The Australian’s Michael Bennet has highlighted concerns being felt in some quarters about the rising number of high LVR (loan-to-value ratio) interest-only loans being written by the big banks.
New data released by the Australian Prudential Regulation Authority (APRA) showed that over 30% of loan approvals for the June quarter were high LVR. Such loans are considered higher risk because they are for more than 80% of the home’s value.
Many businesses have dozens of financial reports that can be overwhelming for the owners to decipher. Financial expert Anthony Keane suggested that business owners can simplify their financial reports by focusing on the three most important reports: the cash flow, aged debtors, and profit and loss statements.
Cash Flow Statement
The cash flow statement answers one of the most fundamental questions for business owners: whether their business has enough money to pay its bills. Understanding the cash flow statement enables the owners to check for cash flow challenges, conserve cash flow or arrange financing if necessary.
The Reserve Bank has cut the cash rate to a historic low of 2.5%. This has led to some speculation about whether it is a good time to lock in a fixed-rate mortgage.
According to commentator Penny Pryor, doing so means one is betting against the banks and anyone considering a fixed loan should understand the benefits for their personal situation.
A recent survey has revealed that retirees are less optimistic than before. The survey, conducted by ME Back, indicated that most households were feeling slightly more optimistic about their finances. The only exception was the retiree group.
The survey showed a drop of 5% in the ‘financial comfort’ category for retirees over the past six months. The retirees stated that they were feeling more worried about their income stability, investments and living standards.
Creating a budget is often easy to do, the difficult part is following it. Fortunately, there are ways to create a realistic and workable budget and follow it successfully.
It can be easy to forget the ‘fun’ component in a budget, but a realistic budget includes an entertainment and leisure component.
Credit cards can be a convenient way to make purchases but they can be costly if they are not used with care.
Fees and Interest
Credit cards often attract a foreign transaction or currency conversion fee when used overseas. Interest rates are another factor to be careful with. If the entire amount is not paid off by the interest-free period, the outstanding amount will attract an interest payment, which can be more than 20% a year.
Living in debt can lead to high interest payments and possibly even insolvency. Symptoms of excessive debt include making only the minimum payments and maxing out credit cards.
Those with excessive debt are often those who make only the minimum payments on their credit cards. Paying only the minimum amount can mean that it takes decades for the cardholder to pay off their credit card debt, instead of months or a couple of years.
Research has demonstrated a link between financial resolve and a variant of a gene associated with self-control. However, studies have also shown that nurture can trump nature when it comes to smart money management.
Here are a few methods to help you become better with your money:
Using basic rules or mantras to guide financial and spending decisions can lead to better outcomes in personal finances. Developing a heuristic process creates a rule and makes a person more conscious of their decisions. For example, basic mantras such as ‘I never shop on impulse’ can guide an individual to better spending decisions.
Getting a loan has never been an easy process and the GFC only made loans harder to obtain. If you are looking to be approved for a loan, there are certain ways in which you can improve your appeal to lenders.
Below are some handy tips to help you make the right decision when taking out a loan.
Do your research. Before you commit to a lender, check what else is out there. The more research you do, the better off you will be.
Once you have found a loan that is applicable to your situation, contact the financing institution and make sure you fit the requirements for loan eligibility. Eligibility can vary between institutions.
Don’t over commit. When coming up with a repayment schedule, you need to be confident in the payment structure. It may be tempting to try to pay the loan off as quickly as possible but defaulting on a payment will leave you worse off in the long run than choosing to pay the loan off over a longer period of time.
Credit cards are a convenient way that many people purchase items when their budgets are a little stretched. But is this the best possible option available? According to MSN money, a personal loan can often be a better option that swiping the plastic.
Below are a couple reasons why it would be wiser to opt for a loan over using a credit card:
When it comes to credit scores, credit cards will garner you a lower credit rating. This is because credit card debt is viewed as revolving credit and is based on your utilised credit – the amount of credit used in relation to how much credit you have made available to you. A personal loan on the other hand is classed as installment credit and does not affected by utilisation.
Personal loans require a payment plan, which means you are being forced pay down the loan each month. Credit cards on the other hand allow people to continually pay off the minimum monthly payment, which means you end up paying off a far greater amount.