Finance Guidance

Many people get stuck in bad debt because they choose to ignore the signs of the problem. Indeed, there are always warning signs that point to the imminent disaster – bankruptcy. What are the major red flags of financial danger and how can you spot them? Here are some tips:

Using your credit cards for everyday purchases. Do you find yourself charging even the smallest purchases to your credit card? Do you often use your card to pay for unexpected buys? Do you need to use your credit card to buy or pay for necessities such as food, electricity, gas, etc? If yes, then obviously something is not right with your budgeting and you could be in danger of credit card debt build-up.

Making only the minimum payment. Do you tend to pay only the minimum required due payment of your credit card each month and choose to leave the rest of your balance? If you do, you are adding more load to your obligations. Remember that carrying a balance also means incurring interest rate charges which can range from 15% to as much as 20% of the original amount of your debt. (continue reading…)

Creditors have more involvement in a Creditors Voluntary Liquidation (CVL) than they do in a Members Voluntary Liquidation (MVL). The liquidation process can have some disadvantages for creditors, such as the fact that in some cases a creditor may not be able to take action against a company without the permission of a court once a company is in liquidation.

A Creditors Voluntary liquidation may be beneficial to creditors due to the fact that regular meetings will be held, in which creditors can, along with an appointed liquidator, ask questions regarding the company’s affairs. Creditors can also disagree with the choice of liquidator and can opt to choose an alternative liquidator if they wish.

With the right liquidator, creditors will receive the amounts that they are owed, allowing the company to be brought to an end. The liquidation process will not be complete until the company’s assets have been valued and sold and the creditors have been paid. Creditors can petition to the court in order to force the company to be liquidated compulsorily, but this is a costly procedure and some creditors may wish to opt for alternatives. (continue reading…)

A CD (Certificate of Deposit) is available at very low interest rates at the present. The amount received will not even keep up with the low rates of inflation the government throws at us. CD rates vary according to how long the money will be tied up. If an early withdrawal is made, a month’s worth of interest can be lost. Since not much interest is being delivered, this is a large loss. Sometimes more than one CD should be purchased in case of a situation where one must be redeemed.

A CD is a time deposit. If you are promising the bank to let them have the money, for example, for a year, then they assume it is not going to be taken out during that time span. The CD is guaranteed against loss by the FDIC (Federal Deposit Insurance Corporation), a government agency, created way back during the Great Depression of the 1930’s.

The highest CD rates one could expect is about 2.5% and this is for having money tied up for 5 years, hardly conducive to getting rich and retiring early. CD rates for 6 months will return around 1%. If money has to be “parked” for a short time, a CD is a good financial instrument. For those with little money to risk, a CD can also be a good investment. (continue reading…)