Sunday, September 30, 2012

Pfi Now Means Public Finance Initiative

The government said today it would support public building projects worth billions of pounds at risk of being stalled by the credit crisis.

"The action will ensure that crucial and valuable public investment will not be disrupted by problems in the financial markets. In total, 13 billion of public investment in procurement will be safeguarded," Chief Secretary to the Treasury Yvette Cooper said in a statement.

The projects are funded by the Private Finance Initiative (PFI) scheme under which private sector funding and expertise are brought in to help give value for money for public works.

"From today the Government will lend to those PFI projects that cannot raise sufficient debt finance on acceptable terms, lending alongside commercial lenders and the European Investment Bank," Cooper added.

"Equity investors will continue to bear the primary risk in these projects and, where available, private sector debt will continue to be provided," she added.

The exact level of government support was not specified, but this is counter to the purpose of keeping these debts off the public balance sheet, which was the basis of PFI.

Up to 2 billion had been expected to be made available during 2009/10, managed by a dedicated team in the Treasury and going to projects that have been unable to raise all the funds they require from banks and private sources.

The package was expected to be financed with unspent funds from government departments, rather than with any new borrowing.

In a separate statement, the government said it was bringing forward by one year almost a billion pounds of spending to improve the country's schools.

"I am today announcing that 919 million pounds of capital spending on schools and children's play areas will be brought forward from 2010/2011 to 2009/10," Schools Secretary Ed Balls said in a statement.

The credit crunch has frozen debt markets and made banks reluctant to lend, especially over long periods, meaning several privately-financed and operated infrastructure projects have stalled.

The government hopes the support measures will boost efforts to pull Britain out of its first recession since the early 1990s.

Britain's economy shrank by 1.5% in the three months to December, the sharpest decline since 1980, and is expected to contract for much of this year.

The construction sector has been hit particularly hard, resulting in thousands of job cuts.

While some infrastructure projects have been able to source all the funding they need, the government feels it has to act now to stem job losses.

The government has already launched a series of measures to try to kick-start bank lending, including an offer to insure losses arising from risky assets and by injecting billions of pounds into the banking system.

It also announced a 20 billion fiscal stimulus plan in November aimed at reducing the severity of the recession and speculation is growing that another stimulus could be on the way in the April budget.

Friday, September 28, 2012

Are Payday Loans Addictive?

While payday loans can act as a savior in immediate financial needs, they can be compulsive too. These are useful as they are easily accessible when one is low on cash in between the paydays. And you can acquire small amounts of money without any paperwork and hassles. Nevertheless, these loans can be obsessive. The part, which is compulsive, is not possession of money but act of acquiring it.

Being compulsive with habit of borrowing is horrible and without preparedness to pay it back, you can be trapped in greater complications and debts. This in turn will persuade you to borrow the money again, fuelling your loan addiction. Compulsions are not easy things to break, they can over power the lifestyle, and you will find yourself creating justifications and excuses for it, no matter devastating it is. You experience buzz or jolt due to such obsession and you end up losing the view of proceeding or coming out of it. Possessing the compulsion of money advances can lead you to stack of trouble. It can attract greater debt, which will trap you in the vicious circle of borrowing.

Lure of immediate cash is enough for propelling individuals straight to different sites offering such an opportunity. Many people assume that by applying payday loans, they are getting good deals, cash for their purchases as compared to use of credit card that charges high interest rates. Like most of Janes and Joes who easily get addicted to any activity, they really are not able to recognize the big stumbling block, waiting for them in near future.

If you are struck in one such situation then you should start by understanding more money that you borrow through payday loan, you are also losing higher finances that are being charged by payday loan companies. One of the best ways for assisting yourself is making a budget and sticking to it. Prepare an efficient financial plan for yourself so that you do not end up taking payday loans for every small monetary disaster that comes your way.

Doing all the above mentioned things would surely help you to understand that you can live in the lieu of the payday loan lender and this is will make you feel better and comprehend that you can manage from your work in between the paychecks too. It is easy to get obsessed to payday loans but it takes a lot to come out of it. For what we think as the best solution for the moment exacerbate existing financial problem too. So you need to very careful while taking the cash day loans.

If you think that you are well equipped for facing penalties posed by overnight cash advances, think again. This hook, reel scheme and cast if reason why the payday loans are considered to be an addiction. Immediate cash is enticing but the inability to pay it back within in the specific time span can invite a lot of trouble for you. So next time you apply for payday loans, ask yourself if you really need it.

Tuesday, September 18, 2012

Financial Forum

Getting advice on financial matters can be a complicated and difficult task. With so much free' advice available online, one can get quite confused as to where to start his search for quality financial advice. A relatively new concept in the world of finance is financial forums. A financial forum is a website that allows users to log into their accounts and start new topics to discuss common problems. To better understand financial forums it is important to understand the basics of an online forum.

A forum is one of the most basic forms of social networking. Registered users can start a new discussion by posting a question (called a topic or discussion thread). Other registered users can then come up with solutions and suggestions to the topic and post' their responses to the topic. The best part of forum architecture is that all posts to a topic are visible to users, and irrespective of the usefulness of a post a person can get an instant overview of the entire process.

Financial forums are based on generic forum architecture, but have the added benefit of offering users tools and useful financial resources. For example, a financial forum can offer tools like mortgage calculators, regular savings calculators, mortgage, savings and credit card comparison tables etc. Apart from tools and comparison tables, a financial forum also has the added advantage of categorising topics. For example, a user looking for solutions to common credit card problems does not need to look through all the posts made on a financial forum. Most financial forums categorize topics based on financial categories, so a financial forum will have topics segregated into various criteria like credit cards, mortgage, bankruptcy etc.

Apart from allowing users to find answers to their problems, a financial forum also acts as a ready reference. Over a period of time, posts are carefully catalogued and stored away for future reference and registered user can easily search through older topics for references. Most financial forums have a search feature that allows users to search for problems by typing in relevant keywords. For example, the keywords bad credit remortgage' will bring all topics and posts that are based on bad credit remortgage issues. In essence, a user might not even have to start a new topic to find a solution to his bad credit remortgage problems.

Apart from acting as information exchange resources, financial forums are also one of the most basic forms of social networking. In addition to allowing users to find solutions to common financial problems, financial forums also bring people from all walks of life together. Although most forums are designed for a global audience, financial forums are designed to be country specific (as tax laws and other finance laws are unique to each country). For example, although Australia and New Zealand are neighbours, a New Zealand based financial forum will only be useful to residents of New Zealand and might not be as relevant to people living in Australia.

Tips for not spamming financial forums

One of the biggest problems with forums in general is that they are targeted by spammers. A spammer is a user that creates an account and then post links and advertisements to other websites. For example, a spammer can target a financial forum to promote his mortgage firm. Although, most forums have a strict no spamming policy and all posts are closely monitored by site administrators, there is a possibility you might be mistaken for a spammer. To avoid any such confusion, make sure you post only meaningful links and also make sure you do not post multiple threads. If your question is not answered the first time around, don't make another post as this can also be mistaken for spamming.

For a New Zealand based financial forum visit

Friday, September 14, 2012

Second Mortgages Or Home Equity Loans

Many people who have bad credit find themselves in situations where they wish they could find a loan with low interest rate and minimal risk. You see, even if you have made credit mistakes in the past that does not mean that you are not capable of reforming in the future, all you need is a chance to do so.

There is good news if you already own a home, because this is possible. Despite bad credit, there are options for second mortgage loans that can be made through using the collateral in your house as leverage.

What Is a Second Mortgage?

A second mortgage loan is a popular choice for many people who are in a situation with bad credit and in need of cash. Known as a secured loan, second mortgages are guaranteed by the collateral in your home and therefore carries a lower interest rate.

There is a catch, however. Basically, the idea here is that if you are unable to repay the loan, the bank or private lender can take your home. The good part is that this ensures that you will repay the loan and negates your bad credit since there is a support system in place for the lender should you default on the loan.

Getting a loan like this one can be a scary proposition because of this caveat, however if you consider the following points, you will be able to safely acquire the bad credit second mortgage that you need without the worry.

There Is a Difference between a Second Mortgage and Home Equity Lines of Credit There are a lot of terms in the lending world, such that you may become confused, so it is important to have your facts straight. Though the term second mortgage is interchangeable with home equity loan, a home equity line of credit is a different concept entirely and you need to be careful when discussing this option with a lender.

Basically, a home equity lines of credit are offered at variable rates of interest rather than a fixed rate. This is very dangerous variable interest rates can skyrocket on you. Second mortgages are offered with a fixed rate of interest and that is the option that you want. Second, getting lines of credit allow you to periodically take out money (up to a specific amount or credit) similar to a credit card. A second mortgage, however, is given out in one, large lump sum.

Specific Challenges to Consider

When researching second mortgages, how much money you can take will largely depend on two factors: the current market value of your home and how much you owe on your current mortgage. You can never borrow more than your home's market value between the two loans, though many lenders offer variable LTV or loan-to-value options that start at 80% of your home's market value.

Another issue, obviously will be your credit score. Because the value of your home will likely allow you to acquire the loan, the interest rate will likely still be higher than those offered to people with good credit scores. That is why it is important to compare several lenders' packages to get the best deal.

It Pays to Shop Around

A good way to go about finding the second mortgage you need at a price you can afford is to look through several online lenders and get quotes from 2-3 of them. You can begin your search through entering the terms bad credit second mortgage loans or lenders into a basic internet search and then go from there.

Monday, September 10, 2012

Why an Accelerated Mortgage Reduction Plan Does Not Require an Increase in Monthly Cash Flow

In any investment strategy the ultimate goal is to increase your net worth.

In order to understand the investment strategy that uses an accelerated mortgage reduction plan you must first understand some basic concepts about debt.

For every dollar you pay in principal toward a loan say at 8% is like investing that dollar at 10 to 14% depending on your tax bracket. Of course investing the dollar carries more risk than paying down the principal on a mortgage that has no tax consequences.

Taking this concept one step further with a credit card that is charging 22% per year in interest one would have to invest the same amount owed at 30% because one would have to pay taxes on the investment. These results would be to just break even on an asset vs liabilities balance sheet. The risk of an investment earning 30% would be extremely high while paying down the principal on a loan would carry no risk.

Next you need to understand the significance of paying a loan payment and knowing how paying the loan at a specific time of the month will effectively start to save interest on the loan paid. Knowing when is the optimum time of the month to pay a loan payment is crucial on how that will affect the interest paid on the loan. Paying close attention to payment timing will go along way towards allowing one to pay the same amount per month but actually provide more 'bang for your buck' and pay off the loan quicker. Having the knowledge of the best time to pay a loan payment and repeating this payment at the same time of the month begins to accelerate the reduction even though it seems like an insignificant amount. The dynamics of the paying off a loan changes with different loan sizes, payment due dates, interest paid and when your income is paid and how many times per month.

Having a budget and continually viewing your monthly expenses you can see what variations can do to the acceleration of the debt pay off time. By making changes in your spending habits you can observe some drastic changes to your pay off time. This instant feedback motivates the participant keeping the participants on track. Making early partial payments but making a second payment later in the month will equal the total amount due for the month and equal the same cash flow but will significantly affect the total interest paid that month.

The knowledge required to make these kinds of decisions could be more work than most people have time for. Just because it might seem to be logical to pay off a loan with a higher interest rate it might be more important to pay down the loan with a smaller interest rate because the total amount owed times the smaller interest equals a larger amount of interest paid than the smaller loan with the higher interest amount. A bimonthly payment plan has some significant results even though the total payment may be exactly the same because part of the payment is paid early in the month. It is important to understand that if you are paid biweekly or bimonthly than you should change the way you pay bills.

Most acceleration reduction programs have built in algorithms that make decisions on how your bills are paid. To decide on which program works best for you will require looking at the bullet points of each program. Some programs are free but have no support and make no guarantees as to results, some programs have a small initial setup fee but require a monthly fee, and then some programs require a large fee up front but will promise support for the entire loan period. The best way to decide is to do a Google search on line for the phrase 'accelerated mortgage reduction' and then decide which program meets your needs the best.

To further validate the importance of this investment strategy one only has to see that at the end of the accelerated mortgage reduction plan you will have increased your net worth by the value of the mortgage you started with. If you started with a 0,000 mortgage you will have increased your net worth by 0,000 in lets say a period of 12 years. To duplicate this increase in net worth outside of this investment strategy one would have to save 00 per month above your monthly cash flow for the same 12 years. The return needed between 5 and 8% would depend on your particular tax bracket. For most families invesing an extra 00 per month would be a daunting task and requiring more risk than paying down the mortgage through an accelerated mortgage reduction plan.

Although the results will vary for any acceleratd mortgage reduction plan and some programs are better than others the total effect will be pretty much the same. So increasing your net worth and using an accelerated mortgage reduction plan is a financial plan that can open future financial doors and improve your quality of life. Of course by paying off your debt early will also allow you to take the original mortgage payment and put it into a conservative savings program which will significantly increase your net worth even further.

Tuesday, September 4, 2012

Plan Your Monthly Personal Budget Using Excel Spreadsheet

Plan your monthly personal or family budget without help from any tools should be a difficult task for you. The easiest way to plan your budget is to use help from Microsoft Excel. Use the following steps to create your own personal budget in excel spreadsheet :

1. Write down your daily expenses in one month period
Create four columns and label them with name "Date", "Description", "Category", and "Amount". Start filling the columns with your daily expenses. You can write any description for your expenses. Categorize it based on your defined category, and fill the amount of that expense.

2. Summarize your expenses
Create new columns and summarize your daily expenses into category where you have to use excel function to sum your daily expenses based on their category. Name the new columns with name "Category" and "Expenses". You can create it within the same spreadsheet or in separate spreadsheet.

3. Add budget column
Add a new column next to Amount column in step 2, and label it with name "Budget". Fill your "Budget" column with the same amount with "Expenses" column.

4. Subtract your monthly income with budget and expenses
Sum the total amount of your "Expenses" and "Budget" columns. Create new rows below "Budget" column, and label it "Income" and "Saving". Input your monthly income, and then in "Saving" cell subtract Income with total amount from "Budget" column. If the result is positive, you can use your expenses as your budget reference. If it is negative, you need to adjust your budget where you think you can save the expenses of that category, and try to commit on this budget on the following month.

You can follow those steps above to simplify your monthly personal budgets, or you can also find some personal budgets created in excel available in internet to ease your plan.