Five Secrets to Coping With the Global Financial Crisis

I want to share some thoughts on how we can all survive and in fact thrive during the current global financial crisis or any other financial crisis that may come your way.

First Secret - Know how much you are earning and spending each month

Write down everything you earn, including wages, bonuses, interest and dividend income and rental income if you have an investment property, so that you know precisely how much is coming into your bank account each month.Like a company, this is your total revenue and if you are to survive and thrive you need to be able to live within this income. If not, consider enhancing your income with a home business - there are lots of ways you can earn additional income from home.

Now write down everything you spend during the course of one pay period, be that a week, fortnight or month. Best to do this over a month, so that you pick up less regular expenses. Expenses that you pay quarterly, such as electricity and gas should be divided by 3, and added to your other monthly expenses. Don't forget the insurance on your car, home and contents and on your life, if you have these items covered. You can't take control until you know where you are spending your money.

Second Secret - Set yourself a financial goal

Set yourself at least one financial goal. Big or small, having clear goals will help you decide what's important and give you an incentive. For example, you want to ensure that each month you will spend less than the total household salaries, so that any other income is seen as a buffer.

Third Secret - Develop a budget

Create your budget.

Hmm, you say, that is just too hard. Well, I say, it is critical if you want to take control of your finances and become financially free. How much do you need for your essential living expenses? How much can you set aside as savings and to pay debts? Do you want to invest for the longer term? Do you have a special project you are saving for? Can you allow yourself some 'play' money for longer term investments? Write this all down.

Fourth Secret - Create an Emergency Fund

Set aside a modest 'emergency' fund to pay for any unforeseen expenses. this should be about 3 months salary. If you can't do this immediately, set up a separate savings account to build up your emergency fund over the next 6 months or so. Don't touch this money for any reason. You will sleep better in tough times knowing you have this buffer fund available.

Fifth Secret - Reality Check

Take a reality check. Can you follow the budget without struggling? Is there an area where you can cut back, or save money by for example, buying in bulk?

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Never Let Money Be an Issue - Financial Crisis and Your Marriage

No matter how financially ready or thrifty you are, it's impossible not to be affected by the on going financial crisis. Nobody is spared from the tremendous outcome of the financial crisis. You never thought that even the most stable businesses could go bankrupt and lay out some employees. If a member of your family is one of the unfortunate employees who got laid off from their job; then you and your family are heading for a monetary crunch. The domino effect of the financial crisis can be quite devastating. It can totally change your life or even break your marriage apart.

On the other hand, financial crisis can be a stepping stone for you and your marriage's growth and maturity. To be able to survive economic struggle your family should work as a team. Being a team means working together in one direction towards a goal. That goal should be specific and attainable. An example of a specific and attainable goal is to save three hundred dollars in a month for emergency money. In order to attain that goal, you should have realistic plans. A realistic plan is cutting back on gas expenses by car pooling or buying groceries twice a month.

One important matter in order to survive financial crisis is to prioritize. Prioritizing will aid you from over spending your money in unnecessary stuff. To be able to do this, all members of your family should discus and make a "needs and wants list". It is a two column list made up of your needs and wants. The "needs" column should be the things you can't do without like food and toiletries. The "wants" column should be the stuff you can do without like perfume or Louise Vuitton bags. Making this list is all about compromising. Compromising is an essential factor in surviving a financial crisis.

Other vital concerns in surviving financial crisis is to ask for manageable payments of your monetary obligations in the banks or credit card companies. Requesting for a moratorium of your loans will protect you from adverse consequences of loan foreclosures. Another way to survive financial crisis is rising above the problem. Avoid blaming each other or yourself. It's difficult to work together if both of you blame each other for a situation you never wanted to be in. Keep in mind that this is nobody's fault. Believe me, pointing a finger at each other will get you nowhere and will only aggravate your situation.

It is imperative that you not only conserve in monetary funds but also your energy. Brainstorming for the right solution can be exhausting therefore focus your mental and physical energy on practical matters. Deal with the current problem constructively. Losing money doesn't mean you're a lesser person. Learn from your mistakes and focus on self improvement can make you decide better for solutions. Your economic struggle is already a major problem to tackle. The least you need is another health or emotional issue to take care of. For that reason taking care of yourself and each other is of the essence.

Your survival- in all aspect depends on how you view and interpret your predicament. If you always view your adversities as an opportunity for growth; then most likely you and your partner will be able to survive the problem and save your marriage all at the same time.

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Reasons For the Financial Crisis

Seems to me that people talk a lot about things but they rarely investigate reasons, causes, and solutions. For example, bailing out the banks neither addresses the reason for the crisis nor is it a solution to the original causes that created the crisis, but recently it's all people talk about. Thus time is wasted on the topic and it comes to be perceived, at least by some, as a 'solution'. It's far more acceptable to talk about events and then hint at some usually one line liberal sounding solution than it is to engage in an actual substantive analysis. In fact, I would argue that in recent times it has become somewhat unacceptable to even talk about certain issues, but maybe that's another article. In this article I would like to investigate some of the reasons for the financial crisis. Without getting political (yet), one can formulate a 'by definition' cause:

We borrow more than we can responsibly pay back.

This is a rather obvious cause of the financial crisis we are in. We do it both individually and as a nation. Our government sets a bad example by spending more each year than it receives. Our money then flows overseas to foreign nations in the form of interest on loans. US consumers borrow more than they can pay back, and banks let them do it.

This is simple enough and hard to disagree with. Now there are probably several reasons why we borrow more than we can responsibly pay back, but let's just consider one good one.

We produce less than we consume.

This is rather strait forward. We don't make things anymore. It has been said that America is a paper economy. Some people seem to be able to ignore basic laws of physics. You can't go along producing nothing and consuming everything for long until things start to get out of whack. But that's exactly what America has been doing. We have been running a trade deficit for years and it only seems to get worse not better. As a result nations like China have all our money. We send it to them in the form of the trade deficit. Producing less than we consume explains why we borrow more than we can responsibly pay back. Now why do we produce less than we consume?

It's not profitable to hire people to manufacture things.

Again that's sort of by definition true and I have so far avoided getting political. We don't manufacture things in America because it's not profitable to do so. I think there are many ingenious Americans that could probably invent some really good manufacturing processes. In fact they did, but unfortunately the processes were exported overseas and other countries get to enjoy the business advantages of using the technologies. Anyway since it's not profitable to hire people to manufacture things we produce less than we consume. So why is it not profitable to hire people to make things in America?

Our government imposes excessive taxes and regulations on businesses.

Simply put our government makes it difficult or usually foolish to hire workers to make things. It's better to do it overseas. Ironically the government usually does this to 'protect' workers, but the media never considers the result of the 'protection' is that the jobs no longer exist. Our government imposing excessive taxes and regulations explains why it's not profitable to hire people to manufacture things.Continuing back up the chain we arrive at the final result: Financial Crisis.

I don't think most people look at things like this so they don't understand the reasons for our current situation, and they have no idea what the solution is. When it comes to our current crises they just 'react' they get upset about giving money to bankers, or maybe they get scared enough that they are willing to give money to the bankers. Either way most people are simply reactive in nature and that solves nothing. We need as a culture to reward substantive dialogue. Instead, I believe substantive thinking has come unfortunately to be often punished in our culture. Pure symbolism and social talk is a waste of time but it's the level most people find themselves on most of the time, deviating from it is breaking the collective rules of behavior we seem to have either decided on or arrived at.

Now I am a person that likes to generalize get abstract a bit. I have kept it simple to this point. But I want to explain the financial crisis from the viewpoint of a larger theory. Sort of like relativity compared to Newtonian Mechanics. My big generalization for what is going on is called 'socialism'. Everyone acts like they know what it means but it would be foolish to assume the average voter could give you a good definition of it. The average voter understands words like "change" the democratic slogan, but even then they misapply the principle because the democrats don't represent change but just more of the same thing the republicans gave us: socialism. But before I get distracted again lets define socialism:

Socialism is a form of collectivism where the government controls what would otherwise be private property ostensibly for the good of society and usually for the purpose of promoting equality.

That's my definition anyway you can check the dictionary to see if I'm close.

I am going to present a single argument against socialism. I have many but I have one that suffices and is really simple. I call it the 'empirical' argument. Empirical because it is based on a single undeniable universal observation:

All nations that went the socialist route and to the extent they did suffer financial crisis.

There are also other observations. For example, inequality is not eliminated in socialist systems but always dramatically increased. The reason, of course, is when you're in financial crisis every penny really counts and for the have-nots socialism is a real tough situation. I have traveled a few socialist societies. In Laos, for example, the hotel clerks at a relatively nice hotel make about $45 a month. I think there is a bit of arrogance almost bordering on racism in America when we assume we can go the same socialist route without the same thing happening to us. We can't.

Most voters don't recognize America as socialist. They don't want to admit we are a socialist nation and members of the left usually say something like: 'The best theory is a mix of capitalism and socialism.' When you consider that the endpoint is less than $45 a month I don't think anyone wants to experience pure socialism. Even the Lao people enjoy some free market reforms or they wouldn't make nearly such a high wage.

Imagine a continuum where on one side you have freedom and on the other pure socialism. When one considers the sheer magnitude of US government spending we are a good way towards socialism in the continuum. I would argue regulations also have to be factored in, and due to our relative prosperity the left has managed to impose more regulations on business than occurs in many more purely socialist societies. In fact we may have more burdensome regulations than has ever occurred in any society for all history. In a way it's quite an astounding liberal achievement. But when you factor in regulations and place us in the continuum we are nowhere near the freedom side and getting closer and closer to the socialist side. So following the empirical argument we should be suffering and we are. I suppose you could call it experimental verification the hard way.

Article Source: http://EzineArticles.com/?expert=Robert_Badaracco

Robert Badaracco - EzineArticles Expert Author

How to Save Money Using the Balance Transfer Credit Card

Credit cards are now essential for many people when it comes to paying bills, purchasing items, shopping, and the like. Using lines of credit is indeed very convenient rather than making cash payments. You just have to swipe them instantly and you are done.

There are several advantages to using cards instead of cash. One example is you have easy access to services and goods because visa and MasterCard are accepted widely and even internationally. In addition, using credit cards is an effective and safe way to keep track of your finances.

However, having and using credit is not that easy. You have to know a lot of methods when using your plastic. One specific method would be the credit card balance transfer. This allows the a cardholder to transfer his current balance to another card. There are many companies that offer low APR credit card applications to encourage clients to sign up for them.

Most credit card companies offer balance transfer credit card deals that will help you save large amount of money in interest payments. Searching on the web is the easiest and most convenient way to look for reputable banks that offer enticing choices you can choose from.

You should read terms carefully and make sure you would be able to save more than with your previous one. Some card companies even offer APR balance transfers with 0% interest. However, their annual fees cost too much. So you must be careful and be practical when choosing the right company. You should also make sure that your balance transfer does not go beyond the limit of your new credit card.

Article Source: http://EzineArticles.com/?expert=Christien_Stogner

7 Best Strategies During the Financial Crisis

It's easy to lose focus and panic during a financial crisis. There are brighter times ahead so get your head out of the sand and start right away. Here are 7 strategies for you to review and keep in your back pocket so that you can stay on track to protect and build your assets back up:

1. Make a budget. Budget is a dirty word to almost everyone. So let me put it this way- watch your cash flow. Track what goes on and what goes out. Get on a money diet. There are many free and lost cost tools to help your track your finances like Mint, Wesabe, and Quicken. Find one you like and use it. You'll be surprise too at how easy it is to pay bills online, too.

2. Get out of debt. Easier said than done, right? Start with consolidating all of your cards to a low or no interest one and then start paying off that one. You will be paying down more of the principal than the interest which helps it go down faster. Meanwhile tear up the ones you own until you get the debt under control.

3. Make cash work for you. Get your cash out of the coffee can, or from under the mattress and invest it. That's right, invest it. If you are nervous that we are headed for a depression, then invest in something that will guarantee your principal back like a bank account or certificate of deposit. If you don't, those dollars under the mattress are a guaranteed loss. They are guaranteed to buy less and less goods and services by the amount of inflation we have each year. And you don't want that.

4. Pay off higher interest debt with low interest funds. Cash is king right now. If your savings is 3% and your mortgage is 8%, then it's obvious to start using your savings to pay down the mortgage. Don't do this until you have enough cash in the bank for emergencies like fixing the roof, car repairs, etc. Be on the extra safe side and have enough cash to support you for 6 months in case you lose your job.

5. Keep contributing to tax deferred plans. Don't stop believing, and don't stop saving for retirement. Believe me that one day you will want to stop working and when that day comes you are going to need the funds to support yourself. Tax-deferred funds in a pension, 401K, 403b, etc. are the fastest way to accumulate money. Be brave and keep contributing the maximum. You will be glad you did years from now.

6. Have an investment strategy and stick to it. Many of you who did not have a strategy to look at in this crisis are the ones that panicked and sold everything and now wonder if they did the right thing. The federal government is spending like crazy and that means inflation is on the horizon. That means you need to be invested in equities to keep up with taxes and inflation. Buy and hold is my favorite all time strategy. It is easy, boring, and was thought up by Pulitzer Prize winners in economics and favored by some of the (still) wealthiest people in the world.

7. Don't abandon diversification. Just because one sector is doing so well that you want to bet the whole farm on it is chasing performance. Stay disciplined with a diversified strategy. Cash for emergencies, equity investments, fixed income investments, and real estate should help you stay ahead of the game. Avoid the temptation to chase after high yield high risk investments to make up for losses in the past.

By following the 7 strategies above you can rebuild your portfolio and protect it from taxes and inflation. In tight times like this, many scams will be floating around. If you focus on your personal financial strategy to build wealth, you will be set for brighter times ahead.

Article Source: http://EzineArticles.com/?expert=Fern_Alix_LaRocca

Personal Financial Crisis Solution

If you're currently going through a personal financial crisis, most likely you are feeling symptoms of stress and depression. These are very typical conditions associated with experiencing the traumatic experience of overwhelming debt. Being under this much stress can effect your judgment and you may be tempted to jump to a seemingly good option that can end your financial troubles.

There are a number of ways to approach and find a solution to your personal financial crisis. First, you must take a good inventory of the source of your financial troubles. Who do you owe money to and how much? This is important because if the source of your debts is consumer debt, then personal bankruptcy maybe an option. However if your debts are tax bills, gambling debts, student loans or money you owe due to law suits, you may be able to use the services of a debt consolidation firm.

In the case of tax bills, it is often better to consult with a tax attorney as they are much better at dealing with the IRS and may be able to negotiate a better repayment plan.

Americans have gotten themselves in a lot of debt in the last decade, starting with the housing bubble that left many with a lot of mortgage debt and very little sustainable value. If the source of your debts is consumer credit cards, personal loans or mortgages, you could take one of two routes, one is to restructure your debts with debt consolidation or chapter 13 bankruptcy.

Many people see filing bankruptcy as a very negative thing, but it is a legal right afforded to all American citizens under federal law that can save you from debt collectors and further debt. Your personal financial crisis can start to ease up as soon as you take the first step by consulting with bankruptcy attorney.

Want to end your financial struggles once and for all? Start feeling better immediately, get a 100% Free Bankruptcy Evaluation. You have no obligation to file, learn the facts about your case and find out which bankruptcy chapter can help you end your personal financial crisis once and for all.

Article Source: http://EzineArticles.com/?expert=Chass_Perez

The 2008-2009 Financial Crisis – Causes and Effects

The 2008 financial crisis is affecting millions of Americans and is one of the hottest topics in the Presidential campaigns. In the last few months we have seen several major financial institutions be absorbed by other financial institutions, receive government bailouts, or outright crash.

So what caused the financial crisis of 2008? This is actually the perfect storm which has been brewing for years now and finally reached its breaking point. Let’s look at it step by step.

Market instability

The recent market instability was caused by many factors, chief among them a dramatic change in the ability to create new lines of credit, which dried up the flow of money and slowed new economic growth and the buying and selling of assets. This hurt individuals, businesses, and financial institutions hard, and many financial institutions were left holding mortgage backed assets that had dropped precipitously in value and weren’t bringing in the amount of money needed to pay for the loans. This dried up their reserve cash and restricted their credit and ability to make new loans.

There were other factors as well, including the cheap credit which made it too easy for people to buy houses or make other investments based on pure speculation. Cheap credit created more money in the system and people wanted to spend that money. Unfortunately, people wanted to buy the same thing, which increased demand and caused inflation. Private equity firms leveraged billions of dollars of debt to purchase companies and created hundreds of billions of dollars in wealth by simply shuffling paper, but not creating anything of value. In more recent months speculation on oil prices and higher unemployment further increased inflation.

How did it get so bad?

Greed. The American economy is built on credit. Credit is a great tool when used wisely. For instance, credit can be used to start or expand a business, which can create jobs. It can also be used to purchase large ticket items such as houses or cars. Again, more jobs are created and people’s needs are satisfied. But in the last decade, credit went unchecked in our country, and it got out of control.

Mortgage brokers, acting only as middle men, determined who got loans, then passed on the responsibility for those loans on to others in the form of mortgage backed assets (after taking a fee for themselves originating the loan). Exotic and risky mortgages became commonplace and the brokers who approved these loans absolved themselves of responsibility by packaging these bad mortgages with other mortgages and reselling them as “investments.”

Thousands of people took out loans larger than they could afford in the hopes that they could either flip the house for profit or refinance later at a lower rate and with more equity in their home – which they would then leverage to purchase another “investment” house.

A lot of people got rich quickly and people wanted more. Before long, all you needed to buy a house was a pulse and your word that you could afford the mortgage. Brokers had no reason not to sell you a home. They made a cut on the sale, then packaged the mortgage with a group of other mortgages and erased all personal responsibility of the loan. But many of these mortgage backed assets were ticking time bombs. And they just went off.

The housing market declined

The housing slump set off a chain reaction in our economy. Individuals and investors could no longer flip their homes for a quick profit, adjustable rates mortgages adjusted skyward and mortgages no longer became affordable for many homeowners, and thousands of mortgages defaulted, leaving investors and financial institutions holding the bag.

This caused massive losses in mortgage backed securities and many banks and investment firms began bleeding money. This also caused a glut of homes on the market which depressed housing prices and slowed the growth of new home building, putting thousands of home builders and laborers out of business. Depressed housing prices caused further complications as it made many homes worth much less than the mortgage value and some owners chose to simply walk away instead of pay their mortgage.

The credit well dried up

These massive losses caused many banks to tighten their lending requirements, but it was already too late for many of them… the damage had already been done. Several banks and financial institutions merged with other institutions or were simply bought out. Others were lucky enough to receive a government bailout and are still functioning. The worst of the lot or the unlucky ones crashed.

The Economic Bailout is designed to increase the flow of credit

Many financial institutions that are saddled with risky mortgage backed securities can no longer afford to extend new credit. Unfortunately, making loans is how banks stay in business. If their current loans are not bringing in a positive cash flow and they cannot loan new money to individuals and businesses, that financial institution is not long for this world – as we have recently seen with the fall of Washington Mutual and other financial institutions.

The idea behind the economic bailout is to buy these risky mortgage backed securities from financial institutions, giving these banks the opportunity to lend more money to individuals and businesses, hopefully spurring on the economy.

What? Credit got us into this mess! Why give more?!?

Ironic isn’t it? Yes, it is true that credit got us into this mess, but it is also true that our economy is incredibly unstable right now, and being that it is built on credit, it needs an influx of cash or it could come crashing down. This is something no one wants to see as it would ripple through our economy and into the world markets in a matter of hours, potentially causing a worldwide meltdown.

As I previously mentioned, credit in and of itself is not a bad thing. Credit promotes growth and jobs. Poor use of credit, however, can be catastrophic, which is what we are on the verge of seeing now. So long as the bailout comes with changes to lending regulations and more oversight of the industry, along with other safeguards to protect taxpayer dollars and prevent thieves from not only getting of the hook, but profiting again, there is potential to stabilize the market, which is what everyone wants. Whether or not it works is to be seen, but as it has already been voted on and passed, we should all hope it does.

by Patrick on September 29, 2008

5 errors to avoid in a financial crisis

But sometimes what you don't do can be just as critical, says Harvard Law School professor Elizabeth Warren, co-author of "All Your Worth: The Ultimate Lifetime Money Plan."

Here are some of her "don'ts" to keep the situation from getting worse as you right yourself financially:

1. Don't borrow more money. Sounds like a no-brainer, right? But in a money crisis, people tend to do the opposite.
"Some people engage in a shell game with themselves," says Warren.

"They pay more down to creditors than they really can afford, leaving themselves with no cash.

" Then they charge current expenses. "They're caught on a treadmill," she says. If you've hit a financial crisis, stop borrowing.

2. Don't cash out your retirement. "There's a reason that money is protected from your creditors," says Warren.

"It's there to protect you when you will not be able to provide for yourself."
No matter what you've signed, you shouldn't feel any obligation to use it for debts.

"When the creditors made their bargains with you, they never expected to be able to reach your retirement," says Warren. "Don't give it up voluntarily."
3. Don't take out a home equity loan or second mortgage. "It is so tempting," she says.

Here's why it's a bad idea: If you're having trouble meeting the bills, unsecured creditors (such as credit card companies) can't take your home.

But if you borrow against it, the new lender can. And if you later decide to file for bankruptcy, the home is usually protected. Unless you've used it as collateral.
4. Don't file for bankruptcy until the crisis is over. "Filing too soon, that is before the crisis is over and the debt hemorrhage has stopped, can leave the person in worse shape," says Warren.

"Because the problem continues, the debts mount up and now bankruptcy is not available."
For instance, if you got into the situation because you lost your job, wait until you are securely in a new job and have some assurances of stability before you file.

If medical bills are the problem, see if you can wait until the crisis is over and you know you won't be adding new bills to the pile. And if it's a divorce, wait until the papers are signed and you have all your legal bills and know more about your new circumstances.

"Bankruptcy shouldn't be based on the debts you've built up," says Warren. "Bankruptcy should be a strategy to emerge. It isn't about dealing with an immediate problem. It's about making a better future."
5. Don't panic. "You have options," says Warren. But it's really difficult to plan when all you can see are the creditors you have and the dollars you don't.
"People feel very alone when something goes wrong, and they often feel they are the only ones facing a financial crisis," she says. "And they aren't.
"If you tried your best and ended up in a hole, then don't beat yourself up," says Warren.

"And don't assume you're the only one who couldn't figure out how to win 100 per cent of the time in the great financial game. This is temporary. You'll come back."

6 Steps to Reduce Your Debt

Dave Ramsey, a financial author has taught the debt reduction method known as debt-snowball method. It is a form of debt management that usually applied for revolving credits.Here are the steps on how to reduce your debt by using debt-snowball method:

1. You have to list all debts according to the smallest balance to the largest balance. However, if two debts are very close in amount owed, the debt with a higher interest rate would come first. A, B, C, D list for example.

2. Pay the minimum payment on every debt.

3. Find out how extra money can be paid for the smallest amount debt (A).

4. Pay the minimum payment on every debt plus the extra money for the smallest amount debt (A) until it is paid off.

5. Then, add the amount of money used to settle the debt A (minimum + extra) for the next debt in order i.e. the second smallest debt (B) until it is paid off.

6. Repeat these process until all debts has been paid in full.

That’s all.

AKPK expects higher debt problem cases

Kuala Lumpur: Credit Counselling and Debt Management Agency (AKPK), an agency set up by Bank Negara, expects a surge in the number of financially-distressed individuals seeking counselling and debt management services this year.

Chief Executive Officer Mohamed Akwal Sultan said more people might not be able to meet their financial commitments in view of the current economic downturn.

There could be more lay-offs and shorter working hours, rendering people in a tight spot for money.

"Last year, the number of counselling services increased to 41,447 from 25,320 in 2007," he told Bernama.

"AKPK also handled 11,958 cases involving debt management programmes in 2008, an increase from 7,614 cases in 2007," Mohamed Akwal said, adding that he expected more cases on credit cards and housing loans.

The Association of Banks in Malaysia (ABM) recently lowered interest rates for credit cards by between 0.5 percent and 1.5 percent for Tier-1, Tier-11 and Tier-111 credit cardholders.

Late payment fees will be slashed to a minimum of RM5 and a maximum of RM75 effective March 31.

However, many parties viewed the interest rate cut as not good enough.

Mohamed Akwal said the reduction would only benefit the 40 percent who currently elect to leverage on the credit made available under the credit cards.

It may also encourage this group to make more regular minimum payments to move from Tier-III to Tier-I to enjoy the lower interest rate.

He said credit cards should be used as an electronic means of payment mechanism and not a source of long-term credit.

Interest rates for credit cards will normally be higher than other secured loans as the risk is higher.

However, interest rates on credit cards in Malaysia are still one of the world's lowest.

"Though the non-performing loans in Malaysia are not as bad as in the United States, it is crucial for the people to live within their means and only buy things they can afford," he said.

AKPK's counselling services are available to all individuals who need help to manage their personal debts with financial service providers regulated by Bank Negara.

However, there is a qualifying criteria for AKPK's assistance, he said.

An individual has to have an income after meeting his or her expenses, total debt does not exceed RM2 million, not under advanced litigation process and is not a bankrupt.

For financially-distressed individuals, who met the qualifying criteria, AKPK will offer a debt management programme (DMP) to restructure their loans or extend repayment period and flexibility in loan repayment amount to suite their cash flow.

"As long as the DMP applicant abides by the terms and conditions, banks will not take legal action," he said.

According to the profile of individuals who have enrolled into AKPK's DMP, Mohamed Akwal said it was the Malaysian men who were the most debt-ridden.

"In a household, it is usually the man who is the main breadwinner and manages the household. As such, they are the ones who normally take loans," he said.

Mohamed Akwal said AKPK's counselling and DMP are available at all its eight branches in Penang, Perak, Melaka, Johor, Pahang, Terengganu, Sabah and Sarawak.

Two new branches in Kota Baharu and Alor Setar will be opened this year, he added.

3 Important Tips to Get Out of Debt

In this day and age, it only takes a few financial missteps and many consumers can find themselves in trouble. The one factor that exacerbates this is debt, or, to be more precise, overwhelming debt.

For some consumers, getting out of debt simply means tightening the household budget and being more stringent on new purchases. For others, the challenge of getting out of debt can be more daunting. In either case, the best self-help plan for relieving debt is planning and discipline.

Here are 3 important tips to be practiced for getting out of debt.

• #1 : Stop increasing your debt.

If you have any credit cards that are maxed out, cut them in half. If you have more than one remaining credit card, cut them up. When you finish, you should have no more than one credit card. Also cut up any “convenience” cards, such as gas cards, department store cards, etc. You will use your one credit card ONLY to buy “must haves” (see below) until you can get your spending fully under control.

• #2 : Record your spending.

The idea of writing down what you spend is a concept most people find annoying at best and useless at worst. However, this is actually your key to getting out of debt. You’re in debt because you spent money you didn’t have. If you’re like many people, your debt didn’t come from one single huge purchase; it was trickles of spending amassed over time. Avoiding more debt starts with knowing what you are spending your money on. Each day for one month (at least), write down every penny you spend, no matter how small.

• #3 : Categorize your spending.

Categorize your monthly expenses into logical groups of “Must have,” “Should have,” and “Like to have.” “Must haves” are things that will cause harm if you don’t buy them, such as food, rent, medicine, pet food, etc. “Should haves” are things that you need, but can do without for a little while, e.g., new clothes for work, gym membership, etc. “Like to haves” are things that you don’t need, but enhance your life, e.g., magazine subscriptions, newspaper, cable tv, weekly coffee with friends, IM on your phone, etc. By doing this, you’ll have a good idea of what you spend your money on, and you’ll be able to figure out where you might need to cut back on spending. You don’t want to eliminate all of the “should haves” and the “like to haves,” but take a look at those first. One of your expenses will be paying off your debt. You will want to always pay more than the minimum required, otherwise it will take a really long time to eliminate your debt. For example, a single credit card with just a $1,000 balance and 19% interest will take about FIVE YEARS to pay off by making only the minimum payment of $26. Paying the minimum, you will spend $1556.40, with the Total Interest Paid: $556.40! Paying only the minimum payment will equate to giving them 55% more than you actually borrowed.

How To Get Out Of Debt

Step 1: Discover the Size of the Problem

One of the things that people are in serious debt do is ignore it -they don't open the mail which brings the demands for final payment or shows them the 100's of dollars they are spending on credit card interest. They are in denial. You cannot fix any problem that you are in denial over. So if your debt is a a problem to you or your family you need to face it and see the size of the problem.You need to learn how to save money - not spend it!

Find out the size of your debt:

* over due bills balances owing, payment terms, interest rates

* credit cards, store cards and similar - balances owing, minimum payments interest rates.

* car loans

* Hire Purchase payments

* house mortgage

* loans from friends and family

So this is the size of problem. Start a spreadsheet or piece of paper - for each loan take a line and note:

* the total debt

* the interest rate

* minimum payment terms and date e.g. 20th month

Step 2: Decide On your Goal

The total figure you came up with might be a little scary! Getting out of debt sounds like a good idea - but does that mean that all debt is bad? Not all debt is bad - borrowing to buying assets can be a good thing - you can out ahead financially if the asset you buy increases in value by more than the interest you pay on the loans.

Unfortunatley a lot of people are confused as to what is an asset - an asset is something that makes money. A rental property or a share portfolio are assets - they make money. A car, a widescreen TV, a gorgeous pair of Italian shoes are not assets - they not only don't make money but their value commonly drops significantly as soon as you buy them, worse some of them will cost you money to keep - such as the car. So do you want to be debt free? Consumer debt free? Once you are free of consumer debt your options to save and invest are wide open.

Step 3: Now prioritise your debts:

Top Priority Debts

Those that by not paying you are endangering your basic quality of life and your credit rating:

* your rent

* your utilities including power, telephone, water

* other utilities: broadband, pay TV,

* any bill that is stamped final demand or which has been forwarded to a debt collection agency

Lower Priority Debts

The other debts probably are in the second priority pile. These may include:

* Loans from families and friends

* credit card debt

* the mortgage on your home

The first group has to be paid and now. Contact your creditors, talk to them, agree a payment schedule and STICK TO IT.

Cancel the utilities that you don't really need: pay TV, broadband or downsize to the cheapest package. Check the fine print, you don't want to be hit with too many penalties for cancelling, but at the end of the day paying a termination fee will probably less than another 3 months of payments.

The lower priority debts. Most people seem to get into debt with credit cards, especially consumer debt. In general pay off the debts that you are paying the highest interest rate on first. However if you would like some instant gratification, take on some of the smaller outstanding amounts first so you can see clear progress.

Step 4: Analyse your Spending

You weren't born in debt! How did you get into debt - was in an unfortunate event: marriage split, loss of a job, illness. or has it just developed slowly over the months and years? If its the latter the issue is clearly that you are spending more than you earn. If your debt is the result of a one-off event then you still need to find some cash to pay of your debts and get your self back on a financially secure footing.

Buy a small notebook and carry it around for a week or 2 - write down everything you spend - everything, the paper, the milk, include anything you put on a credit or debit card too. It's OK I'm not saying do it for ever - just do it for a typical 2 week period- not when you're on holiday, not just before Christmas, just a typical 2 week period. Ideally get everyone in the household to do - or at least those that are contributing income! Now analyse your spending: you can use software or a spreadsheet or pen and paper.

Allocate your spending to some basic categories like:

* groceries

* lunch out

* takeaways

* cloths

* vehicle running expenses

* public transport

* hair dresser

* coffee out

* gym fees

Do you see a pattern - are you shocked at how much your take-away coffees are costing? Had you not realised what you were spending on lunch - whatever it is I guarantee you will find a number of items which shock you.

Step 5 Decide on an Action Plan

Reduce your regular spending

Budgeting is a bit like dieting - if you decide that from now on you are spending nothing on clothes, lunches, shoes, clothes or whatever else it is that you spend money on - it will last a week or maybe a month and then you'll have a blow out. Budgeting, just like dieting, has to be a lifestyle change, and it has to sustainable. If you live to own designer clothes then that's OK, but maybe you can limit your outfits to 3 a season rather than 5? Budgeting is the key to that age old question: how to get out of debt. If you love to go out on the town and drink and party - can you limit it to twice a month, rather than once a week? Yes you are going to have to make some changes but think about your goals and dreams not the spending reductions now!

Sell things

Can you sell stuff to pay of debt? EBay and other auction sites are wonderful places to get rid of your unwanted clothing, the glasses given as a present 5 years ago which you've never used. The toys the kids have grown out of. You not only make some cash you get to de-clutter your life as well!

Can you sell your car? It's not just the car loan that's costing you money but the insurance, taxes, registration, services and petrol! Can you reduce from a 3 car household to a 2 car household or a 2 car household to a 1 car household plus bike or scooter? You not only save money - you save the planet as well? Even if you need to keep the cars you have look at selling them paying off the loan and buying a car you can pay cash for - no more car loan ever that sounds good doesn't it?

Substitute cheaper items

Can you move to a cheaper apartment, if you rent?

Can you save at the supermarket by going to a cheaper one? Can you buy no-name brand items on the things that don't matter i.e. they all taste /act the same e.g. butter, sugar, flour, toothpaste, shampoo, toilet paper. If you like luxury foods then buy them on special, if you have the space and the cash buy items you use all the time in bulk if its cheaper. Take a calculator with you to do the sums!

Can you buy books or clothes at a second hand shop rather than new - you will probably find stuff you would never find new anyway!

Get a cheaper credit card.

Yes I am saying consider applying for another credit card! I am NOT saying use it to buy stuff on though! One of the reasons people have trouble getting out of credit card debt is the punative rates of interest charged and the low minimum payments. So increasing your payments will certainly help - but try to reduce your interest bill will help even more!

One of the reasons to protect your credit rating is that if you are still a good risk you may be able to find a new card which will allow you to transfer an outstanding balance for a low or reduced interest rate. Say you believe you can pay your card debt off in 6 months but you are currently paying 20% interest, if you can find a 0% or 5% credit transfer deal take it - and focus on reducing the debt to zero in the time frame. Whether you cut up the card or not depends on whether you can trust yourself not to get into debt again with it. Smart people don't fund their lifestyle with credit card debt - they use a credit card to reduce bank fees, earn frequent flyer points or other awards and pay it off when due - banks hate those who do that!

Extra Income

Can you go for a promotion at work? A new job? A second job? Even if for a short period of time this might be worth it - though check how much you will nett out of it after work expenses, commuting, and taxes.

Get the teenagers out working a paper-run or in a fast-food outlet - its a good way for them to learn about real-life anyway!

I said earlier that budgeting is like dieting. Its actually a lot easier than dieting - with dieting you can go for weeks without seeing any results, you give up for a weekend and all the weight comes back on! Budgeting isn't like that though - I guarantee that if you reduce your debt you will start saving. Its a snowball effect, as you reduce debt you reduce the interest you are paying which allows you more spare cash to reduce more debt.

Step 6 Putting it All Together

So now you have a list of debts A some cash from selling things Extra income coming in from you extra job Less money being spent on the necessities of life.

Now go back to you list of debts. Start with your highest priority one, how long will it take to clear it with the extra cash you have? Now once you've cleared that one, take the extra cash, plus the re-payments you were making on the initial debt (no longer needed as you cleared it ) and apply it to the next item on the list as and so on. It really does work.

Remember though no more getting into debt for consumer items otherwise you will put yourself back at the start again! Remember that getting out of debt is just a tool - the real aim is to take control of your life and fulfil your goals and dreams.

Credit Card Debt Management Can Help To Prevent A Financial Crisis

For how many years have you used credit cards? Are you facing any difficulties with the use of charge cards? Have you ever identified the mounting problems you are facing at the? If not, keep it in mind that the arbitrary use of credit cards without doubt leads to the emergence and continuation of a great financial crisis, and in a majority of incidents the entire situation gets out of hand, even before you start to realize it.

If you have ever faced, or are facing any similar type of situation it is imperative for you to keep your finances in check, and at the same time be aware of the saga of credit card debt management. If you become attentive, and go through the entire issue you will find that there are several credit card debt management programs that are free or cost little, and facilitate you to regain control of both your finances and personal life.

Therefore, talk to the manager of a credit card debt management program, he or she is the best person to help you get out of this situation. They can show you the existence of several such programs or how you can easily simplify your payments. Once you are out of this credit card mess, you will get a great option of selecting any form of payment with a low interest rate, and that will enable you to save money. It will also reduce your debt by almost half and the interest rate will be lowered to a great extent.

How does this credit card debt management appeal to you? Many experts say that the removal of any economic crisis is possible by an effective credit card debt management and the ultimate goal is making one debt-free within a couple of years.

Acknowledge and Act

How do you manage after you have caught up? For this you need excellent planning and the will to stick to the plan. The efficacy of credit card debt management lies in the fact that, before purchasing any product on credit, you or any concerned consumer should be conscious of the way you plan to repay it. With your desire for expensive products, keep in mind that you will be led to a long-term debt. Reckless buying always adds to a crisis. If you fail to manage properly, take the help of the non-profit credit and free card debt management programs. They are the best way to help you get rid of your existing financial situation.

Understanding Your Current Personal Finance Situation

It is important: understanding your current personal finance situation is something that every person needs to do. By understanding what is going on with your personal finances you will be able to better control them. This can be one of the best ways to avoid money problems and debt.

Getting started is the hardest part. It can seem almost impossible to figure out where to begin when tackling finance issues. The best place to start is to simply look at expenses and income.

As the staples of a good budget, something every person should have, expenses and income are the main financial issues a person needs to understand. To begin you should gather all the relevant information. You may want to get bills, pay stubs and anything else that could help you list out your expenses and income.

The first thing to do is to track your daily expenses. This includes eating out, shopping and gasoline. You want to include these on your expenses list. You may need to gather receipts or actually keep a log for a week to be able to come up with an accurate account of your daily expenses.

Write out a list of expenses and then write out your list of income. At this point you should concern yourself with ensuring everything is listed. If your expenses or income vary then try to get a good average. You should have expenses separated into daily expenses and monthly expenses so you can see where your money is really going. Plus this will help when you go to budget your money.

Now you can begin to look at your debt. You should make out a list of your creditors. Your list should include the creditors contact information, the balance of your debt and the interest rate.

Now you should look at your personal finance accounts. This includes things like checking, savings and stocks. You want to list them all, including their current value or balance.

After going through your expenses, income, debt and personal finance accounts you should have a fairly good idea of where your personal finance matters stand. This should be a great platform for you to build upon to get your personal finances in good order. From this information you should be able to create a budget, get debt under control and best manage your personal finance accounts. You should be able to get the big picture about your personal finance situation and to understand it completely.

PNB to offer balance of ASM units to all

It has set maximum limit of 20,000 units per account holder

KUALA LUMPUR: Permodalan Nasional Bhd (PNB) will offer the remaining 1.6 billion Amanah Saham Malaysia (ASM) units, including those initially set aside for bumiputras, for subscription by all Malaysians from July 21.

President and group chief executive Tan Sri Hamad Kama Piah Che Othman said to ensure a fair distribution to the public, a maximum limit of 20,000 units had been set per account holder during the offer period from July 21-27. The limit would be void after the offer period.

“Thereafter, investors can subscribe for the ASM units without any maximum investment limit, depending on the amount of units left.

Tan Sri Hamad Kama Piah Che Othman ... ‘Sales of the additional ASM units are based on a first-come, first-served basis.’

“Sales of the additional ASM units are based on a first-come, first-served basis,” he told reporters here yesterday.

ASM is an equity-income fund aimed at providing unitholders with a long-term investment opportunity that generates regular and competitive returns through a diversified portfolio of investments.

According to Hamad, the remaining 1.6 billion ASM units are from the 3.33 billion units launched in April.

Of the 3.33 billion units, bumiputra investors were allocated 50%, Chinese 30%, Indians 15% and other races 5%.

However, only the allocated units for the Chinese and Indian investors were fully subscribed and it has now been three months since the fund launch.

“We will continue to hold seminars and talks on the benefits of investing to encourage more bumiputra participation in our unit trust products,” Hamad said.

PNB has confirmed that excluding Amanah Saham Bumiputera, there were some 6.6 billion units that have not been taken up by bumiputra investors.

These are from unit trusts such as ASM, Amanah Saham Wawasan 2020, Amanah Saham Didik, Amanah Saham Nasional dan Amanah Saham Nasional 2.

On the 1Malaysia Unit Trust as proposed by Prime Minister Datuk Seri Najib Razak last week, Hamad said an announcement would be made soon.

Meanwhile, a PNB spokesman said it was not aware of any practices of its agents such as banks on reserving ASM units for selected customers.

“We are not aware of such practices nor do we encourage this,” the spokesman said, referring to the latest ASM annual report which revealed that in the top bracket of unitholders, there were only 296 individuals holding a whopping 264 million units.

This translates into an average of 893,068 units per person.

What Can I Do To Avoid a Personal Financial Crisis

With the current financial crisis not going away anytime soon, many are getting worried about the possible negative implication to their finances. Some will end up retrenched, some will have pay cuts, and some will not even get that increment or bonus that they worked so hard for. How we plan our finances during this crisis will depend largely on our individual situation. I have always maintained that it is not wise to have only one main source of income. For most people, their main source of income is their job. Some would focus on it during the day and even bring it home during the night. In my opinion, this is an unhealthy work style and it also distracts you from also focusing on your other sources of income. If anyone mentions that this financial crisis will not affect them or their company, they are in for a big surprise. According to IMF, this crisis is one of the worse since World War 2 and it may prolong well into 2012. As for any right minded individual, eking out a living from their job, this becomes a problem. As times gets bad, people will spend less. When people spend less, companies will earn less. When companies earns lesser and lesser, retrenchment and pay cuts are inevitable in order to maintain the percentage of profits that their shareholder demands. This is a vicious cycle where employees who are consumers themselves are forced to “tighten their belt” and reduce their expenditure. Thus, further worsening the financial crisis.
Now, what do I mean by other sources income? Like I said before, I do not encourage people to only have one main source of income, their job. In the event that they get retrenched, how are they going to pay their bills and support their family? Here are some ideas on earning extra income.

• Join MLM companies to sell their products. This is a good start to rake in some sales and earn some commission as the entry cost is cheap.
• Join insurance company on a part time basis to promote their insurance product. Insurance provides a very good passive income for every sale that you make as the customer will have to service their insurance in order to maintain it.
• Join a unit trust company on a part time basis to promote their funds.
• Sell tangible stuff online. Nowadays there are a lot of opportunities for people to become business owners through the web. Companies such as eBay or Lelong.com allow you to sell your products to customer (with a fee) through their website. Selling online allows you to reach potential global customers who you might not be able to meet if you are running a physical store in some shopping complex.
• Passionate about swimming? Simply adore cooking? Take your hobbies to a new level. Offer classes for swimming or even do some catering during the weekends.

If you are uninterested in all the above mentioned, then my final advice during this uncertain times is “Create an emergency buffer of cash”. Always have an emergency cash of at least 6 months expenses to cover for any unfortunate eventuality that might occur during this critical period. If you do not have an emergency buffer, this is a good time to start. You never know what might happen and it’s always best to plan for the worse in any financial crisis before it becomes a personal financial crisis.