, but never really researched thoroughly on all sides. This subjective thought made me make a decision I regret. We must eliminate all pre-existing bias and research thoroughly to avoid making bad, subjective decisions triggered by a single source that proves our existing bias to be correct.

Knowing if You’re a Qualified Investor

Investing in the markets and industries is where one could attain financial independence. Your grow as your shares in companies grow as well. However, the first challenge is getting into the stock market. Here are a few things that will help you know if you are a qualified investor.

1.    Market Classes

Investor qualifications vary depending on the investor’s target market. For example, hedge funds are private funds that is run by an experienced manager who ensures great growth, but with a high initial price. Only accredited investors are allowed in hedge funds simply because it could endanger a normal investor’s resources.

2.    Common Criteria

For most investors, the common criteria is not always financial. You could have enough money to buy enough shares, but you have to have a clean slate in your financial debt. Most brokers or agents will ask if an investor understands investing and knows how to research simply because an investor needs to make proper decisions based on annual and quarterly reports of companies and investors.

3.    Legal Nationality

Of course, before you participate in any local stock market, you’ll have to confirm your legal nationality and if your legality permits you to engage in activities that directly affect a country’s economic activity.

Obstacles Preventing Bitcoin from General Circulation

The first-ever, widely-recognized digital currency Bitcoin is gaining a menacing reputation among different governments, which is preventing it from going into general circulation. While many people, including investors and financial experts in the government itself, agree that bitcoin can be a great alternative currency in the future, governments mention the following as their problems.

1.    Lack of Transparency

The bitcoin network, managed by an automated program, records all bitcoin activity in the entire world. The network encrypts allthese transactions, which allow great privacy for many users. Governments are concerned that because of bitcoin’s history of being used as a medium for illegal drug and substance purchases over the Internet, it might become a “shady” medium that ensures no trace from purchase can be made.

2.    Lack of Regulation

Bitcoin has no bank and is managed by not one individual or government. It is a currency that self-regulates. There is no “printing mint”, instead, miners, who are rewarded for having their machines solve complex algorithms using “mining rigs” or powerful computer units, ensure the speed of money production. This decentralized feature is also not recorded and cannot be regulated.

3.    Money Laundering

Because all transactions with bitcoins are encrypted and its high exchange rate due to bustling activity, governments fear that bitcoin can become a medium for money laundering.

Credit Cards and the Effects of a Mis Sold PPI

Payment protection insurance is the biggest financial scandal in the United Kingdom and clearly, banks made a huge profit if the bill is reaching £20 billion, roughly the price of two London Olympics in one year. PPI could be sold on your loan, mortgage or credit card.

If you were mis sold PPI on credit cards, the higher your credit limit, the higher the premium you are paying for the insurance. The same is also true if your credit card has a higher interest rate.

A mis sold PPI could possibly increase your interest rate. Bank employees may not inform you that you were issued an insurance policy for your credit card. Instead, the item would be listed with the descriptors “security”, “protection” or ASU protection.

In some cases, mis sold PPI is not listed as an item on your bank bills and instead, your monthly repayment or your interest rates increase. This is a compound interest rate and resolving this matter can be quite complicated as your loan repayments are tangled with your insurance repayments.

Mis sold PPI could give you an average of £3000 in refunds, but you could be owed more due to your compound interest rates. It would be wise to consult with a PPI claims management company to help you successfully reclaim your refunds.

Alternatives to Debt Consolidation

The alternative to bankruptcy is debt consolidation, but debt consolidation has its advantages and disadvantages. Here are a few alternatives to debt consolidation.

1.    Aggressive Payment Plans

Some debtors actually “snowball” their debts. Snowballing means to pay for a debt’s minimum fee then gradually increase your repayments until you could pay off your debt. By listing all your repayments due for the month, arranging them in the order of highest to lowest interest rate and deciding on the minimum constant repayment you could provide to all your debts, then you could gradually reduce your bills.

2.    Lower Your Interest Rates

Negotiate your credit card interest rates with your lender or creditor. You could actually save hundreds just by negotiating your interest rate with your lender. When negotiating, make it a point to point out that you couldn’t go paying the high credit card rates and that you are considering other options aside from the credit card. Once the bank or lender reviews your history and finds you qualify for a lower interest rate, you are in good hands. However, the results of this alternative cannot be guaranteed completely.

3.     Credit Card Relief Programs

Not only you suffer from credit card or loan debts as many people are also having trouble making repayments. In this case, you could actually get financial assistance from credit card relief programs. Review your household, education and miscellaneous expenses (which you will need to note down), lenders may consider helping you by putting you in their credit relief programs. Most lenders have a financial hardship department.

Some Ways to Save Money Using Your Credit Cards

Sure, a credit card could get you into deep debt but it could actually save you money if you know how to use it right. Here are a few tips that could help you save money using your credit cards.

1.    Rewards Cards

Credit card rewards are available for some credit card owners, which help offset your expenses with the rewards they accrue. However, these cards have very high interest rates. Paying in full each month helps you spend more with credit card reward cards.

2.    Pay More Than the Minimum

Most credit cards remain free if you pay more than the minimum fees you are entitled to pay monthly. However, if you could pay for more than the minimum, you avoid higher interest rates that could plague your financial status for years.

3.    Too Many Cards

Always research before you apply for a new credit card. It is important that you limit your ownership of credit cards, especially the higher-rate ones. Owning too many cards could spell you trouble, even if they guarantee you good rewards or discounts from select merchant promotions.

4.    Cash Advances

Don’t make use of your credit card if you are not going to swipe it in merchant stores. Cash advances usually add a 1-5% fee for every cash advance you make.  

UK Tax Guide for the Self-Employed

Self-employed UK citizens have a special tax scheme. You either pay lower or higher than the conventional UK employee depending on the nature of your business. Here is a short guide to your taxes.

1.    Confirming Self-Employment

A self-employed must register his or her business with Her Majesty’s Revenue and Customs or HMRC within three months of self-employment declaration. Self-employed people may also register for VAT. Upon registration, you should keep all the income and expenses related to your tax return for five years.

2.    Liabilities

The United Kingdom has different kinds of taxes for the self-employed such as National Insurance, VAT, capital gains tax and business rates. Most self-employed pay national insurance and Class 1 contributions for those with employees in their business. Business rates apply for your properties and real estate where business is done and capital gains tax is accrued when selling business properties. All self-employed also pay a percentage for income tax.

3.    Tax Deductions

Anything that is not considered or declared a capital asset is non-taxable and you could claim tax deductions on the following.

1.    Employers’ National Insurance

2.    Employees’ insurance, childcare provision and pension benefits

3.    Costs of Training for Employees

4.    Business Premise Maintenance

5.    Council Tax

6.    Cleaning

7.    General Maintenance