• Lower your monthly payments
  • Reduce stress and live your life
  • Avoid personal bankruptcy court

Research before Investing in P2P Loans

People today are learning about a new way to borrow or lend money online. Investing in P2P loans or Peer to Peer lending is to help people to investor without hurting their credit score. The online websites still provide consumers with the same coded security and privacy that banks have with online banking. The consumer is able to diversify their current income and receive profitable returns similar to having a stock portfolio.

Investing in P2P Loans

People who are interested in this type of investing of money will need to take time to research all the pros and cons to see if it is what they to reach a financial goal. Consumers in North America will find that credit borrowers and loaner that want to build a financial portfolio. The information below is there to help in your research and make conscious decisions on financial planning.

Credit Rating: Does It Matter?

A person’s credit rating is important but is not the only thing used to guarantee a payment. The people who are interested in investing in P2P loans will be based on individual basis on what the loan was used for when it was issued along with the financial history.  A main reason people can receive this P2P loan the funds from a network of people in businesses, the private sector along several financial firms. These loans were to provide consumers a way to consolidate loans with a comparable interest rate that was affordable for the public sector.

However a person that has a high credit score may seem to be the one individual that might invest in a peer to peer loan or P2P but not receive it simply because they are not reliable with any payments.  So when it comes to investing in 2P2 loans people should look on the websites that offer signups for new investors and the Better Business Bureau.

Returns Can Be Reinvested Into Other Accounts

Since this a loan, you and others may wonder how the borrowers can receive any returns.  This is where it is similar to shares bought and sold in companies that participate on the stock market. The reinvesting would be used in a portfolio especially for people that are reaching their late 50’s and early 60’s. This way the borrow could make lower payments each month and reinvest into an IRA so they can receive a return. The person who borrows money would have considerable advantage of using these compound earnings to see a financial growth for the future. This would benefit their financial portfolio along with tax advantages not just in a traditional style IRA but in a Roth IRA.

People who live in the United States and Canada will find that having an account that allows tax deductions a financial strategy. However people need to remember that the P2P loans are taxed in the United States and Canada at a marginal rate.

You May Ask Who the Lenders Are.

The competitions of online and traditional financial firms have increased because of the availability of the notes that are being bought by individuals.  So why are people afraid to invest or reinvest in loans that use notes. This is simply no one likes to lose money especially people who have a high net worth. Loans of any type along the process of buying or selling stock can be a financial risk.

It is important to know all the risk and even reinvesting in P2P loans people still can default on the loan. The reason people are interested in the P2P loans and notes is a way assets can have some principal protection compared to the stock market. Presently finding the right assets to reinvest for growth can be difficult in this economy. People are trying to find the best yet with less risk for financial stability. They are hoping that this will help provide a better portfolio and when it does come to retirement it will help them. If you or others that are looking into this a form of income for the standard of living you will be disappointed.

The peer to peer loan or P2P is not income it is still a loan that individual’s can use to start a new business or use it for expensive merchandise. The loan is based on individual financial status and why they need the loan at any amount for the purchase. The reasons vary and the notes that are reinvested are to provide some financial stability that can be paid off in 2 to 7 years.

Consumers that use this plan of financial planning will need to be comfortable with the idea of not being able to get their money out. On the other hand if they place the notes into a traditional IRA or a Roth IRA there are specific age and governmental regulations that need to be followed especially y in the United States.

The Real Reasons You’ll Never Be Rich

You don’t need to have the highest paid job or to win big at bingo to become rich, it is possible that you can have this wealthy and live in a comfortable way if you follow some sensible financial advice. There are some reasons you’ll never be rich and you might be surprised at some of the ways that you can change your fortune around.

Reasons You’ll Never Be Rich

Making Changes

One of the easiest reasons to see is that you are spending too much of your income, you don’t need the latest gadgets each month to live a happy life. You need to make changes to the way that you budget your money. It is important that you can avoid the need of having your pay come in each week or month to be able to afford the next month’s living expenses, this is sometimes called living pay check to pay check and if you are budgeting in this way you are never going to become rich. This is the main reason you’ll never be rich.

The Changes Needed

If you want to avoid the negative connotation and want to remove the prediction that you can’t be rich then you need to learn how to stop living in the same ways as before. It is going to be difficult to change habits that you have developed but it is possible to change.

One main reason you’ll never be rich is so simple, you are spending too much money each and every month. If you are living beyond your means you are not alone, but if you want to be rich you need to cut back on the money that you haven’t got coming in because to use this money you will need to be paying interest, so you over spending increases to take into account of that interest payment that you will need to make.

You need to start looking at what you are spending your money on each month. Once you are aware of the areas that you money goes to you then need to consider the areas that you can cut back on, try writing out a budget and sticking to it. The idea being that at after you have budgeted you have money spare each month that you can use to save.

Saving Enough

If you want to avoid the reasons you’ll never be rich then you need to consider the amount that you are saving each month and the reason that you are saving this money. You need to put a large percentage of your money away, it is important that you consider the full implications of the money that you are saving, it is good to save for the next festive season, your next holiday but just as important is to save for your future. You need to have a minimum of 3 months money that will cover you in case your income is reduced. This money needs to be in a savings account that is instant access; it will ensure that there is sufficient money to live if you lost your job.

Having Too Much Debt

An obvious reason you’ll never be rich is if you owe too much money. Your creditors are making money on your spending habits, whether it is for a holiday or a new kitchen, it doesn’t matter if you have debt then you are not going to have the money which you can save and become wealthy.

You need to devise a plan to reduce the money that you owe so that the money that you have coming into the home is yours and not going to be making a beeline to your creditors pockets instead.

You might think that it is important to keep up with the latest items but in reality it is going to cost you more in interest payments. If you want an item, you are able to do something the old fashioned way and save for it. It might mean that you have to wait for the item, but you will quickly realize that there are times that you purchase an item that you don’t really need and can do without, and when you are saving for something you can quickly realize that it isn’t as important to have as you once thought.

To recap on the information above it is quickly evident on making chances can reduce the reasons you’ll never be rich.

  • Budgeting and getting the amount that you save higher each month
  • Reduce down your debt as quickly as possible to save on interest payments
  • Increase the savings that you have, and allocate them to different criteria.

Don’t give up on being able to be rich and know that you are free from living from pay check to pay check, but don’t give up working too early because retirement isn’t going to be great if you haven’t budgeted correctly for it.

Alternate Ways to Handle Student Loan Debt

Parent’s that have one or more children in college will have accumulated student loan debt. Furthermore if the child is placed on college suspension or graduating will owe on the average $30,000 in student loan debt.  In fact those graduating this year the debt may even be more simply because Congress was unable to reach a decision regarding the interest rates on government issued student loans.  The interest rates just doubled from the 3.4% to 6.8% for federal student aid which includes both subsidized and unsubsidized loans.

Handle Student Loan Debt

This of course does not apply to a child taking out or the parent signing a promissory note to obtain a loan through a financial institution. At the same time young adults between the ages of 19 to 28 have to worry about the professional job market. The job market for many of these college graduates will be bleak to say the least. Since they will be up against adults that have lost their job because of outsourcing or the business has foreclosed do to the economy. These adults have experience along with high education will most like get the job before the new graduate from college.

Of course if the bachelor degree is in the following fields of science, technology, medical, research, STEMS or mathematics then finding a job is slightly easier compared to other saturated fields. Unfortunately for these individual’s it might take months to years before they can find employment in their field of study. While the graduate is continuing to look for employment and still not working then how will they handle student loan debt?

Ways to Qualify for Repaying Student Loans

Consequently parents, graduates or young adults have two options when it comes to handling student loan debt and the interest of loans that equaling $30,000 or more. Parents and young adults struggling with student loan payments may qualify a deferment or make payments on the interest during forbearance. Many of the deferments are not done automatically so the individual would need to submit a request to the financial institution that services the loan. In addition the person would also need to contact the college or university financial aid office. If at any time the student is in college part-time, in grad school or a career/technical school, along with not being able to find full-time employment or unemployed are all ways a person may qualify for a deferment from the loan. Another way to have a student loan deferred if they have experience economic hardship do to being away for military service, natural disaster and being in the Peace Corps. There are several websites that have information available about getting a loan deferment. One of the websites that is important to check with at the beginning of each New Year is the Federal Financial Aid or FAFSA at the www.FAFSA.GOV.  The application should be completed no later than the first of March each year or as soon as all the prior year’s tax information is available to them.

Two Types of Forbearance

  • Mandatory is for students who do not qualify for a deferment.  However it can be requested if the student is in a dental/medical internship, medical residency program, a national service program, providing teaching service, or have been activated by the governor as a member of the National Guard. The other way a person may receive mandatory forbearance if the student loan payments each moth totals more than 20% or more of their gross income.
  • Discretionary is only granted by the financial institution that gave the student loan. This helps the student to learn the best way to handle student loan debt.

If the choice is not to pay the interest but to let the interest of the student loan accumulate then this may also be capitalized. Capitalized means that it can be added to the principal balance resulting with the person paying interest on it as well. Then again if they do not qualify for either deferment or forbearance the next step is to negotiate a change in the repayment plan. Parents and college graduated adults for this reason should go to the Studentloans.gov website. There they can use a repayment estimator to see if they are eligible for a variety of payment plans and give them an estimate of monthly payments. This way they can begin to handle student loan debt in their budget.

Consolidate Student Loan Payments

However parents and college graduates might find that this simplifies to a onetime payment each month.  People need to look at all payment plans before making an important decision and learn how to handle student loan debt. These loans usually have a 30-year term which will increase the interest in the long run. This will also mean for the college graduate that they will be paying on the student loan until they are in their 50’s and have a family to take care of along with its responsibilities. Of course if the parents are paying for more than one child in college and financial responsibilities until that graduate student gets on their own. These individuals will be paying on student loans until their 60’s before the student loan is completely paid off.

In this case parents and young adults should compare any new payment to their current monthly payments to make sure the best option is a direct consolidation loan. Provided below is several types of loans that can be placed into a direct consolidated loan. People should check on the financial aid government website to see if there have been any changes to the loans for college students.

  • Direct subsidized/unsubsidized
  • Federal Family Education Loan Program (FFEL)
  • Parent Plus Loans
  • Federal subsidized/unsubsidized Stafford Loans
  • Supplemental Loans for Students (SLS)
  • Direct Plus Student loans
  • Federal Perkins Loans
  • Health Education Assistance Loans

A final point is there is a movement to forgive the debts of student loans. The following video discusses the idea of forgiveness and why it might not be such a good idea for the economy.

The Small Ways to Get Out of Debt Free

get out of debt free

When a person is in debt it can sometimes feel like there is no way out of the overwhelming situation. The thoughts of how to get out of debt free can seem daunting. In order to reduce the stress and anxiety over debt is to know your situation and take steps to reduce your debt. One way to get out of debt free is to take each problem separately rather than being consumed with the big problem of debt.

Know Your Money

It is important that no matter your financial situation you know how you are spending your money. This is something that is accomplished through two things.

1.    Know the Facts

It can be a stress saving situation if you decide to know how you spend your money. Take all the money that you spend in a month and track it. Determine how much you are spending on things such as utilities, entertainment, transportation, and groceries. Be sure to account for everything, because knowing exactly where you spend your money is the first place to gain power over your getting out of debt free.

2.    Modify Your Behaviors

Another part of knowing your money is learning ways in which to decrease your expenditures. Take the list of places that you spend money and determine if there are ways that you can decrease how much you spend. In some cases to get out of debt free can be as simple as taking your lunch rather than purchasing lunch at work or carpooling to work.

Know Where to Focus

When trying to get out of debt free you think that you need to eliminate the debt. This can be difficult because all the debt is important to get rid of, so how can you know where to focus your funds. One can have many different types of debt and a rule of thumb is to pay off the highest interest rates first. However in some occasions if you have a balance that is low then it would be beneficial to get rid of that debt before moving on to the higher interest rates. You can try to reduce your interest through communication with your lenders. If reducing the interest isn’t an option through your creditors you need to look into other ways. Some of these ways may be transfer balance or consolidation loan that can reduce many of interest rates in to a single low interest debt.

Enough Income

It is important to understand that no matter how you choose to get out of debt free you will need to have the income to do it. There are times that one does not feel that they are making enough money to satisfy all of their needs. Sometimes we need to think about the little things that we can do in order earn some extra money.

  • Requesting a raise. Requesting a raise may be one of the ways that you can increase your income. Take on extra duties or extend your shifts, these might be options that could help to increase the money you have coming into the home.
  • Short-term freelance. If you don’t have the ability to increase your income through your full-time job, you might look into freelancing with companies that offer short-term jobs. Elance.com and oDesk.com are two sites that are like this. These sites offer the ability to be paid for jobs like writing, transcribing, designing, as well as many other jobs available.

Motivation Can Be Hard

Some people feel that while trying to get out of debt free you life is disrupted and might not be worth the challenges and modifications needed. Whenever you are trying to make a big change in life motivation can make or break the success. There are some basic things that can motivate us through life changes.

  • Family
  • Life goals
    • Education
    • Retirement
    • Family growth
    • Buying a home
  • Winning a challenge
  • Advancements

It is important that a person be willing to embrace the motivations that will help them get out of debt free. Use this to your advantage by creating things that can help you stay on track. This can be accomplished through checklists, or inspiration boards, or even a date to be debt free by. Any of these motivation tactics might help to self motivate you through the process of getting out of debt free.

It is important for one to see how it is possible to make small changes to simple problems that can help to change the entire outcome of your debt situation. Getting out of debt free can be one of the most complicated and stressful situations that you will ever be placed in, however with small steps you will be able to advance and succeed through the process of financial freedom.