PERSONAL FINANCE SECRET

HomePosts filed under Search results for Banking

Showing posts sorted by relevance for query Banking. Sort by date Show all posts

How to Transfer Property After the Death of a Parent

How to Transfer Property After the Death of a Parent.

The death of a parent can be a traumatic and difficult time. However, if they left you some of their property, you may need to go to court to get that property transferred into your name. The process you'll use varies depending on whether your parent had a trust or a will. If they left behind a small estate and didn't have a will or trust, you can use an affidavit to take control of the property without going through probate. Regardless of how you transfer the property, you can't get started until you have a copy of your parent's death certificate.

Method 1 Transferring Property out of a Trust.
1. Go over the trust documents. Typically, the trustee will send notice to you within a couple of months after your parent's death. This notice includes information about your parent's trust as well as a copy of the trust documents. These documents detail the property your parent left in the trust and lists the people who are beneficiaries of the trust.
Trust documents can contain a lot of complex language and legalese. If you don't understand the information in the trust documents, you might want to have the trustee or an attorney go over the documents with you.
2. Contact the trustee named in the trust. If your parent's trust names someone as trustee, they will be responsible for settling the trust and distributing the assets. If your parent had a living trust in which they were the trustee, you'll be looking for the successor trustee.
If your other parent is living, they may be named as the trustee. If your parents were divorced, on the other hand, it's possible that you are listed as the trustee. However, if you are listed as a beneficiary of the trust, you can't also serve as trustee.
Some trusts list an institution, such as your parent's bank, as the trustee. Most institutions have specific individuals that serve as trustees on behalf of the institution.
Tip: If you are listed as the trustee, hire an attorney with experience in trusts to assist you. They'll make sure you follow all the legal requirements and fulfill your duties as trustee.
3. Wait for the trustee to pay creditors and taxes. The trustee is responsible for sending notice to creditors and paying all the debts and taxes that are owed by your deceased parent. In some situations, this involves selling assets from the trust to pay what is owed. With the typical trust, this shouldn't take longer than a year.
For example, if your parent owed $100,000 and the only asset in the trust was a house, the house would have to be sold to pay your parent's debt. Any leftover money would go to the beneficiaries of the trust.
4. Complete any necessary documents to transfer the property. The documents required to transfer property after all debts and taxes are paid depend on the type of property. For most personal property, no documents are required to transfer ownership of the property. However, you will need documents to transfer the ownership of real estate or titled property, such as cars or boats.
For example, if your parent left you their car, you would need the title for the car to transfer the ownership to your name. If the car was held by the trust, the title would be in the name of the trust. The trustee would fill out the title to transfer ownership from the trust to you.

Method 2 Going through Probate.
1. Read your parent's will to determine what property was left to you. Reading your parent's will can be a difficult task mentally and emotionally, especially if the two of you were close. You might want to get a friend or loved one to sit with you as you read it. Generally, the will lists your parent's property and the specific items they want to leave to specific people, if any. Some wills are relatively short and simply leave all of the person's property to one person, while others are more detailed.
Sometimes it can be difficult to find your parent's will, especially if they didn't tell you where it was before they died. Check safe deposit boxes or other places where you know your parent kept important personal papers.
Some people also file a will with the clerk of the county court. Although this isn't a legal requirement, it ensures that you can easily find the will. Call the county court in the county where your parent lived and find out if they allow people to file wills. If they do, they'll explain the procedure for retrieving your parent's will, if it's there.
If you know the name of your parent's attorney, call them and ask them about the will. If they drafted your parent's will, they might have a copy of it.
Tip: If your parent has significant assets, such as real estate, you may need to go through the probate process even if your parent didn't have a will. If there's no will, distribution of your parent's assets is determined by state law.
2. Calculate the value of your parent's estate. Courts have different requirements for probate depending on the value of your parent's estate. If your parent left few assets, you might be able to use simplified procedures that don't require as much time and effort as the full, formal probate procedures.
For this calculation, you're just looking for a ballpark estimate. Generally, if your parent owns real estate, they're probably over the threshold. However, if your parent only owns a vehicle and some personal property (such as furniture, clothing, and household goods), they likely fall below the threshold.
The specific threshold for formal probate varies among states. However, it's typically over $50,000.[8] In some states, such as California, it's as high as $100,000.
Tip: Assets that don't have to go through probate, such as life insurance policies or retirement accounts with a named beneficiary, aren't counted towards the value of your parent's estate for probate purposes.
3. Identify the personal representative of your parent's estate. Your parent's personal representative is the person who will be responsible for the administration of their estate, including paying their creditors and distributing their property. If your parent has a will, they likely named the person they wanted to be their personal representative.
If the personal representative your parent named in their will is not available, see if your parent named an alternate. If they didn't, you'll have to determine who is willing to serve in this capacity. Choose someone who is mentally and emotionally prepared to take on this role.
You can also hire a lawyer to serve as your parent's personal representative. However, this is usually a more expensive option than using someone who is a close friend or member of the family.
Avoid naming someone who is listed as a beneficiary in the will as your parent's personal representative. For example, if you know that you're getting the majority of your parent's property, you probably shouldn't serve as their personal representative.
4. Choose the correct probate court. Typically, you'll use the probate court in the county where your deceased parent lived. If your deceased parent owned property in a different county, you might also be able to use the probate court there.
For example, your parent might own a house in one county but spent the last few months of their life in a hospice in the neighboring county. In that situation, you would likely want to file your application in the probate court for the county where your parent's house is located.
If you call the clerk of the probate court, they can help you figure out which court you should use. You may also be able to find information on the court's website.
5. Submit your parent's will to the clerk of court. Some probate courts require you to submit the will you want to be probated before you file an application or petition to start the actual court process. Call the clerk's office. They'll be able to let you know if you need to submit the will and what the specific process is for doing that.
Usually, there will also be information about the process on the probate court's website.
Typically, you need to bring the will to the clerk's office in person. You may also need to submit copies of the will. However, before you submit the will, make at least one copy for your own records.
6. Complete an application for probate. The probate court you use will likely have a form that you can fill out if you're using simplified procedures. For formal probate, you'll typically have to hire an attorney to draft a formal petition.
You'll have to pay a filing fee when you file your application. These fees vary greatly from state to state and, in many states, even from county to county. However, they're typically a few hundred dollars. If you're filing the application yourself, you'll likely have to pay these fees out-of-pocket initially, but you can get reimbursed from your parent's estate.
7. Hire an attorney to assist with the administration of the estate. If you were chosen as your parent's personal representative, you'll typically want to hire an attorney to help you. The attorney's fees are paid by your parent's estate.
If your parent doesn't have substantial assets or a lot of debt, the administration of the estate might be relatively simple. In that situation, you might not need to hire an attorney, but you still definitely want to talk to one. Most attorneys who specialize in estate planning offer a free initial consultation.
If you are planning on hiring an attorney, it's a good idea to meet with 2 or 3 local attorneys so you can choose the one who best suits your needs. Also, make sure you pick someone you get along with because you're likely going to be working with them for at least a year.
Tip: Attorneys' fees for estate administration are typically determined by state law. In some situations, the judge might also order a set fee.
8. Attend court hearings as necessary to distribute property. With simplified procedures, you typically only have to go to court once. However, if you end up needing formal probate, you'll likely need to attend several court hearings for the judge to approve the distribution of property.
Formal probate proceedings can take anywhere from 6 months to a year for more complex estates. Expect it to take longer if your parent had a lot of debt, or if they had a substantial estate with numerous investments.

Method 3 Completing an Affidavit.
1. Create a list of heirs. List all of your parent's living relatives and show your relationship to them. If your parent died without a will, typically you need to be their next of kin if you want their property transferred into your name. If you are not the next of kin, or if you have other siblings, you'll need letters or affidavits from them stating that they have no interest in the property.
For example, if you have a sister and your parent has a brother who has 2 kids, you would typically list your uncle, 2 cousins, yourself, and your sister on your list of heirs. You and your sister would be considered your parent's next of kin, assuming your parent was divorced or your other parent was not living.
If you aren't close to your parent's family and have no idea who is still living, there are ways you can publish a notice of their death calling for heirs to come forward. The clerk of the probate court will help you with this.
2. Check with banks or other institutions for an affidavit form. Many banks and other institutions that might have control of your parent's assets have their own affidavit form. Using that form makes it easier to get your parent's property because the form includes all the information the institution needs to release the property to you.
For example, if your parent had a bank account, go to one of that bank's branches, explain the situation, and ask if they have an affidavit form for you to fill out.
The website for your state court system might also have affidavit forms that you can use. Banks and other institutions will also accept these forms, provided all the information they need is included on the form.
3. Fill out the affidavits that you need. The affidavit requires you to provide information about the death of your parent and any proceedings that are being conducted in court, or have already been conducted in court, regarding their estate. Typically, if you're transferring property using an affidavit, there won't be any court proceedings. You'll also need to provide details about the property that you want to be transferred to you.
If there are other heirs, they'll likely need to sign your affidavits as well. For example, if you have a sibling, they would need to sign the affidavit, even if you're the only one submitting it.
If someone else signs the affidavit who won't be present when you submit the affidavit, typically their signature needs to be notarized, even if yours does not.
Tip: Not all states require these affidavits to be notarized. However, some banks and other institutions may require it, so generally, it's a good idea to go ahead and sign your affidavits in front of a notary.
4. Gather ownership documents for the property. In addition to your parent's death certificate, the institution holding the property needs proof that your parent owned the property you're trying to take ownership of. Generally, the institution will tell you exactly what documents or information you'll need.
For example, if your parent had a bank account, you'll typically need to know the bank account number and the name on the account. You might also need your parent's debit card, if they had one. A recent bank statement would have the information that you need.
Some property has a specific ownership document. For example, if your parent owned a car, you would use the title in their name to prove their ownership. With their death certificate and an affidavit, you could then get the title transferred to your name.
5. Submit your affidavits to the relevant authorities. For titled property, such as cars or boats, you'll typically submit your affidavit to the local title office to get the title transferred to your name. For banking or investment accounts, submit the affidavit and supporting documents to the financial institution that's holding the account.
For items of personal property that don't have a title or other documentation, usually you can simply take it. You might consider getting a friend or family member to come with you to help clean out their place, or at least to be there for moral support.

Warnings.

You typically have to wait at least a month after your parent dies before you can take ownership of their property. Different states have different time requirements.
This article discusses how to transfer property after the death of a parent in the US. If you live in another country, the rules may be different. Consult a local attorney who specializes in estate planning.

May 07, 2020

How to React when Your Spouse Wants to Open a Separate Bank Account

How to React when Your Spouse Wants to Open a Separate Bank Account.

Money is the leading cause of stress in relationships and disagreements about money can often lead to divorce if they are not handled properly and openly. Your spouse requesting to open a separate bank account can be a difficult issue to navigate as a couple. In the moment, it may come as a surprise and bring up negative emotions, such as suspicion or anger, which require a calm head and an open mind. In order to avoid any financial surprises like this, you should have open and frank conversations with your partner about your finances. It is important to determine your and your spouse’s motivations honestly before they become a problem. Finally, if you do end up having separate accounts, you can keep the peace in your relationship through good communication and by clearly dividing all debts and credits evenly.

Method 1 Communicating with Your Spouse.

1. Try to stay calm. If your spouse’s request comes as a shock, you may experience a wide array of emotions. You may feel hurt or betrayed that your spouse wants their own bank account. You may also feel angry or become suspicious of their motives. However, in the moment, the best thing that you can do is to try to stay calm. This will help you have a productive conversation with your partner about your finances.

Once you feel emotions well up, try slowly counting down from ten while taking deep breaths. This will help calm your body’s anxious response.

2. Ask your spouse why they need a separate account. After your spouse makes their request, ask them why they need the account. Talk with your partner about what the purpose is of the separate account. More importantly, discuss what it means for your relationship.

You might ask things like “Why do you need a separate account?” or “What is the separate account for?”

You may find that a separate account simply helps your spouse manage their money better. However, it may also be a sign of larger problems in your relationship.

3. Practice active listening. Be a good listener and pay attention to what your partner tells you. Listen to what they say and try not to be distracted by your own thoughts and emotions. Although this may be difficult when your emotions are high, active listening will ensure that you and your spouse communicate clearly and avoid any misunderstandings.

Make eye contact. Use facial expressions and head nods to indicate that you are listening.

You can also try paraphrasing. For example, "I hear you saying that you want a little financial independence. Is that right?"

4. Keep an open mind. Although a separate bank account may trigger feelings of suspicion and distrust, there may be valid reasons for your partner’s actions. For example, if your partner is accustomed to managing their finances in a certain way, a separate account may provide them with some autonomy. Try to keep these negative thoughts at bay and keep an open mind while you discuss what a separate account means to your relationship.

Try writing about why you are offended or hurt by this to gain a better understanding of your feelings. For example, you may be harboring negative feelings of inferiority if your spouse makes more money than you do.

5. Make your feelings clear. It is important that you clearly communicate your emotions to your partner. Let your spouse know how their actions have affected you. If the new account is a surprise, express to them any hurt feelings that you may have, as well as any fears concerning the health of your relationship.

You might say things like “This new account really worries me” or “I’m hurt that you’d open this account without talking to me.”

6. Follow up with your spouse. After you have your initial conversation, make a point to talk about it more in the future. Do not simply have the initial discussion and then never broach the subject again. Ask your partner to talk with you about the account after you have had some time to think about it. This will allow your emotions to settle a little, which can give you some perspective.

For example, pick a time a few days after your initial discussion to revisit the subject. If you are still upset about the separate account, you might want to meet at home to avoid creating a scene in public.

You might say something like “Can we talk about this more tomorrow?” or “I think that we need to talk about this more in the future.”

Method 2 Moving Forward Together.

1. Talk about your financial goals. In order to avoid any financial surprises, you should have frank and honest conversations with your partner about your values and financial goals. Talk about what you want to save for, how you envision your finances being managed, and how each of you will contribute to the household income. Although you do not need to agree on everything, you should try to come to a consensus on how to manage your money.

You should ask your partner things like “What things do we want to save for?” and “How much should we save for retirement?”

2. Discuss your finances regularly. Besides conversations about your financial goals, you should talk about your finances on a regular basis. Sit down and talk with your partner about your bills, savings, and other assets that you are managing. It is important that you and your spouse are honest about what resources you have and how you are actively managing your finances. If you have children, then doing this can also set a good example for them.

For example, once a month, make a time to meet with your partner and just talk about your finances.

3. Manage your finances together. As a couple, you and your partner should put together a household budget. Then you should sit down together and balance your budget every month. This will ensure that you are both invested in and aware of what is going on with your finances.

For example, after you have been paid but before you pay your major bills, you and your spouse should set a time to manage your resources each month.

There are helpful free digital tools available for managing finances, such as Budget Pulse.

4. Have joint and separate accounts. One easy way to maintain financial transparency is by opening joint and separate banking accounts. Put your money for bills and other shared expenses in a joint account, which you both manage. Then decide on how much money will go into separate accounts for individual spending. This will help you manage your household expenses while maintaining some autonomy.

Although the accounts may be separate, you should consider putting both of your names on the accounts in case one of you becomes incapacitated.

5. Maintain transparency. Make sure that you and your partner are able to see each other’s accounts. Although you may find that separate and shared accounts are more practical for your relationship, you and your partner should still be able to look at how each of you are managing your money. A little transparency will help you build trust and keep you on the same page financially.

However, it is important that you manage this transparency responsibly. Try not to become too critical of your partner’s personal spending habits or attempt to control how they spend their money. As long as they are not affecting your shared income, you should still respect their autonomy.

If your partner is too critical or controlling about how you manage your individual finances, let them know that you are capable of making your own decisions. Say something like “I can take care of myself” or “I’d appreciate it if you’d trust me.”

Method 3 Maintaining Separate Bank Accounts.

1. Divide expenses fairly. If you and your partner decide to have separate accounts, it is important that you find an equitable means of dividing household expenses. When you put together your household budget, talk with your partner about how much they can contribute to your shared expenses. It is important that you come to a consensus on how much each of you will contribute to your joints expenses each month.

For example, if your shared expenses are $2,000, make sure that you and your partner each contribute $1,000 from your personal accounts.

If one of your makes more money than the other, the person who makes more may need to pay a larger portion of the shared expenses. Talk about this to avoid any resentments or hard feelings.

2. Deposit funds evenly. Whenever you or your partner receives any extra income that you did not budget for, say from a work bonus or as a gift, you should find a way to split the money equitably. Talk with your partner about what accounts the money should be deposited in. Just as you need to divide all expenses evenly, you should also find equitable ways of divvying up extra income.

For example, if your partner gets a bonus, you may decide to keep half of the money in your partner’s account and put the rest in your joint savings account.

3. Save remaining balances. In addition to your budgeted joint savings, you and your partner might also consider saving money from your individual accounts. At the end of the month, you and your partner may decide to put the remaining balances from your individual accounts into a shared savings account. This will ensure that withdrawing from the savings account is a mutual decision.

For example, if you have a remaining balance of $100 in your personal account at the end of the month, deposit it in your shared savings account.

February 25, 2020

how to react when your spouse wants to open a separate bank account

How to React when Your Spouse Wants to Open a Separate Bank Account.

February 25, 2020

How to Start a Finance Company

How to Start a Finance Company.

Finance companies provide loans to individual and commercial customers for a variety of reasons. Commercial customers can include retail stores, small businesses or large firms. Commercial loans can help established businesses construct a new office or retail space, or they can help new business get up and running. Personal loans for individual customers can include home equity loans, student loans and auto loans. Starting a finance company requires not only a thorough understanding of your target customer's needs and a comprehensive product line, but also a solid business plan that outlines how you will make your company successful. In addition,any new finance company must comply with strict state and federal regulations and meet initial funding requirements.

Part 1 Identifying the Finance Company Business Model

1. Select a finance company specialty. Finance companies tend to specialize in the types of loans they make as well as the customers they serve. The financial, marketing, and operational requirements vary from one specialty to another. Focusing on a single business model is critical to the successful creation and operation of a new company. Private finance companies range from the local mortgage broker who specializes in refinancing or making new loans to homeowners to the factoring companies (factors) that acquire or finance account receivables for small businesses. The decision to pursue a specific finance company specialty should be based upon your interest, your experiences, and the likelihood of success.

Many finance companies are founded by former employees of existing companies. For example, former loan officers, underwriters, and broker associates create new mortgage brokerage firms specializing in a specific type of loan (commercial or residential) or working with a single lender.

Consider the business specialty that attracted you initially. Why were you attracted to the business? Does the business require substantial start-up and operating capital?

Is there an opportunity to create the same business in a new area? Will you be competing with other similar, existing businesses?

2. Confirm the business opportunity. A new finance company must be able to attract clients and produce a profit. As a consequence, it is important to research the expected market space where the business will compete. How big is the market? Who presently serves potential clients? Are prices stable? Is the market limited to a specific geographic area? How do existing companies attract and serve their customers? How do competitors differ in their approach to marketing and service features?

Identify your target market, or the specific customers you intend to serve. Explain their needs and how you intend to meet them.}}

Describe your area of specialization. For example, if your market research indicates a growing number of small start-up companies needing loans, describe how the financial products and services you offer are strong enough to gain a significant share of that market.

Consider the companies already in the competitive space. Are they similar in size or dominated by a single company? Similar market shares may indicate a slow-growing market or the companies’ inability to distinguish themselves from their competitors.

Tip: Identifying your target market will require you to identify key demographics that are currently underserved and how you plan to draw these customers away from your competitors. You should list who these customers are and how your financial products will appeal to them. Include any advantages you have over competitors.

3. Identify the business requirements. What are the likely fixed costs to operate the business - office space, equipment, utilities, salaries and wages? What business processes are necessary for day-to-day operations - marketing, loan officers, underwriters, clerks and accountants? Will potential clients visit a physical office, communicate online, or both? Will you need a financial partner such as mortgage lender or a bank?

Mortgage brokers act as intermediaries between borrowers and lenders, sometimes with discretion up to a dollar limit. Factors typically leverage their own capital by borrowing from larger financial institutions.

4. Crunch the numbers. How much capital is required to open the business? What is the expected revenue per client or transaction? What is break-even sales volume? Before risking your own and other people’s capital, you need to ensure that profitability is possible and reasonable, if not likely.{{greenbox: Tip: Develop financial projections (pro formas) for the first three years of operation to understand how the business is likely to fare in the real world. The projections should include month to month Income Statements for the first year, and quarterly statements thereafter, as well as 'projected Balance Sheets and Cash Flow Statements.

Part 2 Making a Self Assessment.

1. Identify your skills. Before starting your new company and, possibly, a new career, it is important to objectively evaluate your skills and personality to determine what steps you need to take to successfully start and manage a finance company. Do you have special training in the finance specialty? Do you understand finance and accounting? Do you work well with people? Are you a leader, who inspires others to follow them, or a manager, who can assess a problem, discern its cause, direct resources to implement a solution? Are you a good salesperson? Do you have any special abilities specifically suited to the finance industry?

2. Assess your emotional strengths and interests. Do you work best alone or with others? Do you find it easy to compromise? Are you patient or demanding with others? Do you make quick, intuitive decisions or do you prefer detailed information and careful analysis before acting? How comfortable are you with risk? Are an optimist or a pessimist? When you make a mistake, do you beat yourself up or regard it as a learning opportunity and move on?

3. Consider your experience. Have you worked in the finance industry previously? Are you monetarily and professionally successful in your present position? Do you understand marketing, accounting, legal matters, or banking? Have you been responsible for creating new markets or leading sales teams?

4. Determine your financial capacity. Do you have sufficient capital to open the finance company you envision? Do you have assets that can cover your living expenses during a start-up phase? Will your family or friends contribute to the financing of your business? Do you have access to other financial sources - personal loans, venture capital, investment funds, or financial sponsors?

Part 3 Creating a Business Plan.

1. Set up your business plan. The Business Plan serves a number of functions. It is a blueprint for building your company in the future, a guide to ensure you remain focused in your efforts, and a detailed description of your company for potential lenders and investors. Begin writing your business plan by including all of the required sections and leaving room to fill them in. The steps in this part should serve as your sections, starting with the business description.

2. Write a business description. Your business plan will layout a blueprint for your company. The first part of your business, the description, is a summary of the organization and goals of your business. Begin by justifying the need for a new financial company in the industry or target location. You should briefly identify your target market, how you plan to reach them, descriptions of your products and services, and how your company will be organized.

Tip: You should also briefly explain how there is room in the current market for your company (how it will compete against competitors). You should already have this information from your initial market research.

3. Describe the organization and management of your company. Clarify who owns the company. Specify the qualifications of your management team. Create an organizational chart. A comprehensive, well-developed organizational structure can help a financial institution be more successful.

The Chief Executive Office leads the "executive suite" of other company officers.

The Chief Operating Officer manages the activities of the lending, servicing and insurance and investment units of the company.

The Chief Administrative Officer’s responsibilities include marketing, human resources, employee training, facilities, technology and the legal department.

The Chief Financial Officer ensures that the company operates within regulatory parameters. This person also monitors the company’s financial performance.

In smaller companies, executives may fill more than one of these roles simultaneously.

4. Describe your product line. Explain the types of financial products and loans you provide. Emphasize the benefits your products offer to your target customers. Specify the need your product fills in the market.

For example, if your target customers are small business owners, describe how the financial products and investments you offer to help them run their businesses.

5. Explain how your business is financed. Determine how much money you need to start your finance company. Specify how much equity you own. State what percentage other investors own in the company. Indicate how you plan to finance your company with leverage (loans),where these loans are coming from, and how the loans will be used in the business.

In most cases, equity in the company is used primarily for the company's operations, rather than the source of loans to customers. Secondary lenders provide funds to the finance company that is subsequently loaned to customers; the customers' loans collateralize the lenders' loans to the finance company. This is because profit is made in the spread, or the difference between your cost of acquiring capital and profit from lending it out.

Any funding request should indicate how much you need, how you intend to use the money, and the terms of the loan or investment.

6. Document your marketing and sales management strategies. Your marketing strategy should explain how you plan to attract and communicate with both customers and lenders/depositors. It should also show how you plan to grow your company. The sales strategy defines how you will sell your product.

Promotional strategies include advertising, public relations and printed materials.

Business growth opportunities not only include building your staff, but also acquiring new businesses or beginning to offer different kinds of products.

The sales strategy should include information about the size of your sales force, procedures for sales calls and sales goals.

7. Include financial statements in your business plan. Reviewing the pro forma financial statements you created during your business planning, be sure that your projections are reasonable and conservative. You may also want to cautiously estimate performance over the next two years after that. Include a ratio analysis to document your understanding of financial trends over time and predict future financial performance.

Prospective financial data should provide monthly statements for the first year and annual statements for the next two years.

Standard financial ratios include Gross profit margin, ROE, Current ratio, Debt to Equity.

Ratio and trend analysis data helps you document whether you will be able to continue to serve your customers over time, how well you utilize your assets and manage your liabilities, and whether you have enough cash to meet your obligations.

Tip: Add graphs to your analysis to illustrate positive trends.

Part 4 Determining Your Business Structure.

1. Consider forming a Limited Liability Company. A Limited Liability Company (LLC) is similar to a corporation in that it protects its owners from personal liability for debts or actions incurred by the business. However, they have the tax advantages of a sole proprietorship or partnership. A corporation typically files taxes separately from the shareholders.

Be aware that corporations pay double federal income tax, meaning taxes are assessed when profit is earned, and then again when it is distributed to shareholders.

You should seek legal advice to determine the best structure for your business.

2. Name and register your business. Choose a name that represents your brand and is unique enough to obtain a website address or URL. When choosing a name, check with the U.S. Patent and Trademark Office to make sure you are not infringing on any trademarks. Also, check with you state to see if the name is already in use by another corporation.

You will have to register with your state as a corporation. The exact registration process varies by state and type of corporation you decide to form.

Since your business name is one of your most important assets, protect it by applying for trademark protection with the U.S. Patent and Trademark Office.

3. Obtain a require operational licenses and permits. Financial institutions acquire these from the state in which they operate. Consult with your State Business License Office to identify the specific license and permit you need. Each state has different requirements for licensing financial institutions. You will need to specify exactly what type of financial institution you are opening, such as an investment company or a licensed lender. You will then furnish the requisite documents and pay any fees.

Due to the incredibly complex and constantly-evolving nature of the financial services industry, it is advised that finance companies hire and retain expert legal counsel to guide them through these regulations.

Note: You will also need to comply with any permit requirements surrounding your office space, like public and workplace safety regulations and operating permits.

4. Learn about regulations. The two categories of financial regulations in the United States are safety-and-soundness regulation and compliance. Safety-and-soundness regulations protect creditors from losses arising from the insolvency of financial institutions. Compliance regulations aim to protect individuals from unfair dealings or crime from the financial institutions. Financial regulations are carried out by both federal and state agencies.

Federal financial regulation agencies include the Federal Reserve System, the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency, the Office of Thrift Supervision, the National Credit Union Administration and the Securities and Exchange Commission (SEC).

State regulatory agencies may have additional requirements that are even more stringent than those set by the SEC.

With the help of your legal counsel, investigate reserve and initial funding requirements for your company. This will determine how much startup money you need.

5. Protect yourself from risk and liabilities with indemnity insurance. Indemnity insurance protects you and your employees should someone sue you. Financial institutions should purchase a specific kind of indemnity insurance called Errors and Omissions (E&O) insurance. This protects the financial company from claims made by clients for inadequate or negligent work. It is often required by government regulatory bodies. Remember, however, that staying in compliance with all regulatory requirements is still your responsibility.

Part 5 Setting Up Shop.

1. Obtain financing. You will need to finance your company according to your business plan, using a combination of equity and debt financing. Initial startup costs will be used for meeting reserve requirements and the building or rental of office spaces. From there, much of the company's operating capital will be lent out to customers.

Be aware of Federal and State laws regulating the private solicitation of investors. Adherence to securities laws regarding the information provided to potential investors and the qualifications of the investor will apply in most circumstances.

Sources of debt financing include loans from the government and commercial lending institutions. Money borrowed with debt financing must be paid back over a period of time, usually with interest.

The Small Business Administration (SBA) partners with banks to offer government loans to business owners. However, these loans can only be used for the purchase of equipment, not lent out to others. The SBA helps lending institutions make long-term loans by guaranteeing a portion of the loan should the business default.

Finance companies face the problem of having to raise large amounts of initial funding to be successful. They also often have to deal with a slew of other challenges before they become profitable. Without accounting properly for issues like fraud, it's very easy for a finance company to go out of business.

Note: Investors may want to provide financing in exchange for equity in the company. This is called equity financing, and it makes the investors shareholders in the company. You don’t have to repay these investors, but you do have to share profits with them.

2. Choose your location. A finance company should make a positive impression on customers. Customers looking for a loan will want to do business in a place that projects a trustworthy and sound image. Take into account the reputation of the neighborhood or of a particular building and how it will appear to customers. Also consider how customers will reach you and the proximity of your competitors. If your target customers are small local businesses, for example, they may not want to drive to a remote location or deal with heavy city traffic to meet with you.

If you are not sure, contact your local planning agency to find out if your desired location is zoned for commercial use, especially if you plan to operate out of your home.

Leasing commercial office space is expensive. Consider your finances, not only what you can afford, but also other expenses such as renovations and property taxes.

In today's connected world, it's also possible to run a finance company online, without a location for physical interaction with customers. While you'll likely still need an office for your employees, not having a retail location can save you some regulatory hassle expense.

3. Hire and retain employees. Write effective job descriptions so employees and applicants understand their role in the company and what your expectations of them are. Compile a compensation package, including required and optional fringe benefits. Compose an employee handbook that communicates company policies, compensation, schedules and standards of conduct.

Perform pre-employment background checks to make informed decisions about whom you hire. Financial planners and advisors require a specific educational background and are subject to rigorous certification requirements. Consider obtaining credit reports to show how financially responsible a candidate is.

4. Pay your taxes. Obtain an Employee Identification Number (EIN) from the IRS. This is also known as your Federal Tax Identification Number. Determine your federal and state tax obligations. State tax obligations include income taxes and employment taxes. All states also require payment of workers' compensation insurance and unemployment insurance taxes, and some also require payment of disability insurance.

5. Create loan packages for your clients. Decide if you are going to offer revolving or fixed-amount types of credit. Think about your target customers and what kinds of loans they would need. Homeowners and individuals may seek mortgages, auto loans, student loans or personal loans. Entrepreneurs may seek small business loans. Consolidated loans may help customers who are struggling to manage their finances.

Recognize that your loan offerings, rates, and terms will need to be constantly reworked with the changing loan market. Some of these items may also be subject to various regulations, so consult your legal counsel before finalizing your offerings.

6. Market your new finance company. Target your marketing efforts towards your chosen niche of clients. Marketing includes networking and advertising, but there are also other ways of letting potential customers know you have set up shop. Become a familiar face in your local business community by attending and speaking at events sponsored by the local chamber of commerce. Publish communications such as a newsletter or e-zine. Participate in social networking on sites like Facebook, LinkedIn and Twitter.

Note: In order to become successful, you'll have to attract both depositors and loan customers, so be sure to offer deals on both ends. Without attracting depositor, you will have no capital to lend out to customers.

December 03, 2019

how to detox your finances

How to Detox Your Finances.

One thing you need to do when you resolve to get your financial ducks in a row is to know how to detox your finances. It is important to get rid of old habits, any residual money pits, or anything else that is hurting you financially so that you can move on in a financially sound manner. These steps provide a financial detox plan to get you on your way.

Steps.

1. Sort out your credit and debts immediately.

Check your credit report. Do this, at the very least, annually. You are entitled to a free credit report once a year from each of the three major agencies.

Manage your credit. Don't let it manage you. Don't max out your cards just because you have a certain limit. It's more important to stay conscious of what you can afford to pay rather than relying on any illusory limit as a source of your finances. The banks want you to spend that much; it doesn't mean you have the income flow capacity to meet it regularly!

Manage your debt. If you are struggling, talk to your creditors. Don't ignore the problem, it will not go away on its own, it will only get worse. The sooner that you seek financial advice and support, the faster you can turn around debt problems.

Avoid store credit cards. Their APR (annual percentage rate) is considerably higher than a 'regular' credit card and having several cards can tempt you into thinking you have more spare cash than you actually do. Store cards also tie you down to spending at one place, regardless of whether it has the best deals or not.

2. Sort out your savings and insurance.

Get a decent interest level in your savings account. Work out how much you can spare from your income to place into this account and try to stick with that minimum on a regular basis. Keep checking for better savings deals and switch your money around to follow increased interest returns - internet banking makes it easier to track interest changes and change your savings approach regularly.

Realize that saving in a low interest savings account might not actually be the best use of your money. If you can use 100 dollars towards knocking down a high rate card or a very low rate savings account, think hard about where to use it.

Invest in yourself. Get some life insurance. Educate yourself about the different types of insurance and what suits you at the time. If you can't afford to make such a payment now, what makes you think your family will be able to if something happens to you? It's a priority worth sorting out in the present.

3. Become actively involved in your finances.

Think about where the money is going, what it is doing. Don't just 'let it happen', or hope that money will come to you. Active planning, saving, and debt paying requires the investment of your time and engaged interest.

Undertake weekly money management tasks. It is better to spend 20 minutes a week sorting finances than to leave it all to tax time - incremental financial attention each week will save you a lot of effort and time in the long run.

4. Watch out for fraud. There are some key things that you can do to protect yourself:

Destroy any unneeded receipts and statements;

Retain the receipts you do need (in a safe place) and compare them against credit card and other financial statements;

Never disclose your personal information to someone on the phone, such as a cold sales call or through your email. It is crucial to remember that most of the time, your email is not secure.

Redirect your mail immediately when you move. If someone moves into a house behind you, they are unlikely to have the same stake that you will in safeguarding your information and will simply throw things in the trash where they can be found by others, or worse still, might be tempted to make fraudulent use of it.

Check your credit report periodically.

Remember that if a deal seems too good to be true, it probably is. Do your research and ask trusted people for advice before leaping in and spending your money.

5. Track your expenditures.

Do this to identify where your money is going and whether or not each expenditure is necessary or frivolous. This will allow you to build a bigger spending pattern and review what you are spending your money on. You can do this by:

Saving receipts (for at least as long as it will take you to note down the cost and what was covered).

Keeping a notebook handy that you can write down prices and purchases as they occur.

6. Think before you buy.

Save, then buy. Start reminding yourself often that don't have to have that item or service right now. That new computer will wait until you can save up to get a new one. Putting a $500 computer on credit now can easily cost you over a thousand dollars over the period it takes to pay it off. Write "New Computer" on an envelope and put money into it every chance you get. Hide the envelope and don't ever take money out except for the new computer.

Avoid impulse buying. Nothing is that important. Stores prey on consumers trying to get you to buy. That is why they are laid out the way they are and why the candy and magazines are right by the cash register.

Carry it around the store for a while. Quite often, you will realize that maybe you don't need it just now. Research it on the Internet to see if you can find it more cheaply, or to see if it really does do what you want it to. Maybe you can borrow someone else's rather than owning it? Think through all the options.

Don't buy into a brand just because you always have. With today's technology, there are alternatives to just about anything, and quite often they are less expensive. Look around and be a choosy buyer. Use buyer comparison sites before you go shopping so that you are aware of the best deals and can use this knowledge to bargain with.

Learn how to haggle and don't be uncomfortable about it. Bargaining is a good way of getting a fair deal.

7. Take charge of your home space.

Sell things that you aren't using or don't want. They are just taking up space and not giving you joy. If you can't sell it, consider donating it. Your personal environment will be a lot cleaner for it and other people can benefit from your donation.

Declutter your home and your life. Clean out your garage, have a yard sale, etc. Doing this will surprisingly lighten your load. It is also a good way of reminding yourself that it's easier not to bring things into the house in the first place as you'll only end up having to clean them out!

Look at your energy usage. Change to light bulbs that use less energy, water heating that is less energy-intensive and turn off your appliances when not in use. Simple things that can save you a lot of money in the long run.

8. Take charge of your earnings.

Earn what you deserve. Look at your wages. Find out what the going rate is for what you are doing in your area. See what you can do to get your salary increased.

Increase your brand value. Yes, your brand value. See what you can do to increase your value to yourself and to your employers.

9. Balance your life and your work. Balance is very important to help you deal with day to day problems. When you are off balance with one thing, other problems will quickly follow and it can be all too easy to resort to spending as the answer to not coping with juggling many things in your life. Slow down and do a stocktake on what you need to change about the way you're living.

10. Teach your children about finances. Don't just assume that because they are kids, they shouldn't have to think about how to budget and how to delay desires for instant gratification. The bad habits they start now will stay with them; equally, teaching them good habits will be life-lasting too.

Tips.

If you have a lot of debt from credit cards, personal loans, payday or car title loans or medical bills, you may want to consult an attorney about bankruptcy.

Visit a free credit counselor in your area for financial and budgetary advice and counseling. These can be especially helpful if you feel you are in over your head.

Avoid blurring wants and needs. It is important to focus on the things you need first and be very conscious about fulfilling your wants.

AnnualCreditReport.com provides consumers with the secure means to request and obtain a free credit report once every 12 months from each of the three nationwide consumer credit reporting companies in accordance with the Fair and Accurate Credit Transactions Act (FACT Act). AnnualCreditReport.com offers consumers a fast and convenient way to request, view and print their credit reports in a secure Internet environment. They also provide options to request reports by telephone and by mail.

Warnings.

Stay away from companies that offer to repair your credit report or score. Many times these agencies will contest all the debts shown on your report. This process works temporarily, as creditors are required to verify debt within 30 days or it is removed from your report. At this point you will appear to have a "clean" record and the agency may collect a hefty fee from you. When the creditors do get around to verifying your debt, it will simply be added to your report again.

None of the advertised credit offers have accurate reporting from the credit bureaus.

There are many companies out there who will offer "free" credit services like reports and score monitoring to first-time customers. Be advised that while you may receive an initial report for free, you may be required to sign up for some kind of paid membership after your trial period is over. These reports are not directly from the credit bureaus, and they are not always accurate.

Credit bureaus do not maintain reporting agencies. There is only one agency maintained, an which deals directly with the bureaus. This site deals with both the FTC and the credit bureaus.

January 20, 2020

How to Avoid Finance Charges on Credit Cards

How to Avoid Finance Charges on Credit Cards.

If you are late paying off the balance of your credit card, you will likely incur further finance charges on the balance until it is paid. The best way to avoid these charges is to pay off the balance on time. You will often get a grace period of around 21 days after receiving the bill in which to do this. If you just pay off the minimum you will be incurring more and more interest and it will take you a long time to pay off the debt.

Method 1 Clearing Your Card Balance.

1. Pay off your balance at the end of every billing cycle. The most straight-forward way to avoid charges on the balance of your credit card is to pay it off in full at the end of each billing cycle. Paying off the whole balance by the due date on your bill will mean that you do not incur any additional finance charges on the balance.

Paying the balance of on time will also help your credit rating improve over time.

2. Determine if you have a grace period. Once you receive your bill, you will often have a grace period in which you can pay it off without incurring charges. These vary depending on what credit card deal you have, so you will have to check the details of your specific account. The typical grace period tends to be around 25 days.

If your card does have a grace period, your card provider must give you at least 21 days after your bill is mailed for you to pay it off.

3. Pay off the balance within your grace period. If your card has a grace period, you must pay off the balance in full before the end of this period to avoid any finance charges. If the grace period is 21 days, make sure you pay off the balance in advance of the due date. You can make the payment up to 5pm on the last day without incurring charges.

Make your payments in plenty of time so that you don’t accidentally miss the deadline.

If you mail your payment, allow 7 to 10 days for the payment to be applied to your account.

For online banking, check with your bank. It can be the same day, or it can take three working days. It’s best to be safe, so pay it off early if possible.

4. Consider transferring the balance to another card. If you are unable to pay off the balance within your grace period, there is an alternative way to clear the balance. You may be able to transfer the balance to another credit card, with a lower APR. For example, some cards will give you 0% APR for a limited time. In this specified period you will not have to pay any finance charges, so you will be able to pay the balance off more cheaply.

If you are considering this, it is important that you are careful and conscientious with your finances.

After the 0% APR period expires you may have to pay a higher rate of interest, so you should be completely sure of the terms and conditions.

If you transfer the balance from one card to another, remember that you have not paid off the debt. Don’t do this just to free up the card to take on more debt.

Method 2 Finding the Best Credit Card Deal.

1. Choose credit cards that do not charge annual service charges. There are numerous charges and fees connected to credit cards that you cannot avoid by paying off the balance on time. These include annual fees that are incurred regardless of how much you use the card. By shopping around you can find a card that doesn’t have these unavoidable service charges.

You can search through a database of hundreds of credit card agreements that are available from a variety of companies online.

The database is available on the website of the Consumer Financial Protection Bureau here: http://www.consumerfinance.gov/credit-cards/agreements/

2. Read the fine print. It’s important that you spend some time reading up on the all small print before you sign up for a credit card. Read it again before you activate a card, and call the company if you don't understand something. Be sure you know the interest rate and how finance charges are determined. Find out if there are ways for the lender to raise the interest rate, and if anything seems questionable, avoid working with that company.

Check to see what fees there are for balance transfers.

When you use the "checks" that arrive with your bill, these are considered balance transfers and are often subjected to additional fees.

3. Determine whether there is a universal default clause. When you are looking at different credit card agreements you should note whether or not they have a universal default clause. This type of clause gives the credit card company the right to raise the interest rate on your card if you are late paying your credit card bill or any other creditor. The credit card provider can monitor your credit report and alter your rates during the contract.

This clause can also be activated for a high debt-to-income ratio.

Remember that a higher interest rate or APR on your card results in high finance charges.

If you have a card with this clause, pay all your bills on time.

Question : I have never missed minimum due date, but still there is a finance charge. Is it because of the outstanding balance, or is the bank cheating me?
Answer : In all likelihood, the bank is not cheating you. If you fail to pay the full balance due before the due date, you will pay finance charges, which usually consist of interest on the unpaid balance.

Question : If the bank is closed on the first 3 days of month, can they charge the full month's interest when you were not able to contact them previous 3 days?
Answe : Yes. Some purchases compound interest monthly, and once the month has started, you could owe interest for the next 30 days. It's just like when you mail a check: it is credited on the day it is received, which would not be on a weekend or holiday.

Question : If my account has been closed but I still have a balance, can I avoid paying the finance charge?
Answer : You can try to negotiate with the credit card company for a payment plan that doesn't involve finance charges or a lump sum payoff but typically you will continue to pay interest as long as you have a balance.

Question : Do I get a personal loan on the basis of my credit card score?
Answer : A lender will consider your credit score as well as your credit history, work history and current income.

Question : If I pay total unbilled amount before due date, can I use my credit limit the next day?
Answer : You should wait until the card issuer has acknowledged receipt of your payment.

Question : If I paid all the outstanding balance, is there any finance charges?
Answer : It's possible there are finance charges left over from before you paid off the balance. If you pay off the full balance on time, there will be no further finance charges placed on your account after that point. If you keep paying the balance down to zero on time every month, you will not see any more finance charges.

Tips.

Check your credit report annually and correct any erroneous information. Some creditors use information obtained in credit reports to increase the finance charge percentage charged.

January 18, 2020

5 Things Every Entrepreneur Must Do to Be Successful, According to Richard BransonIf

5 Things Every Entrepreneur Must Do to Be Successful, According to Richard BransonIf.

You don't get these fundamentals right, you don't stand a chance.

Building a successful business is hard, and no one has ever done it the same way twice. Each entrepreneur must puzzle through their own series of tough tradeoffs and competing priorities. There's lots of advice out there to guide you, but no one can tell you exactly how to make your business successful.

There are, however, a handful of ways to pretty much guarantee you're going to fail. Get these things wrong, and no amount of cleverness or hard work can save you. And if anyone out there has nailed getting the basics right, it's Sir Richard Branson.

The serial entrepreneur has succeeded big in everything from banking to space tourism, and on his blog recently he shared his five-part formula for entrepreneurial success, no matter what type of business you're building.

1. Make something useful.
This seems obvious, but Branson's not the only one warning would-be entrepreneurs that their most likely mistake is making something no one actually needs. Y Combinator founder Paul Graham, for instance, advises against sitting around brainstorming startup ideas for the sake of making it big. The result, he says, is usually "sitcom startup ideas."

"Imagine one of the characters on a TV show was starting a startup. The writers would have to invent something for it to do. But coming up with good startup ideas is hard. It's not something you can do for the asking. So, unless they got amazingly lucky, the writers would come up with an idea that sounded plausible, but was actually bad," he has written.

Have "I want to build a startup" as your starting point, and you'll probably end up doing the same. Branson tries to steer would-be entrepreneurs around the same pitfall by suggesting they focus on impact, not success.

"Above all else, you should not go into business purely for financial reasons. Running a company involves long hours and hard decisions; if you don't have a better reason than money to keep going, your business will more than likely fail, as many new businesses do."

"So, it's important to create something of use that is going to benefit society as a whole. If you do something you truly care about, you will be in a much better position to find customers, connect with them, and keep them coming back."

2. Have a dead simple message.
Marketing strategy can get complicated, but Branson insists that, at its core, your brand's pitch must be dead simple.

"Customers don't just shop for a brand and its products, but also identify with its core values. Ask yourself, why did I start my business? Be honest -- this will help you establish an authentic value and voice. Then break your message into something simple," he writes.

For instance, Virgin stands for "great customer service, good value, and innovative alternatives to our competitors' offerings," he explains.

3. Market yourself.
Know your message? Great, now you have to get out there and trumpet it to the world. This isn't Field of Dreams. If you build it, they will not come. Not without adequate marketing, at least. That doesn't necessarily mean spending a fortune, but it does require a willingness to put yourself out there for the world to see (and potentially laugh at).

"My mentor, Sir Freddie Laker, a man who had started a company to challenge British Airways on their home turf, gave me some invaluable advice when I was starting up Virgin Atlantic," Branson recalls. "Knowing that we couldn't match the more established airlines in terms of marketing budget, he encouraged me to drive the publicity myself: 'Use yourself. Make a fool of yourself. Otherwise you won't survive.' I took his advice, and I've been thinking up fun ways to stand out from the crowd and draw the media's attention to our company ever since."

Hot-air balloon flights and cross-dressing might not be your thing, and that's fine. You don't have to be as outlandish in courting publicity as Branson, but you do have to be willing to put yourself out there in a brave, authentic way.

4. Embrace social media.
Making a spectacle of yourself might be as old as the first market barker who out-shouted her neighbor to sell more vegetables, but these days this sort of hustle is best done through more high-tech means.

"Social media is not only more cost-efficient than advertising, but it also offers great opportunities for innovative engagement with your customers," Branson claims. Only if you do social right, however.

"In my experience, selling a product through social media doesn't always work -- it's better to simply communicate with your customers in an authentic way and have fun. As you build an online profile that people can identify with and trust, you'll find that they will soon become customers," he instructs.

5. Enjoy what you do.
Liking your work is, of course, important for happiness. But Branson and science agree that you're also far more likely to succeed professionally if you enjoy your time at the office every day. "If you genuinely love and believe in what you do, others will take notice and share your enthusiasm," he believes.

Which is why he also states that, "If you find your interest flagging, it's time to make a change -- switch from operations to management, move on, expand into new territories, anything that interests you. To find success, you need to be fully committed or your work will show it," a sentiment with which many other icons agree.

July 22, 2020