Business Finance Guides

Understanding how personal finance works is very important if you want to enjoy financial freedom. This is why I've decided to list 30 personal finance tips for everyday consumers, business owners, first time and existing home owners, students and people with bad credit so you'll be able to make wiser decisions with your money:

1. Forget about the prime rate:
Many lenders will advertise their prime rate first to lure applicants into thinking that they'll be able to get that rate on their business or personal loan. The truth is that only a select few can qualify for the prime rate, so you should keep your expectations realistic and use the prime rate as a reference only.

2. Double check your credit report:
Did you know that a simple error on your credit report could seriously hurt your credit score? Make sure that you check if there are any errors on your credit report and report any error immediately if you don't want your credit score to suffer.

3. Consider applying for a secured credit card:
Secured credit cards are a great way to do some credit repair on your own. Most bad credit credit cards are secured cards, so you'll have to be prepared to pay a minimum security deposit upfront. Just make sure that the activity on your card is reported to the major credit bureaus if you want to be able to improve your credit using your card.

4. Beware of payday loans:
Even if they're often the only short term loan option for many people, a payday loan might actually do you more harm than good. Payday loans have way higher interest rates than most loans and they're even outlawed in certain states. So make sure that the lender you're thinking about borrowing from is in concordance with the laws in your jurisdiction and is registered with the BBB.

5. Understand how debt consolidation works:
A debt consolidation loan is like any other loan. The goal of a debt consolidation loan is mainly to reorganize your debt and make the repayment easier. While it may be a good debt reduction tool for some people, it's not always easy to qualify for one. Beware of people who claim that you'll be able to qualify for a debt consolidation loan whatever your circumstances; you'll either need a good credit score or collateral to qualify for most debt consolidation loans.

6. Consider getting an FHA loan:
If you're thinking about buying a new home, but don't have the necessary funds to pay a huge down payment, you might think about applying for an FHA loan. FHA loans are easier to qualify for and the down payment is lower than on most mortgage loans, so you should definitely give FHA loans a try.

7. Consider alternative financial aid options:
Students have many federal and public options available when it comes to financial aid. Don't assume that you won't be able to qualify for financial Grants because you're in a favorable financial situation. There are many government loans available to students and they're not all based on need, so make sure that you look at all the student loans available to you in detail if you want to enjoy the best financial aid possible.

8. Be realistic:
If you have less than perfect credit, your chances of qualifying for a cheap loan or a signature loan will be pretty dim. Most of the time, you won't be able to get a preferential rate on your loan, unless you apply for a secured loan. So be prepared to pledge some asset as collateral if you have bad credit but still want an acceptable interest rate on your loan.

9. Choose the best bank account for you:
There are many different types of bank accounts available these days and they all have their advantages and disadvantages. If you want to safely deposit your money and get a small return on your investment, a regular savings account might be the right choice for you.

You can also apply for a high interest savings account, but you have to be aware of all the details of your account before you sign up. Some will require that you keep your money locked for a set amount of time while others will demand that you make minimum monthly contributions to your account.

If you simply want to have the flexibility to withdraw funds whenever you need and print checks, than you should go for a regular checking account. However, some institutions offer high interest checking accounts, but they have more stringent terms and the return isn't the best. The same is true with money market accounts. So make sure you know all the terms associated with your high interest checking account or money market account to see if it's really the right choice for you.

10. Pay higher deductibles:
A lot of people are afraid to pay higher deductibles when buying individual health insurance or life insurance. However, agreeing to higher deductibles will allow you to reduce your premiums. So, if you feel you'll be able to handle it, you should definitely consider this option.

11. Think twice about switching to a Roth IRA:
If you have a traditional IRA, the new legislation allows you to switch to a Roth IRA. However, even if the tax advantages a Roth IRA can give you can look interesting, switching is not always in your best interest.

The main difference between a traditional IRA and a Roth IRA is that with a traditional IRA, your contributions will not be taxable, but you'll have to pay taxes when comes the time to withdraw your funds. With a Roth IRA, on the other hand, you won't have to pay taxes once you withdraw your funds, but your contributions will be taxable. You should keep in mind however that if you decide to convert your traditional IRA to a Roth IRA, it will be viewed as a taxable event under income tax law and you'll be taxed based on the entire conversion amount for your current tax bracket.

A Roth IRA can be a good option if the tax bracket you end up in at the time of withdrawal is higher then during the time you're making contributions. However, you never know how tax laws may change in the future and major modifications could cancel all the benefits a Roth IRA can give you. So you should definitely make sure that switching is the best option for you before you make a decision.

12. Take advantage of 0% credit card deals:
The best way to take full advantage of 0% credit card deals is by doing a balance transfer from a card with a higher interest rate to your new one. However, you have to make sure that the transfer fees are worth it and that you'll be able to repay the balance before the 0% offer ends.

13. Consider settling your debt:
While it's always better to seek professional help when it comes to debt settlement, but if you decide to do it yourself, make sure that you check with other people who've decided to settle their debt on their own to see what worked for them and what didn't. Go on debt settlement forums and ask people who were in the same financial situation as you and had to deal with the same creditors as you are and research the methods they've used to successfully settle their credit card debt. If it worked for them, it's bound to work for you.

14. Stick to a budget:
budgeting is in my opinion the single most important part of proper money management. If you want to save money or get out of debt, it's essential that you learn how to create a budget and stick to it. If you don't want your budget to be too stringent, make sure that you allow a portion of your savings towards spoiling yourself. This way you won't feel strangled by your budget.

15. Snowball your credit card debt:
pay your credit card with the lowest balance first so you can eliminate the minimum payment due on this card and use it to pay the next card in line. This way, instead of paying the minimum on each of your cards every month and never see the end of it, you'll be able to erase the balance on each of your cards gradually over time.

16. Think twice before filing for bankruptcy:
Before filing for bankruptcy, make sure that you weigh all of your options. And remember that bankruptcy doesn't always mean that you won't have to repay your creditors. So make sure that you understand bankruptcy laws and use bankruptcy as your very last resort.

17. Compare top credit card offers:
When it comes to comparing top credit card offers, the internet is your friend. But it's always better to skip pre-screened credit card offers and do your research independently. And beware of comparison sites, you can never really tell what their true intentions are.

18. Don't automatically go for a fixed rate mortgage:
If you're thinking about staying in the same house for a long period of time, then a fixed rate mortgage is usually a better idea, but if current mortgage rates are pretty good and you're only intending to stay in your house for a short period of time, an adjustable rate mortgage might be a better option for you. So don't automatically assume that a fixed rate mortgage will be the best option and consider if current mortgage rates are low enough for you to benefit from a variable rate mortgage.

19. Think twice about getting a rewards credit card:
If you were thinking about applying for a rewards credit card, like an Airmiles credit card per instance, make sure that you'll be able to enjoy the benefits. Before you apply for credit card with rewards, you have to understand that you'll often have to spend a lot of money before you can enjoy any significant rewards. The same goes for cash back credit cards. So before you decide to sign up for one of these cards, make sure that they'll truly be beneficial for you

20. Create an amortization schedule:
An amortization schedule will allow you to foresee how much you'll have remaining on your mortgage at any period during the term of your loan. It will allow you to prevent any unpleasant surprises and help you manage your payments more easily.

21. Use your business card wisely:
If you decide to sign up for a business credit card, you can use it to monitor your expenses more closely. Use it to pay for all your business expenses and for business expenses only. This way, it will make the job easier for your accountant at the end of the year.

22. Beware of credit counseling services:
While some may be legitimate, some credit counseling firms will make outlandish claims to get new clients. If a credit counseling agency promises to wipe out your bad credit in an instant, run away. Credit repair takes time and a lot of effort, so any company that makes such claims should be wiped off your list immediately.

23. Use your student credit card wisely:
A student credit card is a great opportunity to start your credit history, so be careful. Remember that if you make only one late payment on your credit card, it could affect your credit for years, so make sure that you use your first credit card responsibly.

24. Consider alternative lending options:
Depending on your situation and your assets, different lending options might be available to you. Per instance, if you want to have all the advantages a loan can give you, but want to enjoy more flexibility, you should think about applying for a line of credit instead. It will allow you to withdraw funds when you want it and only withdraw the money you need, so if you're not sure how much you'll really need to borrow, a line of credit can be a great option for you.

25. Consider buying down points on your mortgage loan:
If you want to pay less interest on your mortgage loan, you can always consider buying down points. If you can handle it, buying points can significantly reduce the amount of interest you'll have to pay, so you should definitely think about it.

26. Currency trading is not a get rich quick scheme:
A lot of people fall in the trap of thinking that the Forex is an easy way to make a quick buck. The truth is that to make significant money in the Forex, you'll need a lot of money and experience. So don't believe all the hype currency trading and make sure that you either consult a professional or get thoroughly informed about how currency trading works before you choose to invest.

27. Don't get overexcited about ETFs:
While ETFs may seem promising, they're not for everyone. If you decide to trade in an ETF that monitors a certain index, like the DJIA or the NASDAQ 100, you have to understand what they're all about first. And you shouldn't jump on an ETF simply because of some information you heard in the news. Make sure you understand thoroughly what you're buying before you make any decision, or you might severely regret it.

28. Be careful with your home equity:
Make sure that before you apply for a home equity line of credit or a home equity loan, you're ready to face the consequences. If you can't respect your end of the agreement, you run the risk of loosing your home. So make sure that you keep that I mind before you borrow against the value of your home.

29. Understand what influences your FICO score:
There are basically three main factors that can affect your FICO score. The first factor that will affect your score is your payment history. Remember that the very first late payment you make will do significant damage to your FICO score.

Next, you have your debt to income ratio. It is calculated by adding up all of your minimum monthly obligations towards debt and dividing it by your gross monthly income. Your minimum monthly payments towards debt shouldn't count for more than 1/3 of your monthly gross income to be considered acceptable. Anything higher than that will severely hurt your FICO score.

The third factor that will affect your FICO score is your debt to credit limit ratio. This is calculated by checking how much available credit you're actually using. Each account you have has a certain limit and if the balance is under 50% of your credit limit, your debt to credit limit ratio will be considered good. However, the best place to keep your debt to credit limit ratio is around 20 to 25%.

Strangely enough, if you pay your balance in full every month, you'll be labeled as a "deadbeat" by credit card companies because you won't be paying interest. If you keep your balance at about 25% of your credit limit, you'll be paying just a little bit of interest each month while still being viewed as a financially responsible person, which will make you look like an ideal customers to credit card companies.

30. Go for safe investment options:
Before investing in the stock market, make sure that you consider safer investments options like bonds first. Government bonds are viewed as the safest, followed by municipal bonds. Certificate of deposits are also a safe investment option you should consider. So before you think about stock trading, make sure you take a look at these investment options first.

If you manage to follow these tips I just gave you in this article, you'll be able to significantly improve your personal finances and get the most out of your money. Just make sure that you consult a professional before you make any major financial decisions. This way, you'll be sure to make sound decisions that will insure your financial stability for years to come...