My Personal Finance Blog » Outgoings

How To Make A Budget For Family Financial Stability

admin — Wed, 15 Jun 2011 15:21:45 +0000

Keeping control of your personal finances is, in theory, a fairly simple process. It is only human nature that makes home budgeting and financial control so difficult for many people. However, for the sake of this article, we will consider the simple side of the household budget equation, which is making a budget in the first place.

A good starting point in your quest to make a home budget, is to take stock of your current and recent situation, and list out all your monthly outgoings.

If you only do this from memory, there is a chance you will miss one or more important items. You probably have several sources of information on what those regular outgoings are, and whether they are easy to find depends on how well organised you are with your paperwork. It is worth checking back over at least three months bank and credit card statements, and jot down what your regular payments are out of those. At the same time, you can also make a note of items of expenditure that may recur later on.

Another source of information will be the bills and receipts that you have received over the past quarter. If you have not kept such documents and records before, then now is a good time to start. The good organisation of your important financial documents, and orderly filing of bills and receipts, will stand you in good stead for controlling the family budget when it is set.

Going over what you have spent over the last quarter will cover most if not all of your regular payments. However, it is important to think about whether you have any quarterly, annual, or new commitments that may not have shown up in your previous search. This part of the process in making your budget should give you a list that includes utilities (eg water, electricity, gas and telephone), insurance payments, mortgage and loan repayments, and credit card payments.

The regular payments you have so far found will form the core of your household budget. You can now turn those into a formal list, either on paper or on a spreadsheet, and put the amounts into the next column, with a heading notifying the month. Before moving on to the next phase, add a further 11 columns on the paper or spreadsheet, with the headings changed to appropriate months until you have a column for each calendar month for a year. I have prepared an example budget spreadsheet to help you.

For each of the items listed, decide whether they are monthly, quarterly, or yearly, payments, then repeat the monthly amounts in all the columns that apply. For example, monthly payments will go in all 12 columns but quarterly in only in the four columns when payment is due.

The next stage is for you to consider what other necessary expenditure will come out of your income every month. These other expenditure items probably do not show up as regular payments in the first stage, though individual payments may. These items may include food, household goods such as detergents, car maintenance, petrol (gasoline), and fares, which are essential to you, and you need to budget for each month.

Again, list these items in the budget list, and then enter amounts in each monthly column. What you will have then will be the “essential expenditure” part of the budget. This, if you like, is the unavoidable part of your budget. At least, it is unavoidable in the short term.

On top of that essential expenditure, though, we all have discretionary, unnecessary or indulgent expenditure, on things we like to spend on but do not actually have to.

However, before considering your non essential outgoings, there are two things it is advisable to do:

1. Total your monthly essential expenditure for each of the next 12 months, and

2. Write (or type) in your monthly net income at the top of your budget form.

Hopefully, “2″ is much higher than “1″, and you still have some income left to spend on non-essential things that make life more pleasant, plus some regular savings too.

Now that you know that you have money spare to spend on non-essentials, such as holidays and eating out, then you can also list those. You will then have a complete picture of your spending and income patterns, and have a basic budget from which you can plan ahead and keep your finances under control. If all goes well, you can also budget to save a reasonable amount each month, putting you well on the way to financial stability.

The 2005 Bankruptcy Abuse and Consumer Protection Act – Credit Counselling

admin — Mon, 13 Jun 2011 22:02:00 +0000

Very few people have been left untouched by the financial upheavals of recent years. In the good times we tend to spend and not think about it too much. The social pressures to look as though you are “succeeding” are such that when the crunch comes, we find what were manageable debts have now become unmanageable.

People find themselves in a financial situation they never thought that they would be in – one that happens to other people, but never to them. That situation is called bankruptcy.

Bankruptcy no longer carries the social stigma it once did. It is often considered the mark of someone who had the guts to try and go it alone, but failed, through little of their own, (after all, it’s the banks we now all love to blame!)

However, this doesn’t make the actual process any less stressful, and in 2005 the government brought in the Bankruptcy Abuse Prevention and Consumer Protection Act, which made it even more stressful to claim bankruptcy.

One of the main purposes of the Act was to make sure individuals weren’t using the bankruptcy laws simply to avoid debt. By hiding their true earnings and assets, it had been possible for people to claim chapter 7 bankruptcy, where all assets are liquidated but the debtor emerges free of debt, to rid themselves of unwanted debt, and at the same time retain a comfortable standard of living afterward, and with a head start in improving their credit rating after discharge.

Now, anyone wanting to file for bankruptcy has to attend government approved credit counselling.

Anyone attending counselling must bring with them details of their income and assets, and their financial outgoings. They must also supply details of their creditors and amounts owed. This way the court can decide if the more popular chapter 7 bankruptcy is an option, or if in fact the debtor, albeit with a rearrangement of their debts under a chapter 13 bankruptcy, can afford to repay their debts over a period of time, usually 3-5 years. In this way the debtor does not escape the bulk of debt, and creditors get their money.

It will also determine if there are perhaps other ways the debtor could avoid bankruptcy altogether.

One way is by using debt settlement companies, who charge a fee to the debtor, but take over the debt, usually at a reduced amount which they negotiate on your behalf.

The advantage with these companies is that your credit record is nowhere near as badly affected as it is should you become a bankrupt.

However, care must be taken when using one of these companies as many have turned out to be scams, taking the debtor’s cash, but not dealing with the debt itself, leaving the debtor worse off.

As with all things in life, it is research that pays dividends.

Retail Shopping Centre Renovation Strategies

admin — Mon, 16 May 2011 08:02:47 +0000

As the retail property ages, the strategy for the property will shift and change. This is where the matters of property renovation and refurbishment arise. Not every property will or should remain within its current use or keep its existing tenant profile, and may be better suited for change.

A property that does not change and adjust to community needs will reverse in performance and stagnate.

The astute investor will look for change as an opportunity; something to increase property use and performance. The demographics of the region and the demands of the local business and domestic community should be closely monitored so that this change can be seen and seized at the right time and in the right way.

So what renovation alternatives are available to the landlord when change is a real opportunity in the property? Consider some of these.

Renegotiation of existing leases. Keeping in close contact with tenants in the property will provide these renegotiation opportunities. Exercise of options earlier than the lease requires. If a tenant exercises their option for a further term early, it gives the landlord surety of income and stability in that tenant location. Working with tenants to provide timely expansion and contraction strategies. Many tenants will need to adjust their business and its size from time to time. It is usually better that you adjust for the tenant than you loose them to a competitor. Updating the lease form to increase revenue potential. Good leases are created by good property lawyers that have considered the function of the property and the investment plans of the landlord. The resultant lease form can keep the property to a performance strategy. Recovery of property outgoings and operating costs in a better or more expansive way. Building and property operational costs do go up. In this day and age it is common to have a structure built into the lease that allows the operational costs to be recovered in some way. It can be through gross or net rents, together with the structure of the rent reviews. Creation of new tenancy space and leases. Where the property design allows, any areas should be checked for better use and layout. Using the ‘as built’ drawings for the property is a good place to start your planning for this. Conversion of previously unused space to rentable space. This can include the better use of the common areas. Excessive open areas like these should be examined for better use and potential leasing. It is surprising how much vibrancy can be created in a property when the common area is split up into smaller kiosks and tenant areas. Monitor the foot traffic in and out of the property so that high traffic areas can generate the best property profile and rental opportunity. Integrate the community into your property more effectively through common areas and better services and amenities. You can also put a stage in the common area and offer it to community groups for free as part of an initiative to bring more people to the property. Improve signage strategies so that the property is more visible and impacting to the community. In doing this it is important to standardize the signs and placement. This will include the tenant and common area signs so that they all give a quality modern impact to the property. Paint common areas frequently. This gives the visitor to the property the right impression. Require tenants to renovate their internal leased space at least every 5 years. Establish a property business plan for each financial year and ensure that the plan incorporates lease initiatives together with income and expenditure growth or control factors (rent reviews, options, and outgoings recovery). Lighting improvement is an easy way to give the property a cleaner and modern feel. Reconfigure and expand the carpark on the property so that people can use the property more effectively and more quickly. As part of this, in some locations it is advisable to provide undercover car parking. Integrate public transport into the property. This could be as simple as a bus stop in or outside of a retail shopping centre. Encouraging tenants to do their own renovation in harmony with the centre’s plans. Lobby the local council or roads authority to install traffic lights and road adjustments outside your property so that tenants and customers can get to the property easily. Upgrade the landscaping outside the property so that it gives a positive impression Install a pylon sign on the property that brands the location and the property well. Give the property a name that the community can relate to

Property Management/Real Estate Management – A Booming Career Option

admin — Sat, 11 Dec 2010 20:45:46 +0000

Almost similar to the management function in any other business, property management also implies operation of residential, commercial, or industrial property. In literal words, this may stand as managing a property on behalf of its owner in his/her absence or lack of time. This branch of management includes a wide array of functions related to maintenance of buildings including damage repair, paint, and substitution of any fitting. Property management, also referred to as Real estate Management, at times also involves rent collection, outgoings of payments, insurance payments, paying the maintenance staff, and negotiating with the current and prospective tenants.

Right from the residential apartments to villas, and from small shops to commercial malls, people engaged in the property management service cater to all your property related needs. Not only this, they at times also undertake personal property management, thereby taking care of equipment, tools, and all the related corporeal capital assets attained and employed to build, renovate, and sustain end article deliverables.

Real Estate Management or Property Management actually entails the procedures, organisms, and manpower needed to administer the life sequence of acquired properties. These procedures may include two or more of the following features like acquisition, maintenance, control, liability, operation, and disposition.

Roles of a Property Manager

One of the most important roles of a property manager is to act as a buffer between the landlord and the user of the property. He/she acts as a liaison person who makes both the parties agree on mutually beneficial terms. The property mangers accept the rent on the behalf of the landlord from the tenants and address all the maintenance issues on behalf of tenants. This service thus benefits both the parties equally and is hence flourishing with the upcoming boom in the real estate sector.

Property management service is beneficial either for working professionals who do not have time to search for their desired place or for property owners staying outside Canada. Such landlords definitely need to hire some manager to look after their property and to liaise with their tenant constituency.

This service has many different facets to it. It includes managing the financial transactions of the properties, participation in the litigation process as well as initiation of tenant litigation and signing in of the contracts with maintenance companies, security companies, and insurance companies.

Although litigation is an altogether different stream which is entrusted only upon trained attorneys of the area, yet most of the management services undertake the property litigation themselves. For this, they also at times hire real estate attorneys on an hourly basis who do the freelancing for the former. The majority of legal matters that draw the attention of property managers are cases pertaining to

* Evictions

* Public nuisance

* Non–payment of rent

* Non–payment of bills

* Harassment due to damages and

* Diminution of pre-arranged facilities

Therefore, it becomes quite mandatory for the property managers to be updated on all the law practices applicable under municipal, county, and state law.

In the present scenario, various magazines and journals also publish the desired property details. Such journals tend to publish mainly the following

* Contemporary market trends and research

* Market data digests and reports

* Area-wise deep analysis of property trends

* Various judgments and updates in property law and

* Property reviews based on market research

That is to say, these journals adopt a wide subject abate and address key concerns ranging from the economic, physical, and social aspects of Property management to international perspective.

What are the mechanics of the decision to modify?

admin — Sat, 20 Mar 2010 16:41:51 +0000

Whether you are applying directly to your lender or claiming eligibility under HAMP, the practical decisions are all to be made by the lender. You do whatever you can to set out your side of the proposed bargain with a clear set of accounts showing money in and money out. The need is to demonstrate a guaranteed slice of your monthly income that can be devoted to paying a reduced instalment. So list everything you are obliged to pay to keep body and soul together, from food to utilities to transport to health insurance, and so on.

Without the modification, this is going to be negative, i.e. on paper, you are spending more than you earn. The “trick” is to show enough to cover a modified instalment, perhaps with a tiny slice of money left over for the inevitable emergencies. If the modified instalment you prove can be paid is enough to keep the lender less unhappy, the modification will be agreed on a trial basis. But if the minimum instalment the lender requires will leave you in negative territory, your offer to modify will be rejected. Why reject a good faith offer? Because people who have to juggle monthly payments to fit into the available money almost always default again. Your income must cover all outgoings.

If the modification is agreed in principle, it moves on to a formal trial basis. In theory, this is a three-month trial, but the reality is that the lenders usually drag their feet and are very slow to convert the trial into a permanent modification. This ought not to affect you. After all, you are paying the agreed amount. But there is a problem. Until the modification is made permanent, the lender will report you to the credit rating agencies as still delinquent. This is grossly unfair.

You are paying what is agreed. But, as the law stands, the unpaid balance each month will be reported as late. Thus, the longer the trial period is allowed to drift the worse your credit score will become. This requires action. You should contact the three major agencies, Experian, Equifax and TransUnion, and ask that details of the trial be added to your credit file. That way, even though your score will continue to decline, all other lenders will be able to see what is going on.

So what is happening during the trial other than you proving your ability to pay the reduced instalments on time? The answer is slightly disheartening. It is always in the lender’s interest to collect as much money from you as possible on your mortgage. But, while you stay in default, the lender is entitled to foreclose at any time. If the lender judges it will make more money by foreclosing rather than accepting the reduced payments over the rest of the term, it will always foreclose.

It is simply collecting as much cash from you as possible before triggering your eviction. No-one said the home loan industry had to work fairly, and it does not. The only time the lender will accept a permanent modification is when the accounts clearly show more profit in keeping the mortgage alive. While the housing market remains depressed, the odds are in your favor. But if resale prices start to rise, the odds will swing against you.

Family Finances – Budgeting for Baby

admin — Thu, 11 Jun 2009 00:59:03 +0000

le, planning to have a child is a very exciting time. However, while it may be obvious it will create many lifestyle changes, many couples neglect to plan for the financial changes having a child will create. You might be going from two incomes to one and having the increased outgoings that a baby creates such as medical bills, clothes, toys, groceries and so on.

Just how much will your lifestyle differ once your child is born? If this is your first child, there might be significant changes in the household income. Will one of the parents be staying home at least in the initial months of the baby’s arrival? If so, the household income could be significantly cut back.

In addition, a new family member will increase the overall monthly costs for the parents. Food, diapers, new furniture, clothing and more will all add up. If both parents will go back to work once the baby arrives, child care costs can be surprisingly expensive. All in all, it’s important to plan ahead for the future in order to prevent going into debt once the child arrives.

What do savvy and financially-intelligent parents do in order to prevent these future lifestyle changes from incurring debt? Save. Simply put, savings account options can be a great way for parents to plan for a future child. By planning your finances ahead of time, soon-to-be parents can find the finances to pay for the medical bills and other necessary future items.

There are a number of savings account options that soon-to-be parents can consider to help pay for the initial bills and items that will be needed for a new baby. They can look into a high interest savings account that will protect their money and increase it over the upcoming months. A managed fund is another smart option for new parents.

Living off a new income might be implemented in the future and if this is the case, new parents should consider learning how to live off one income now – before the baby comes. This way, the additional money coming in from the secondary income can go directly into a managed fund or high interest savings account. In a strong performing fund you may be surprised just how fast the value of the fund can increase once you start depositing most of a second income into the fund. You’ll be able to build up funds to cover items such as doctors bills, baby supplies and more.

Planning a new baby doesn’t have to mean that your family will go into debt. By analyzing and budgeting your finances in advance, you can save lots of money through high interest savings account programs and managed fund options. When the time comes, the new parents will come home with a new baby – and no new debt. Learn how you can start saving now to plan for a new baby through savings accounts and more.

Richard Greenwood writes articles to help family finances including budgeting and debt reduction. He is Director of the compareyourbank.com.au designed to aid consumers to compare credit cards and high interest savings accounts online.