Financing a New Car Doesn’t Have to Feel Like a Catch-22

The 21st century has brought tremendous improvements in the fuel efficiency of gasoline-powered cars, but fuel prices are still leaving a collective knot in the stomachs of already financially-stressed Americans. The “haves” have no problem forking over the cash for new, higher MPG or hybrid gasoline-electric cars. But those who have not-as-much (and the irony … Continue reading “Financing a New Car Doesn’t Have to Feel Like a Catch-22”

The 21st century has brought tremendous improvements in the fuel efficiency of gasoline-powered cars, but fuel prices are still leaving a collective knot in the stomachs of already financially-stressed Americans. The “haves” have no problem forking over the cash for new, higher MPG or hybrid gasoline-electric cars. But those who have not-as-much (and the irony here is not lost) may be trapped in less fuel-efficient, older cars for the very reason they need to save: they just don’t have the cash flow for a new car.

New car purchases stalled when the economic solvency of mainstream America went on the skids (starting around late 2008). It wasn’t until late last year that buyers began to emerge from their – on average – decade-old cars, thus delivering a glimmer of hope to auto makers, car dealerships and the U.S. economy in general. By finally shedding their old jalopies, the penny pinchers are treating themselves to intoxicating new-car smells and better gas mileage.

American consumerism may be back on track, but having not-as-much continue to become more burdensome as gas prices increase. The aforementioned glimmer of financial hope is triggering “what ifs” in a lot of minds, maybe even yours… What if I could get spend less on gas? What if my old car just conks out completely? What if I could just get a new car this year?

Financing a New Car is Cool Again

Taking on a loan for a high-ticket item like a new car is risky for both the borrower and lender. Fortunately, as the economy shows some sparks of life again, lenders want to lend again. Bloomberg reports that auto loan interest rates are at their lowest since 2008, and bad credit loans are up to 23% of the new-car financing market. There is hope, even for those who took a hard hit financially.

But, borrowers don’t need to jump out of the frying pan and into the fire just because loans are more available. Poor borrowing and lending habits are what got Middle America into financial trouble in the first place. Fear of record-high gas prices and dying vehicles has the potential to send you into panic mode, and push you to take any loan you can get but, there are smart ways to borrow, even when cash flow is tight. First stop: a loan payment estimator.

Numbers don’t lie. The loan payment estimator at Jeff D’Ambrosio Auto allows you to estimate payments based on the cost of your dream car, or estimate how much dream car you can buy based on the payments you can afford. Playing with the numbers will show you just how valuable it is to save up cash for a down payment if at all possible. You can sometimes get a loan with no money down, but that does increase your monthly payments and extend the life of your loan – which means you’ll pay more in interest when all is said and done.

Costs of Buying vs. Leasing

If you buy a car with plans to keep it for as long as possible, don’t worry about becoming “upside down” on your investment. The depreciation value on a new car makes it nearly impossible to avoid but, eventually, as you pay down your loan, you’ll be right side up again. Take good care of your car for the entire time you own it and the two of you will have a healthy and cost-effective relationship that lives long after the loan is paid.

Leasing a car may seem like an option only for buyers with a good cash flow when it’s really all about how you budget and how much wear and tear you put on a car. Turning in a lease and getting a new car every few years can be nice for people who don’t travel much and who don’t like to or can’t take care of aging vehicles. Just remember, leasing a vehicle still requires monthly payments, but they may be lower than payments on a loan. Plus, every time you take on a new lease, you’ll have to put down a few thousand dollars. So what you save on payments should go into the bank towards your next lease down payment. Potato/Potahto?


Choices in Finance Education

The finance industry offers a plethora of options to students wanting to join the finance profession.

Today’s finance profession is not limited to just the accounting jobs. With the right kind of finance education, a finance student can find himself suitable for a variety of finance roles. Most finance careers require you to be good with numbers and have knowledge of basic business statistics. Let’s take a look at some of the lucrative financial education options.

Accountancy: This is the most widely popular financial career. Commonly referred to as a public accountant, you learn about to prepare and maintain a businesses financial records. You also learn about taxation and other financial aspects of the business. Education in this area is very comprehensive, and the exam is considered quite difficult. Apart from public accountants, there are also other specialized fields such as cost accountant, management accountant, and tax expert.

MBA Finance: Another popular area in finance education is the MBA in Finance. This program is at the post-graduate level and is offered by most universities as well as business schools. An MBA Finance degree opens up career opportunities in a plenty of areas, which include banking, financial analysis, financial markets, research, etc. In general, the reputation of an MBA Finance is measured based on his skill level and the reputation of the college from where the program was completed.

Financial Planning: This is one of the most sought after professions in the finance field. As a financial planner, you are required to manage the personal finances of individuals. You are expected to invest people’s money in the best assets based on their risk profile and also advice them on various matters such as taxation, real estate, among others.

Finance Certifications: As the finance profession has grown, many new finance certifications have emerged that help students get equipped with very specific financial knowledge. For example, the Certified Financial Analyst (CFA) designation helps you become a financial analyst. There are popular certification programs for becoming risk managers; these are Financial Risk Manager (FRM) offered by GARP, and Professional Risk Manager (PRM) offered by PRMIA. If you are interested in Alternative investments, then you have the option to become a Certified Alternative Investments Analyst (CAIA). There are financial certifications in almost every area of finance.

Personal Finance for Young Professionals: Why Your Effective Tax Rate Is Higher Than Mitt Romney

Mitt Romney’s federal income tax rate has come under a lot of critique with the showdown for the republican primaries heating up. He created claims that demonstrated his real tax rate was somewhere around 15%. This number has come under assault from the White House and experts alike, pointing out that Romney, whose forecasted net worth is over $250 million, is out of touch with the issues and regular life of the general American.

Surely, it appears crazy that a multi-millionaire who gained close by $20 million in income each one of the last few years pays federal taxes at a rate of 15%. Bear in mind, every single thing that Romney has done is absolutely legitimate. His effective tax rate of 15% is due mainly to the reality that almost all of his income is originated from capital gains. No matter if this is reasonable or not, a lot of individuals like to then compare their income tax rate to this. The everyday worker generating 50k is furious that he will pay 25% whilst Romney merely pays 15%. But let’s dig a little deeper into these facts.

Effective vs. Marginal Tax Rate

The United States has a progressive tax platform in which the more income you earn, the higher the proportion of taxes you have to pay. The highest marginal tax bracket a man or woman can pay is 35% for those making $379,151 or more. But don’t be bamboozled by this figure. As we see with Mitt Romney, the 35% tax rate on ordinary income is not going to apply to capital gains, it only is applicable to ordinary W-2 type income that you ought to receive from your company.

The effective tax rate you pay is a lot more truthful representation of your taxes. It primarily considers the real portion of taxes you paid where as marginal is the tax rate the last and next dollar you generate will be taxed at.

Remember this whilst comparing your tax rate to Mitt Romney, you invariably want to figure out your effective tax rate when making comparisons.

How Can I Get Capital Gains

So let’s say you calculated your effective tax rate, and it’s still significantly greater than 15%! Many wise investors and high income earners shop for investments considering that capital gains are merely taxed at 15%.

Despite the fact you may not be allowed to get incentives in the form of stock options like the large players, you can always participate in employee stock purchase plans. These plans generally let you to actually buy company stock at a low price and if you hold onto it for a year, you are able to claim long term capital gains and pay taxes at 15%. Simply speaking, you are trading your personal ordinary taxable income, which would be taxed at 25%, 28% etc. for capital gains income which will now be taxed at the favorable rate.

You can also obtain capital gains the old fashioned way by ordering stocks on the open market. Although this is a riskier strategy, it is going to work out effectively over a moderate to lengthy period of time. I would prescribe discounted index funds that match correctly with the complete market. With this option, you are able to properly diversify and at the time you sell your stock you would merely be charged 15% taxes on your own gains. It also can help you to tax harvest losses in down markets, effectually deferring your tax bill.

So, does it agitate you that you pay up more taxes than Mitt Romney or would you do the same thing in his shoes? I think all income should be taxed at a flat rate for those above a particular level(ie poverty line). What about you?


Storage Unit Auctions

You’ve seen it on TV reality shows and now you’d like to cash in on storage unit auctions as well. Reality TV featuring auction hunters has really heated up interest in these auctions. People are excited by the idea of buying a hidden treasure for only a few hundred dollars at auction. These auctions have been around for a while but their popularity has skyrocketed as these shows have brought attention to them.

Why does it happen?

The auctions happen because the owner of the property cannot, will not, or has forgotten to pay the rental on their unit. The companies that own these units foreclose on and then sell off the contents to recover their lost rent. The property owners loss is your possible gain if you buy it right.

During the foreclosure process the owner can reclaim his property by paying the rent and fees; if not the owners of the storage facility will put an announcement in the paper about the sale. If two or three units are up for grabs, it becomes a feeding frenzy as seasoned and novice auction hunters swarm in.

Occasionally, an auction will get cancelled at the last minute if the property owner comes in and pays their back charges. The storage unit owners cannot continue an auction if the property owner pays his rent. It is only fair and in this case the auction hunters must move on.

What to expect during an auction

Storage unit auctions are informal affairs; all bids are given orally while everyone just stands around the unit being auctioned off and the highest bid wins. The winning bidder must pay right away and usually the winners only have two days or less to clear out the contents, so come prepared with a truck or large van to haul your loot away.

These storage units typically measure 5′ x 5′. A lot of stuff can get jammed into such a small space. During the auction, the unit manager, who is often also the auctioneer will open the unit and show the contents to the bidders for a short time before bidding. This means that you will possibly have only a few seconds to look in and judge your bid. You must be prepared and perhaps this preparation will only come after you have participated in a few of these.

Good signs of possible profit are large appliances and things that will easily sell online like books. Don’t blow all of your money on the first storage unit unless it is clear that it has a lot of high value items.


Business Accounts Receivable Financing

Why is business accounts receivable factoring so popular today? Who is doing it, why are they doing it and when is the best time to explore accounts receivable factoring agreements? The main reason for the popularity of factoring is the economic cycles that businesses experience.

As economic cycles turn downward and banks tighten up credit, loans become hard to come by as was in my case during the global recession of 2008-2009. In these tough times, accounts receivable factoring companies are filling in the need by offering the capital businesses need to keep their doors open, and even to grow and expand.

Factoring has become a key alternative finance strategy for many small businesses today. In fact, many small businesses are now preferring factoring over applying for loans with banks and the small business administration (SBA), who often have a more rigorous and lengthy process.

It’s also much quicker to access capital when factoring as opposed to the long and painful process of obtaining a loan. What are some of the more common ways companies are engaging in business accounts receivable factoring?

Trucking companies factor freight to cover wages and salaries for drivers. Staffing agencies factor their invoices so they can pay their head count / staff. In medical accounts receivable factoring, which is a very specialized niche, medical companies factor out receivables owed to them by insurance companies and even the government to fund their day to day needs (expenses) in the short term.

Businesses of all sizes are also pursuing accounts receivable factoring companies because these companies also often offer purchase order refinancing, working capital credit lines, growth or expansion funding, inventory financing and other types of asset based lending where businesses take a loan by pledging their physical assets.

Here are answers to three common questions that must be going through your mind right now:
Why should you factor?

Simple. It is easier, faster and in many cases can be cheaper. Once you are accepted or have a relationship with a solid accounts receivable factoring company, you essentially have a revolving line of credit with them. Think about it, if a company factors your invoices once, chances are they will do it again, and again, and again. They win, and most importantly YOU win.

Here is the other thing. You no longer have to worry about who will process accounts receivables at your business. when you factor, you are essentially outsourcing the entire function. Let them worry about it while you worry about growing your business!

What size business can factor?

Any kind really. However factoring is most common with small to medium size businesses as large Corporates have their own alternative capital or funding sources. The answer is actually simpler than that. If you have receivables, you can for sure factor.

When should you consider business accounts receivable factoring?

Do you need cash to grow and expand your business? Do you need more funding to run your day to day operations? Who doesn’t?

Are you having trouble or simply don’t want to acquire a business or SBA loan? If you answered yes to any of these questions and you feel you are ready to take the next step in your business, then YOU SHOULD consider accounts receivable factoring.