H.J. Chammas's Blog, page 3

How Do Credit Utilization Ratio Affect Your Credit Score?

In a previous article, we've covered how debt-to-income ratio (DTI) can affect whether you get approved for a loan or credit. In this article, we will cover on credit utilization affects your credit score.

Your credit utilization ratio (also referred to as debt-to-credit ratio) is a measure of how much credit you’re using compared with your credit limit. For example, let’s say that you have a $10,000 credit limit on your card and your current balance is $3,000, which makes your credit utilization ratio 30%.

Your debt-to-income ratio (DTI) is a calculation of how much of your monthly income is devoted to debt payments and certain other financial obligations. Lenders want to know you have the ability to pay back a loan.

Related: What Your Credit Score Doesn't Tell You, And How To Repair Your Credit

Payments that should be factored into your DTI include:

Monthly rent or mortgage payments (including taxes and insurance).Minimum monthly credit card payments.Monthly auto and student loan payments.Monthly child support or alimony payments.Monthly payments on any other type of loan.

Once you’ve added up all these obligations, divide the total by your monthly gross (pre-tax) income to arrive at your DTI. For example, if your monthly debt payments and financial obligations add up to $2,500 and your monthly income is $6,000, your debt-to-income ratio is 41.7%. In general, a DTI that's lower than 49% makes you eligible for loans.

How Credit Utilization Affects Your Credit

Loans can be either secured loans or unsecured loans. Mortgages and car loans are secured loans, as they are both secured by collateral. Loans such as credit cards and line of credit are unsecured, not backed by collateral. Unsecured loans typically have higher interest rates than secured loans as they are riskier for the lender. With a secured loan, the lender can repossess the collateral in the case of default.

Loans can also be described as revolving loans or term loans. A revolving loan is a loan that can be spent, repaid, and spent again, while a term loan is a loan paid off in equal monthly installments over a set period called a term.

Let's see how different loan obligations are categorized:

A line of credit is an unsecured revolving loan.A credit card is an unsecured revolving loan.A home mortgage is a secured term loan.A personal loan is generally an unsecured term loan.A car loan is a secured term loan.A student loan is generally an unsecured term loan.

Related: Learn how bankers qualify applicants for different types of loans

Credit Utilization Ratio

Your Credit Utilization Ratio is influenced almost entirely by your revolving loans (credit card debt and line of credit). In general, it's best to keep your credit utilization ratio below 30% on any single credit card and across all of them. This also applies to any line of credit extended to you by your bank.

A whopping 30% of your FICO score, the scoring model used in most lending decisions, is determined by your credit utilization ratio. The lower the credit utilization ratio, the better is your credit score.

Why Lenders Use Debt-to-Income Ratio (DTI) To Qualify You For a Loan

Although your debt-to-income ratio isn't used to calculate your credit score, you should know that it's a big factor lenders use to decide whether you qualify for a loan or credit because it indicates how able you are to take an additional financial obligation. In other words, lenders want to know how able you are to pay back your debt and financial obligation, including the new loan you're applying for.

Banks and other types of lenders set their own DTI standards, so an acceptable DTI with one lender might be considered too high with another. In general:

DTI of 35% or less: Green light. You are looking good, and your lender will favor your application. Compared to your income, your debt is at a manageable level. You most likely have money left over for saving or spending after you’ve paid your obligations. DTI between 36 - 49: Yellow light. You are still eligible for a loan, but you have an opportunity to improve your situation. You’re managing your debt adequately, but you may want to consider lowering your DTI. This could put you in a better position to handle unforeseen expenses. Your lender may ask you for additional eligibility criteria. DTI of 50% or more: Red light. You need to take action to get your finances in order. In the eyes of your lenders, you may have limited funds to save or spend. With more than half your income going toward debt payments, you may not have much money left to save, spend, or handle unforeseen expenses. With this DTI ratio, lenders may limit your borrowing options or even categorize you as not eligible for loans.

Related: Personal Finance Quickstart Guide for Paying Off Debt, Credit Repair, and Money Management

What Your Credit Score Doesn't Tell You, And How To Repair Your Credit

 

What Your Credit Score Doesn't Tell You, And How To Repair Your CreditWhat do lenders look at when determining your creditworthiness for a mortgage?

Without a doubt, the first thing that came to your mind is your Credit Score. This is what everyone talks about, and at the same time, very few people do understand how this score is determined. However, there is another number, which is rarely communicated to you by lenders, and that is being used by mortgage companies and banks as the major determining factor for your creditworthiness - Your debt-to-income ratio (DTI). Here’s what it is and why it’s so important.

DTI - Explained

Your debt to income ratio (DTI), sometimes also referred to as debt burden ratio (DBR) in certain countries, is what lenders compute to determine your creditworthiness. In countries where credit score is not available, your DTI may be the main measure of your creditworthiness for a loan, refinancing, or credit. The debt to income ratio is exactly what it sounds like: the amount of debt you owe as compared to your overall income. 

Your lenders will look at this ratio when they are trying to decide whether to lend you money or extend credit. A low DTI means you have a good balance between debt and income. As you might have guessed, lenders like this number to be on the low side, which means your debt is at a manageable level relative to your income. The lower it is, the greater the chance you will be able to get the loans or credit you seek.

Total debt is the total of all your monthly debt obligations, which are considered monthly recurring debt. It includes your home mortgage or rent, car loans, student loans, your minimum monthly payments on any credit card debt, line of credit, and any other loans that you might have.

Your lender seeks to assess how comfortable you are with paying both your current debt as well as your ability to borrow more. For that reason, your new monthly mortgage payment (towards the new loan you will be applying for) will be added to your total debt computation.

Gross income is the sum of all your earned income (from your job) and unearned income (passive income) before tax. In the case of unearned income considerations, careful and responsible lenders need to account for a cushion in the event of any month you do not receive this unearned income from rentals, businesses, or paper assets. Those lenders are often conservative and assume about 80% of unearned income. Inquire with your lender about their current practice on this topic.

DTI, expressed in percentage, is computed by dividing your total debt over gross income. By definition, it is a calculation of your total gross monthly debt or payments divided by your total gross monthly income. This percentage helps lenders determine the kind of borrower you’ll be. The smaller the percentage, the better.

DTI Traffic Light - Approved or Rejected?

Even if you pay your bills on time, have a solid income, and carry a good credit score, the ratio of your monthly expenses and debt requirements to your income is central in the mortgage approval process. When lenders compute your debt-to-income ratio, there are three major thresholds they follow.

35% or less - Green light: You are looking good, and your lender will favor your application. Compared to your income, your debt is at a manageable level. You most likely have money left over for saving or spending after you’ve paid your obligations. 36% to 49% - Yellow light: You are still eligible for a loan, but you have an opportunity to improve your situation. You’re managing your debt adequately, but you may want to consider lowering your DTI. This could put you in a better position to handle unforeseen expenses. Your lender may ask you for additional eligibility criteria. 50% or more - Red light: You need to take action to get your finances in order. In the eyes of your lenders, you may have limited funds to save or spend. With more than half your income going toward debt payments, you may not have much money left to save, spend, or handle unforeseen expenses. With this DTI ratio, lenders may limit your borrowing options or even categorize you as not eligible for loans.

Determining the Maximum Mortgage Loan You are Eligible For

From a lender's perspective, loan eligibility is based on your debt-to-income ratio. As shared above, your lender will allow a maximum DTI of up to 50% of your gross income, and this includes all your loan obligations, including the mortgage installment being considered by your bank.

Below are the steps followed by a lender in computing the maximum loan amount you will be eligible for:

Compute your maximum allowed debt obligation by multiplying your current gross income by the DTI ratio set by your lender. This allows your lender to determine the sum of total monthly debt you will be comfortable with affording on a recurring monthly basis based on your income. Compute your maximum monthly mortgage loan installment , which includes the new loan installment. This is computed by subtracting your existing total monthly debt from your maximum allowed debt obligation. Compute your maximum monthly mortgage installment related to principal and interest . Your maximum monthly mortgage loan installment (step 2 above) covers all four components of a mortgage: principal, interest, taxes, and insurance (often referred to as PITI). Installments towards both the principal (P) and interest (I) apply directly to settle your loan with your lender on a monthly basis throughout the terms of the loan. On the other hand, payments towards property tax (T) and home insurance (I) are obligations you owe to the government and your home insurance provider and therefore are not counted towards settling your loan. Compute the mortgage value you are eligible for . Both PI components of the monthly loan installments, when paid throughout the terms of the loan, will settle the full mortgage loan by its maturity date. So, adding those PI monthly installments over the total number of months throughout the term of the loan will determine the total amount you will be paying throughout the same period. This amount includes both the total principal amount (which is mortgage value) and total interest paid. This suggests that by subtracting the total interest from the total payments throughout the term of the mortgage, the principal value (which is the mortgage value) can be computed.When you want to invest in income-producing assets (such as real estate), you will need funds to finance your purchases. Determining your loan eligibility allows you to figure out the starting capital that will be borrowed.
I have provided a mortgage loan eligibility calculator that does all the computations explained above.  It can be downloaded from the link below.
Related: Free Loan Eligibility Calculator

Strategies to Improve Your DTIWhen you apply for a mortgage and your loan gets rejected due to your high FTI, it’s not the end of the world. You can lower your DTI by:
Paying off debt: TThe more monthly debt payments you can eliminate, the lower your DTI will become. It will be a wise move to pay off first those high-interest loans with the high monthly installments. If your finances can handle it, pay off early those revolving loans (such as credit card loans and lines of credit) and get rid of these monthly payments once and for all! Restructuring your debt: This strategy, if well executed, will boost your DTI to acceptable levels in no time. I encourage you to discuss this strategy with a professional who can guide you on consolidating all your revolving loans and short-term loans into longer-term loans. This will definitely reduce your total monthly debt obligations to a level that reduced your DTI. Increasing your total income:  Increasing your earned income (salary) doesn’t happen with the snap of your fingers, but have you considered creating a stream of passive income that will increase your total income?If possible, adding a co-borrower or co-signer to the loan who has a lower DTI than yours might bring your combined DTI down to an acceptable level.If you’d still like to know more, get in touch with us, and let's discuss the strategies that are possible to you.
Related: Book a Discovery and Strategy Call to Discuss Your DTI

What Your Credit Score Doesn't Tell You, And How To Improve Your Creditworthiness

 

What Your Credit Score Doesn't Tell You, And How To Improve Your CreditworthinessWhat do lenders look at when determining your creditworthiness for a mortgage?

Without a doubt, the first thing that came to your mind is your Credit Score. This is what everyone talks about, and at the same time, very few people do understand how this score is determined. However, there is another number, which is rarely communicated to you by lenders, and that is being used by mortgage companies and banks as the major determining factor for your creditworthiness - Your debt-to-income ratio (DTI). Here’s what it is and why it’s so important.

DTI - Explained

Your debt to income ratio (DTI), sometimes also referred to as debt burden ratio (DBR) in certain countries, is what lenders compute to determine your creditworthiness. In countries where credit score is not available, your DTI may be the main measure of your creditworthiness for a loan, refinancing, or credit. The debt to income ratio is exactly what it sounds like: the amount of debt you owe as compared to your overall income. 

Your lenders will look at this ratio when they are trying to decide whether to lend you money or extend credit. A low DTI means you have a good balance between debt and income. As you might have guessed, lenders like this number to be on the low side, which means your debt is at a manageable level relative to your income. The lower it is, the greater the chance you will be able to get the loans or credit you seek.

Total debt is the total of all your monthly debt obligations, which are considered monthly recurring debt. It includes your home mortgage or rent, car loans, student loans, your minimum monthly payments on any credit card debt, line of credit, and any other loans that you might have.

Your lender seeks to assess how comfortable you are with paying both your current debt as well as your ability to borrow more. For that reason, your new monthly mortgage payment (towards the new loan you will be applying for) will be added to your total debt computation.

Gross income is the sum of all your earned income (from your job) and unearned income (passive income) before tax. In the case of unearned income considerations, careful and responsible lenders need to account for a cushion in the event of any month you do not receive this unearned income from rentals, businesses, or paper assets. Those lenders are often conservative and assume about 80% of unearned income. Inquire with your lender about their current practice on this topic.

DTI, expressed in percentage, is computed by dividing your total debt over gross income. By definition, it is a calculation of your total gross monthly debt or payments divided by your total gross monthly income. This percentage helps lenders determine the kind of borrower you’ll be. The smaller the percentage, the better.

DTI Traffic Light - Approved or Rejected?

Even if you pay your bills on time, have a solid income, and carry a good credit score, the ratio of your monthly expenses and debt requirements to your income is central in the mortgage approval process. When lenders compute your debt-to-income ratio, there are three major thresholds they follow.

35% or less - Green light: You are looking good, and your lender will favor your application. Compared to your income, your debt is at a manageable level. You most likely have money left over for saving or spending after you’ve paid your obligations. 36% to 49% - Yellow light: You are still eligible for a loan, but you have an opportunity to improve your situation. You’re managing your debt adequately, but you may want to consider lowering your DTI. This could put you in a better position to handle unforeseen expenses. Your lender may ask you for additional eligibility criteria. 50% or more - Red light: You need to take action to get your finances in order. In the eyes of your lenders, you may have limited funds to save or spend. With more than half your income going toward debt payments, you may not have much money left to save, spend, or handle unforeseen expenses. With this DTI ratio, lenders may limit your borrowing options or even categorize you as not eligible for loans.

Determining the Maximum Mortgage Loan You are Eligible For

From a lender's perspective, loan eligibility is based on your debt-to-income ratio. As shared above, your lender will allow a maximum DTI of up to 50% of your gross income, and this includes all your loan obligations, including the mortgage installment being considered by your bank.

Below are the steps followed by a lender in computing the maximum loan amount you will be eligible for:

Compute your maximum allowed debt obligation by multiplying your current gross income by the DTI ratio set by your lender. This allows your lender to determine the sum of total monthly debt you will be comfortable with affording on a recurring monthly basis based on your income. Compute your maximum monthly mortgage loan installment , which includes the new loan installment. This is computed by subtracting your existing total monthly debt from your maximum allowed debt obligation. Compute your maximum monthly mortgage installment related to principal and interest . Your maximum monthly mortgage loan installment (step 2 above) covers all four components of a mortgage: principal, interest, taxes, and insurance (often referred to as PITI). Installments towards both the principal (P) and interest (I) apply directly to settle your loan with your lender on a monthly basis throughout the terms of the loan. On the other hand, payments towards property tax (T) and home insurance (I) are obligations you owe to the government and your home insurance provider and therefore are not counted towards settling your loan. Compute the mortgage value you are eligible for . Both PI components of the monthly loan installments, when paid throughout the terms of the loan, will settle the full mortgage loan by its maturity date. So, adding those PI monthly installments over the total number of months throughout the term of the loan will determine the total amount you will be paying throughout the same period. This amount includes both the total principal amount (which is mortgage value) and total interest paid. This suggests that by subtracting the total interest from the total payments throughout the term of the mortgage, the principal value (which is the mortgage value) can be computed.When you want to invest in income-producing assets (such as real estate), you will need funds to finance your purchases. Determining your loan eligibility allows you to figure out the starting capital that will be borrowed.
I have provided a mortgage loan eligibility calculator that does all the computations explained above.  It can be downloaded from the link below.
Related: Free Loan Eligibility Calculator

Strategies to Improve Your DTIWhen you apply for a mortgage and your loan gets rejected due to your high FTI, it’s not the end of the world. You can lower your DTI by:
Paying off debt: TThe more monthly debt payments you can eliminate, the lower your DTI will become. It will be a wise move to pay off first those high-interest loans with the high monthly installments. If your finances can handle it, pay off early those revolving loans (such as credit card loans and lines of credit) and get rid of these monthly payments once and for all! Restructuring your debt: This strategy, if well executed, will boost your DTI to acceptable levels in no time. I encourage you to discuss this strategy with a professional who can guide you on consolidating all your revolving loans and short-term loans into longer-term loans. This will definitely reduce your total monthly debt obligations to a level that reduced your DTI. Increasing your total income:  Increasing your earned income (salary) doesn’t happen with the snap of your fingers, but have you considered creating a stream of passive income that will increase your total income?If possible, adding a co-borrower or co-signer to the loan who has a lower DTI than yours might bring your combined DTI down to an acceptable level.If you’d still like to know more, get in touch with us, and let's discuss the strategies that are possible to you.
Related: Book a Discovery and Strategy Call to Discuss Your DTI

The Myth About Your Credit Score... And What's More Important In Determining Your Creditworthiness

 

The Myth About Your Credit Score... And What's More Important In Determining Your CreditworthinessWhat do lenders look at when determining your creditworthiness for a mortgage?

Without a doubt, the first thing that came to your mind is your Credit Score. This is what everyone talks about, and at the same time, very few people do understand how this score is determined. However, there is another number, which is rarely communicated to you by lenders, and that is being used by mortgage companies and banks as the major determining factor for your creditworthiness - Your debt-to-income ratio (DTI). Here’s what it is and why it’s so important.

DTI - Explained

Your debt to income ratio (DTI), sometimes also referred to as debt burden ratio (DBR) in certain countries, is what lenders compute to determine your creditworthiness. In countries where credit score is not available, your DTI may be the main measure of your creditworthiness for a loan, refinancing, or credit. The debt to income ratio is exactly what it sounds like: the amount of debt you owe as compared to your overall income. 

Your lenders will look at this ratio when they are trying to decide whether to lend you money or extend credit. A low DTI means you have a good balance between debt and income. As you might have guessed, lenders like this number to be on the low side, which means your debt is at a manageable level relative to your income. The lower it is, the greater the chance you will be able to get the loans or credit you seek.

Total debt is the total of all your monthly debt obligations, which are considered monthly recurring debt. It includes your home mortgage or rent, car loans, student loans, your minimum monthly payments on any credit card debt, line of credit, and any other loans that you might have.

Your lender seeks to assess how comfortable you are with paying both your current debt as well as your ability to borrow more. For that reason, your new monthly mortgage payment (towards the new loan you will be applying for) will be added to your total debt computation.

Gross income is the sum of all your earned income (from your job) and unearned income (passive income) before tax. In the case of unearned income considerations, careful and responsible lenders need to account for a cushion in the event of any month you do not receive this unearned income from rentals, businesses, or paper assets. Those lenders are often conservative and assume about 80% of unearned income. Inquire with your lender about their current practice on this topic.

DTI, expressed in percentage, is computed by dividing your total debt over gross income. By definition, it is a calculation of your total gross monthly debt or payments divided by your total gross monthly income. This percentage helps lenders determine the kind of borrower you’ll be. The smaller the percentage, the better.

DTI Traffic Light - Approved or Rejected?

Even if you pay your bills on time, have a solid income, and carry a good credit score, the ratio of your monthly expenses and debt requirements to your income is central in the mortgage approval process. When lenders compute your debt-to-income ratio, there are three major thresholds they follow.

35% or less - Green light: You are looking good, and your lender will favor your application. Compared to your income, your debt is at a manageable level. You most likely have money left over for saving or spending after you’ve paid your obligations. 36% to 49% - Yellow light: You are still eligible for a loan, but you have an opportunity to improve your situation. You’re managing your debt adequately, but you may want to consider lowering your DTI. This could put you in a better position to handle unforeseen expenses. Your lender may ask you for additional eligibility criteria. 50% or more - Red light: You need to take action to get your finances in order. In the eyes of your lenders, you may have limited funds to save or spend. With more than half your income going toward debt payments, you may not have much money left to save, spend, or handle unforeseen expenses. With this DTI ratio, lenders may limit your borrowing options or even categorize you as not eligible for loans.

Determining the Maximum Mortgage Loan You are Eligible For

From a lender's perspective, loan eligibility is based on your debt-to-income ratio. As shared above, your lender will allow a maximum DTI of up to 50% of your gross income, and this includes all your loan obligations, including the mortgage installment being considered by your bank.

Below are the steps followed by a lender in computing the maximum loan amount you will be eligible for:

Compute your maximum allowed debt obligation by multiplying your current gross income by the DTI ratio set by your lender. This allows your lender to determine the sum of total monthly debt you will be comfortable with affording on a recurring monthly basis based on your income. Compute your maximum monthly mortgage loan installment , which includes the new loan installment. This is computed by subtracting your existing total monthly debt from your maximum allowed debt obligation. Compute your maximum monthly mortgage installment related to principal and interest . Your maximum monthly mortgage loan installment (step 2 above) covers all four components of a mortgage: principal, interest, taxes, and insurance (often referred to as PITI). Installments towards both the principal (P) and interest (I) apply directly to settle your loan with your lender on a monthly basis throughout the terms of the loan. On the other hand, payments towards property tax (T) and home insurance (I) are obligations you owe to the government and your home insurance provider and therefore are not counted towards settling your loan. Compute the mortgage value you are eligible for . Both PI components of the monthly loan installments, when paid throughout the terms of the loan, will settle the full mortgage loan by its maturity date. So, adding those PI monthly installments over the total number of months throughout the term of the loan will determine the total amount you will be paying throughout the same period. This amount includes both the total principal amount (which is mortgage value) and total interest paid. This suggests that by subtracting the total interest from the total payments throughout the term of the mortgage, the principal value (which is the mortgage value) can be computed.When you want to invest in income-producing assets (such as real estate), you will need funds to finance your purchases. Determining your loan eligibility allows you to figure out the starting capital that will be borrowed.
I have provided a mortgage loan eligibility calculator that does all the computations explained above.  It can be downloaded from the link below.
Related: Free Loan Eligibility Calculator

Strategies to Improve Your DTIWhen you apply for a mortgage and your loan gets rejected due to your high FTI, it’s not the end of the world. You can lower your DTI by:
Paying off debt: TThe more monthly debt payments you can eliminate, the lower your DTI will become. It will be a wise move to pay off first those high-interest loans with the high monthly installments. If your finances can handle it, pay off early those revolving loans (such as credit card loans and lines of credit) and get rid of these monthly payments once and for all! Restructuring your debt: This strategy, if well executed, will boost your DTI to acceptable levels in no time. I encourage you to discuss this strategy with a professional who can guide you on consolidating all your revolving loans and short-term loans into longer-term loans. This will definitely reduce your total monthly debt obligations to a level that reduced your DTI. Increasing your total income:  Increasing your earned income (salary) doesn’t happen with the snap of your fingers, but have you considered creating a stream of passive income that will increase your total income?If possible, adding a co-borrower or co-signer to the loan who has a lower DTI than yours might bring your combined DTI down to an acceptable level.If you’d still like to know more, get in touch with us, and let's discuss the strategies that are possible to you.
Related: Book a Discovery and Strategy Call to Discuss Your DTI

The Hidden Advantage of Having a Steady Paycheck

The Hidden Advantage of Having a Steady PaycheckWhy does the majority of employed (and self-employed) dread Mondays?
You become dependent on caffeine to force yourself awake, dragging yourself out of bed, commuting to a barely tolerated job, and doing the 9-5 grind five days a week, until you retire.
You often get tired of this feeling, but then you justify to yourself that you're being a modern-day slave trading huge blocks of your life’s time, at least 48 hours a week, in exchange for little money.
This makes you even more stressed! you keep on repeating monotonous tasks, so you can pay for your student loan, car loan, mortgage loan or rent, and your credit card bills.
You often describe yourself running on a treadmill, getting tired, but find yourself not getting anywhere. The thing is you know you're going to be on the same treadmill the next day.
There have been countless researches that reveal the same feeling about having a 9 to 5 job, but very few realize that this same treadmill is hiding a competitive advantage of having a steady paycheck!
This video below explains the 3 secrets that uncover this hidden advantage:

"Being an employee gives you a superior advantage to become a wealthy millionaire"

The process of building wealth is depicted in a 3-step journey that's explained in this video below.

Related: Your 3-Step Journey to Financial Freedom

Book a Complimentary Discovery Call to Discuss Your Game Plan

 

 

How Not To Let Your Ambitions and Dreams Break And Sink?

How Not To Let Your Ambitions and Dreams Break And Sink?Without a doubt, we've all read (or watched related movies or documentaries) about the disaster that happened in the early morning of 15 April 1912... THE SINKING OF THE TITANIC.
On that morning, a new page of dark history has been written. This resulted in the deaths of more than 1,500 people! Those were people with families, loved ones, friends, dreams, ambitions,...
The ship of dreams ended up in complete silence and darkness in the deep waters of the ocean.
Many of us start our career pumped up with dreams and ambitions, and then we hit obstacles and challenges, we surrender, and allow our dreams and ambitions to settle for less... and even sink!

Let me explain why…
In today’s fast-paced life, we get distracted by hundreds and hundreds of messages every hour. We get sucked into other peoples' lifestyles and we imagine ourselves living their lives. Most of the time, what we see is "sexy" for social media, but may not be a true reflection of reality. Very few talk about their past (and current) failures and challenges.
We want to enjoy the same life those influencers and gurus are living, but then... hey... we realize their lifestyle is something far beyond our reach. This leads us to stop following our dreams, then procrastinating, and complaining all the time about our life!
We then stop looking for solutions for our today's problems and challenges and hide behind many excuses that we create. We allow our ship to sink in the piles of bills, debt, responsibilities, and negativity around us. Our problem seems endless and we sink deeper and deeper as our credit card loans, personal loans, student loans, and other loans only get bigger and bigger... exactly like the Titanic sank in the cold waters of the Atlantic Ocean.
Time passes by... and then we refresh ourselves... trying to stay afloat and then see a glimpse of hope and get energized again to live amazing lives and do extraordinary things. Our problems are pulling us down on one hand, but our dreams and ambitions are lifting us up.
One of those two forces will win!
If we keep on doing what we've been doing, then most probably we will be facing a similar fate like the titanic.
If we ACT on our dreams and ambitions... by taking small baby steps... the odds are our ship will float and sail towards those dreams and ambitions.
When Is The Time To Act?Time is your worst enemy and your best friend, don't forget that time won’t ever come back again.
It’s your decision whether you start living the life you want and provide for your children a better future.
YOU DECIDE if you want to become a Titanic or you will start living the life you were created to live!
You might feel like you need a miracle in your life right now.
YOU DON'T NEED MIRACLES... you're alive and that's the biggest miracle you can ever get, now get to work, because dreams won't become reality without taking action!
You would like to start but you don’t how, where, you don’t have a plan and you’re confused, you want to take action but that feeling of “I DON’T KNOW HOW” makes you feel anxious and nervous.
Related: How Failure Can Be An Integral Part Of Your Success, Even If You've Made Tons Of Mistakes!

How And Where To Start?Any self-made successful person took action... the right action for them... the right action for their own unique situation. There's no one size fits all plan!
But there's a sure path that anyone can (and shall) go through to put up a rock-solid plan to turn around their lives.
This path boils down to having clear answers to those four key questions:Where am I now?Why am I there?Where do I want to be?How to get there?You just need to reflect on those questions and answer them clearly and honestly.
Trust me, who you'll become in the process is as important as the results you want to achieve in your life.
I know what you're feeling and thinking right now because I've been there:You might think that your current job is a limitation or an obstacle to your success. I tell you that it can be your biggest leverage if you know how to make your job work smart for you.You might be afraid of failure because you don't have the right support and guidance. I tell you that support and guidance will be available to you where you're ready and have the right mindset to start taking action.You might think you lack the right knowledge and expertise to put up an action plan and then work on it. I tell you that knowledge is readily available by reading books, attending online courses, joining webinars, or even working with a coach.You might feel you don't have time to take action. Trust me... all you need is a strong enough "big why" and time will find you. Related: What is your "Big Why"?
I know what it means to be depressed, anxious, frustrated, and broke. But, it doesn't have to remain like that!
We all have a family who depends on us and we want to try our best to provide the best they deserve, and not to be seen as a failure by the people we love the most.
I was broke till my mid 30's, and then by following simple, yet powerful, strategies I was able to become financially independent in a few years. If I could do it, anyone can!
My commitment to you is to teach you the "what", "how", "where", and "when" through my articles and content. You don't need to spend money on that... just invest your time in your financial education.Join My Newsletter!

Who is NOT Responsible for Your Financial Well-being?

Who is NOT Responsible for Your Financial Well-being?The best thing about history is that it helps us predict the future. In the last 100 years, there have been several recessions across the globe. The well-documented facts show us that employees were laid off and unemployment shot up to high double digits. Employers who had to let go of their employees never thought they were responsible for the financial well-being of those laid-off employees. To me, no job looks secure.


On the other hand, governments across the world have genuine obligations to improve their economies and provide jobs for their citizens. They have attempted to boost their respective economies with quantitative easing and other forms of easy money so that companies will borrow money for free to invest in their businesses and recruit people. The result of lowering unemployment did take a long time. In most cases, although unemployment went down in percentage, the quality of the jobs created and the respective paychecks were far from the levels before those recessions hit.


The fact of the matter is that you alone are responsible for your financial well-being. I encourage you to start changing your mindset and put yourself in control. I urge you to take advantage of your current employment status and invest in income-producing assets that will work hard for you to generate income. This unearned income is what will look after your well-being in the event you ever have to (or choose to) leave your current job.

There are four baby steps that anyone could take to become in control of their personal finances, improve their credit, adopt a millionaire mindset, and earn passive income from income-producing assets.

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Are The government or Your Employer Responsible for Your Financial Well-being?

Are The government or Your Employer Responsible for Your Financial Well-being?The best thing about history is that it helps us predict the future. In the last 100 years, there have been several recessions across the globe. The well-documented facts show us that employees were laid off and unemployment shot up to high double digits. Employers who had to let go of their employees never thought they were responsible for the financial well-being of those laid-off employees. To me, no job looks secure.


On the other hand, governments across the world have genuine obligations to improve their economies and provide jobs for their citizens. They have attempted to boost their respective economies with quantitative easing and other forms of easy money so that companies will borrow money for free to invest in their businesses and recruit people. The result of lowering unemployment did take a long time. In most cases, although unemployment went down in percentage, the quality of the jobs created and the respective paychecks were far from the levels before those recessions hit.


The fact of the matter is that you alone are responsible for your financial well-being. I encourage you to start changing your mindset and put yourself in control. I urge you to take advantage of your current employment status and invest in income-producing assets that will work hard for you to generate income. This unearned income is what will look after your well-being in the event you ever have to (or choose to) leave your current job.

There are four baby steps that anyone could take to become in control of their personal finances, improve their credit, adopt a millionaire mindset, and earn passive income from income-producing assets.

Discover More!

Are You In Financial Stress? Here Are 3 Money Habits To Win The Game

 

Are You In Financial Stress? Here Are 3 Money Habits To Win The GameDo you often get absent-minded thinking about money problems throughout the day? What about waking up in the middle of the night anxiously making some mental calculations about paying your bills, rent, mortgage, credit card, and other expenses?
This is when you feel you're in a financial mess that's consuming the most out of your mental energy. It makes you feel like a loser and it all goes into vicious circles. But you can fight back and emerge as a winner in the money game!
The first step would be to confront reality and have a clear understanding of what's causing your financial stress. So let’s take a look at common reasons when people think they’re slowly sinking in the ocean of debt and bills.
Causes of Financial StressIf you've been feeling that your financial stress is leading to emotional stress and health complications, you're right. It has been medically proven that financial stress can trigger long-term diseases and emotional stress, which in turn lead to more financial stress.

As with any problem, the first step is to acknowledge it and analyze what's causing it. The obvious answer to your financial stress may be around money, but, check why money is only the symptom of your problem and not the root cause.
The common manifestations and causes of financial stress are:
Expenses are greater than income: You spend more than what you are earning. You’re maxing out your credit, taking personal loans for trivial things, or starting to withdraw from your retirement fund. The real cause here is your spending habit that turns into an addiction that keeps on going on for a long period of time until you can't borrow more money and then you get a big slap on the face.Living paycheck to paycheck: You spend your paycheck and get left with more days at the end of your money until the next paycheck. Somehow you manage to survive, and like a drug addict, your next paycheck refreshes you again and you go into the same cycle every month. You complain that your salary is wiped out paying off your bills and debt obligations. The real cause here again is your spending habit .Debt: The feeling of paying your debt off from a big chunk of your salary makes you feel stuck in the hamster wheel. You feel you're working only to pay back your lender! Most often you won't remember why you've even taken that debt in the first position. This goes back to your spending habit where you've taken bad debt to purchase products and services of no real value and that gave you some instant gratification.Lack of financial plan: You feel you’ve lost control of your finances. You sit there on your floater trying to survive and hoping the wind will take you one day to a safe shoar. Not knowing any better, you might get drowned in the ocean of spending.Quick Fixes Won’t Solve Your Money StressYou might think having more money solves your problem outright. You start to work even harder to get your next promotion and that long-awaited pay raise. You get sucked into "Get Rich Quick Schemes" and you lose more money on the false promises of getting rich.
The reality is, the more money we have the higher our financial stress if we keep our same bad spending habits. It's human nature to have an insatiable thirst for more things that money can buy.
The real enemy here is us... it's our money and spending habits.
The real key to dealing with financial stress is to change your money habits:
Spend smarter,Save some, andInvest in income-producing assets.

Fight Financial Stress With These 3 Money HabitsNow that we've realized we've been standing in our own way to financial success, we need to master the money habits that will help us get rid of financial stress.
1. Spend SmarterWe spend two main types of expenses, essential and discretionary expenses.
While essential expenses are essential for survival, there is little that can be done here. But it will be wise to have a check on our spending on housing and other essential expenses. Check out this related article below that goes more into details on this topic.
Related: How Can Personal Finance Best Be Managed To Build Generational Wealth
When it comes to your discretionary expenses, here is where most of us get trapped. We tend to spend what we have on the things that will get us instant gratification. Even worse, we borrow money (bad debt), using our credit or taking loans, to buy things that will not serve us any good for our retirement. We all enjoy spending on expensive dinners, designer clothes, and flashy cars, but those things have to be paid for from another stream of income - not your salary. Indeed if you’re seriously looking for another income source, you can earn extra income while you keep your day job.
2. Save SomeAs an automatic consequence of spending smarter, you will find yourself left with some more money to save. What to do with this saved money will be covered in the next point below.
By having good spending habits, we tend to lower our bad debt. Work out a plan with a financial coach on how to pay your bad debt, starting with those liabilities that have the highest interest rates. Identify unnecessary expenses that you can reallocate to debt payment. The faster you can pay all your bad debt, the sooner you will switch your financial reality from a financial stress situation to financial comfort.
After paying off your bad debt, you need to go on a mission to save at least 10% of your income. You've already acquired the habit of spending smarter and paying off your bad debt. In this next phase, you need to start re-allocating the sum of money you've using to pay off your bad debt towards your savings.
Believe that you can solve your money problem. Some people have been in worse financial problems than you, and they’re able to get out of their dilemma. Believe that you still have control over your finances and you start bringing hope back into your home.
3. Invest in Income-Producing AssetsNow that you've paid off your bad debt and you've been saving at least 10% of your income, it's time to put this money to work for you.
Here's where many of us get lost again!
There are hundreds and hundreds of investing options, but trust me most we don't (and never) have control over. It's like gambling our money on the optimistic promise of future gains.
It's has been proven, over the centuries, that investing in income-producing assets is where most of the rich and wealthy have either made or preserved their wealth. We are talking here about investing in assets that pay you a steady stream of residual income for as long as you own those assets. Any capital gains come as the cherry on top of the cake.
Related: Which Assets Build Wealth – Stocks, Bonds, or Real Estate?
There are financial coaches or specialists who can help people solve their money problems. You can also talk to a family member or close friend and ask for financial assistance if you believe this is in your best interest.

IT ALL STARTS WITH YOUR MONEY HABITS!

Having more money is not the solution to your financial stress. Changing your money habits is what will help you recover from financial stress.
Is there a bad financial situation that you were able to come out of? How did you do it?

How Failure Can Be An Integral Part Of Your Success, Even If You've Made Tons Of Mistakes!

How Failure Can Be An Integral Part Of Your Success, Even If You've Made Tons Of Mistakes!
Most of us fear failure and mistakes, which is no surprise. Throughout our years at school and university, failing an exam resulted in a feeling of shame and incompetence. Even in most of our lives as employees, failure to deliver on our objectives will eventually lead to a bad performance evaluation. In extreme cases, the door will be wide open for us to leave our job.

Some mature companies accept failure as part of the learning curve of their employees, but those failures need never be experienced more than once, and they should not lead to a major financial loss. In other words, those mature companies are projecting an image of a culture that welcomes failure as part of a learning organization. But when the shit hits the fan, the employee who made a mistake will be looking for a new job in a new company sooner rather than later.


In my professional life as an employee, I used to fear making large mistakes. But in my professional life as an investor, I have made rather large mistakes and realized that failure is an integral part of my success. When I learned how to convert “fear of failure” into “opportunity of failure”, I developed creativity, flexibility, agility, and the ability to explore new ways of achieving my goals.

In fact, the biggest mistakes I have made in my investment life have taught me lessons not only about how to avoid them in the future. The solutions to those mistakes have taught me more important lessons about how my "how-to" can become more rigid and can deliver better results.

When you fail in an important endeavor, you affiliate yourself with some of the most famous people in the world. I am confident you know two famous quotes from Thomas A. Edison, known as America’s greatest inventor. One quote is “I have not failed. I’ve just found ten thousand ways that won’t work”, and the other one goes “Many of life’s failures are people who did not realize how close they were to success when they gave up”. The moral of the story is that you fail only when you give up.


Another impressive story is that of Abraham Lincoln, who served as the sixteenth president of the United States. After facing several failures, such as losing his job, failing in business, having a nervous breakdown, being defeated for speaker of the house, being defeated for nomination in Congress, being defeated for the US Senate, and being defeated for nomination for vice president, he overcame each of them as it was time for a better outcome, and was eventually elected president. He is also famous for saying “Always bear in mind that your own resolution to succeed is more important than any other”. Those great achievers taught us that determination for success will keep us going and trying again and again until we succeed. Who we become in the process becomes as important as success itself.

In summary, I encourage you to start “learning to learn” by learning to unlearn to learn again and again.

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