| How Do You Cut Down Your Liabilities?
, Money Educational Contest - Minimum 150 words
Replies(1 - 9)
Sep 17 2007, 05:20 AM
Junior Money Maker
Group: Blog/Monitor Partners
Dream Points: 127
Experience Points: 144
Joined: 10-June 06
Member No.: 2,223
Its a good qsn for all !
There are many ways available to Cut Down Liabilities ...
If you are a business owner : Do not try to make money stretch too far. A business needs a good financial manager (within the company or an outside advisor). It is your money, so be very self-disciplined. You must keep meticulous records for yourself, the IRS, and your lender. Control on your expenses and give personal touch to your employee.
For Job person : Stop your extra expense. Do not take drugs and alcohol drinks. As per the survey "Substance users are 33 to 50 percent less productive." so, you loose your Job or your boss didn't offer you good salary !
For House Wife : Its hard to make money so, track your expanses and make sure that its not more than your earning !
For All : Do not make you expanses higher than earning PLUS do not take loans every time ... Stop using your credit card or control your expenses using credit card...
Maintain your Budget : Most people have only a vague idea of where their money goes, but they generally find that it doesn't go as far as they think it should. The solution is creating and maintaining a budget, an itemized description of income and expenses.
I think it help us to control our liabilities Its my opinion ...
Best Luck ...
Admin - YourRanking.org
Best eCurrency with inbuilt Exchange ! Join Now to Get $3 Free Signup Bonus !
Only with www.PayTreck.com
Join with Just $2 and Receive $3,945,961.95 profits just by referring 3!!! Only @ www.LrMatrix.com
Sep 22 2007, 05:04 AM
Senior Money Maker
Group: Lifetime Supporters
Dream Points: 1,333
Experience Points: 709
Joined: 13-July 07
Member No.: 20,561
As LPL advisor Mark Trantham, vice president of Lifetime Wealth Strategies in Lakewood, Colo., notes: "If you can't manage your debt, what good are your assets?"
So, you can made some choose to Cut Down Your Liabilities :
1. Choosing the right investment properties: there's more to creating a profitable real estate portfolio than just buying what's available. Here's how to make the best choices.
Real estate can be a great investment, but not every property is a big winner. To make money, short- or long-term, it's important to buy the right property at a reasonable price. This may sound simple, but the details can be complicated. Here are some guidelines to follow:
SET GOALS. "When you seek rental property, you should know whether your primary objective will be current cash flow or long-term appreciation," says Jocelyn Wright, a financial planner with Wealth Development Strategies in Houston. She explains that if your goal is cash flow, you'll need to figure out how much you think you're going to spend on repairs and whether you'll have to borrow that money. "The more money you have to borrow to buy the property and make improvements, the higher your mortgage will be," says Wright. And that will cut into your profits.
2. Shouldering the weight of duty: where are companies going to continue to do business, once they get back on their feet? Risk managers, duty-bound to rethink their business-continuity strategies, could cut and run to the nation's safest cities. Or they could stay put and rebuild the business in a very different way.
It's a question many people want to ask but are afraid to say on the record: Why the hell would businesses want to move back to New Orleans after Katrina? Or here's another one: Who would want to open a business in Florida after the eight storms that have collided with it in the last 15 months? Or how about own any property anywhere near the coast--Gulf or Atlantic?
Sure, that warms the heart, but does it make sense when the waters recede, the rubble is cleared and your business is out of commission for who knows how long?
It could be more wishful thinking than responsible action. Some would blame ignorance, obstinacy or emotion. After all, the Atlantic Basin is experiencing an upswing of cyclone activity. For at least the next couple decades, the U.S. coastline could expect more seasons like 2004 and 2005. That means business interruption year after year, compounded by escalating premiums.
3. Cutting to the chase: suddenly seeking cut-through clauses - Reinsurance Focus.
4. Draw a map: if cut-to-length logging has seen great success in Canada, ithas also caused its share of grief. Success or failure, it often goes back to.
5. Environmental Impact.
Global investors are turning up the heat under corporate executives to ensure they spell out how climate change and other environmental liabilities will affect their bottom line.
As concern grows over the enormity of the corporate world's energy demand, businesses are coming under increasing scrutiny over their readiness to deal with the flip side of that same coin: climate change. A recent move by more than two dozen institutional investors, managing $1 trillion in assets, to persuade US regulators that publicly traded companies should disclose the financial risks of climate change in their public documents is only the latest indication of investors' escalating concerns, analysts agree.
6. And More.
Just whic is the best way for you. All of the risk is by you and wee need a good skills for Cut Down our Liabilities.
Sep 22 2007, 04:02 PM
Senior Money Maker
Group: Lifetime Supporters
Dream Points: 22
Experience Points: 1,040
Joined: 13-June 07
Member No.: 19,215
Money is just an object. It can be an asset and a liability at the same time. If one puts it to work, it will be an asset but when it stays stagnant and when there is no flow, that's when the liabilities start to haunt one down. Therefore, one either increase the asset portion or cut down the liability portion. For most people, it is cutting down the liability portion that will be the goal.
To cut down liabilities, there are many simple ways, both easy and hard, depending on each person's daily activities that may limit their ability to do so. Some may take a few weeks to break free, while others months. Worst of all, there are some who don't even make it and go back to their habits of spending.
The idea here is to spend less money than one makes. This is the most basic skill one has to get used to. Now that credit cards are easier to obtain, even from a young age of 18, more and more people are landing into financial traps early in their life and will continue to have those debts till they grow old.
According to a study done in the US, for every six kids that leave high school :
- One out of six will likely be declared bankrupt during their lifetime
- Two out of six will likely divorce due to financial incompatibility with their spouse
- Three out of six will fail to save for retirement
- Four out of six will incur substantial ongoing credit card debts and finance charges
One has to know that if he/she can't pay for an item in CASH, he/she can't afford it! Period!
The next option to cut down liabilities is to do the exact opposite - buy assets. Many have heard of assets, things that put money into their pockets but many do not actually do it. Buying assets can be as simple as placing a very small fraction of money of one's monthly salary and accumulate it and pay for down payments for real estate and then renting it out. With the right support, one can easily grab hold of the right real estate and get passive income from it. However, one must be sure that the rental money must be more than the amount of money needed to maintain the piece of real estate.
One can also be aware of business opportunities like investment programs. Putting some money aside and placing them in bonds may be a good start for average people. Having a steady passive income generated from the bonds may help preventing one from spending that money and at the same time let one earn from it.
Bonds are there for a reason, to help discipline one of his/her financial habits and guide them to a stable future with a brighter knowledge on finance management.
Avoid bad debts, like borrowing money to buy an object that will not make you money. For example, borrowing money to buy a car. It costs money to maintain the car, and instead of making you money, it is using your money to keep it alive.
Get into a lot of good debt, like borrowing money to acquire assets, like real estate, or investment programs, that will bring money into your pocket.
Prevent temptation - Patience is a virtue
This is especially true for youngsters. When a crazed object is introduced into the market, it is sold at a very high price. However, one should notice that after a few months, the price starts to drop, with extra objects being included in the sale of that object. For example, a PSP is being sold in January at about 500 dollars. Everyone starts buying it, and after just a few months, it dropped to 300 dollars. If one buys now, he indirectly saves 200 dollars! One should always know that paying that extra 200 dollars is just for the purpose of showing off. The question now is if it was worth that 200 dollars. One may show off to his/her friends for just a few days before they turn bored. Is 200 dollars worth that few days of showing off?
One should know that temptation and desire is the cause of most people spending a lot when in fact they can save a lot more just by being a bit more patient. That's why it is said patience is a virtue.
Have Money Jars - Pay Yourself First
One should always have different sectors to put their money in. This is another way to cut down spending as more discipline is performed here. To cut down liabilities does not necessarily mean to live like a beggar, not enjoying life. One has to cleverly separate his money so that he can actually enjoy and still get some money saved at the same time.
One should diversify his/her income into jars :
- Living Expenses- This is the jar for all expenses like water bills, phone bills, electricity bills
- Financial Freedom Account - This is the jar for asset building, assets are bought with this money
- Savings - This is the jar where small amounts of money are inserted every month and used for emergency only
- Education - This is the jar to gain more knowledge, financial or academic, which will then increase literacy to have a better financial status
- Play - This is the jar for some money to be set aside for enjoyment
- Donations - It is always said that wherever you give money, it will come back in one form or another, this jar is for money to be donated to organizations
With these jars, one can see where money is flowing to and can manage either their assets or liabilities. Whether it is increasing assets or decreasing liabilities, with these jars, it is easier to manage them.
Have a budget
This is continued from the previous section. A budget puts you in charge and gives you a tool with which to manage your finance. Let's assume you earn about $5000 per month. Let's fill in the blanks. This will be a mini financial statement of yourself. This will help see whether you're having assets or liabilities.
From Job - ............................$_____
Income tax - .........................$_____
Gross income minus taxes - ....$_____
Pay Yourself First
Needs and Wants - .................$_____
Financial Freedom Account - ....$_____
Savings - ...............................$_____
Education - ............................$_____
Play - ....................................$_____
Donations - ............................$_____
With this mini financial statement, one can either calculate and find out he's gaining money or losing money.
To cut down the liabilities, some money can be taken away from the play and needs and wants section and placed into savings or financial freedom account. This way, their loss is reduced and therefore their liabilities are cut down.
Using Your Own Money
There are several ways to pay for stuff, but which one is the best?
Cash, Checks, Debit Cards, Automatic Payments?
The reason as to why credit cards are easier to obtain now is because banks want people to be in debt to them earlier! When they use credit cards, they are actually borrowing money from banks to pay for the item they can't afford to pay with cash. When they borrow, interest is being placed for every single cent they borrowed. Interest can go up to 25%!!! For example, if one borrows about $10000 to buy a watch, he has to pay $2500 on top of that $10000 in total of $12500!!!!
Talk about financial intelligence! One has to be educated to see the bad sides of having credit cards. The easiest way for an average person to cut down his/her liabilities is to literally cut their credit cards to prevent them from using it in the future. Then, the credit card debt is slowly paid back monthly depending on the rates of the banks.
Have a team of players
This is the most important point that most neglects. To have friends that are financially stable to advise them on the best ways to manage their money.
It is best for one to have a :
- Coach - this can be a close relative to be your financial advisor, but you can learn to be your own coach!
- Ball - the energy of money - to put money into work and bring you more money
- Team Players - This can be brokers that help you do transactions and eventually make you more money through bonds, funds and shares. With a good coach and a good broker, it is easy to have more assets, eventually decreasing the liability
- Fans - Most people go alone when it comes to money, one should share the idea of it with relatives to get more opinions
- Stadium - This is the place where you play the game of making more money, this can be shares, funds, real estate etc.
- Snack Bar - One refuses to spend a bit of money to enjoy when they do earn some money. Soon, they'll get exhausted and not earning as much as before.
Therefore, there are many ways for one to cut down his/her liabilities. This can be in the form of saving, investing or just spending less than average. One has to first break away from his/her comfort zone and discipline themselves to stabilize their financial status.
Please I wanna start this company up...
Oct 3 2007, 04:39 AM
New Money Maker
Dream Points: 100
Experience Points: 55
Joined: 28-September 07
Member No.: 24,653
Firstly, I believe is to really understand the term Liability and in the words of my Favorite Author Mt Robert Kiyosaki - Liability simply means things or stuff that takes money OUT of your pocket..Literally.
So to cut down liability is to minimize unnecessary expenses. To do that, we have to clearly define between what we NEED and what we WANT. To me, what we NEED are things or stuff that supports our LIFE, for example we need food, drink, transportation, shelter and education thus we should aim to spend not more than 70% of our income to meet those NEEDS.
The things or Stuff that we WANT (which generally increse our LIABILITY) are that to support our LIFESTYLE instead, for examplee - fine dining in a fancy restaurant, having a cuban cigar, opting for Perrier than Soda, buying a Ferrari instead of a Toyota, buying a lavish bungalow against a simple apartment and using credit cards more often than using cash. It is really good to be able to afford a LIFESTYLE that we want but if we spend more than 15% of our income to the stuff that we WANT than it is time to go to a financial doctor because something about you is sick..what is it? your pocket.
So how to cut down your liabilities is really a process to change your Lifestyle...simple..
Oct 3 2007, 05:56 AM
Active Money Maker
Dream Points: 114
Experience Points: 327
Joined: 18-August 07
Member No.: 22,255
Before going in-depth to answer this question, I would firstly like to define the terms used in the question. Boundaries have to be set so that the question can be dissected and it will make things much clearer. Liabilities refer to something for which one is liable; an obligation, responsibility, or debt. It also refers to something being more of a hindrance and something which drags a person down. Cut down is also appropriately used since liabilities are always, and will always be inevitable. No one is spared from liabilities but the wiser ones are those who have methods to lessen, reduce, to make their liabilities more bearable. Hence, the phrase “cut down on our liabilities” instead of it being “How do we remove our liabilities?”
There are many kinds of liabilities. Most people are familiar with the common ones such as taking a loan, buying a car through installments. But these are just one of the many many examples of liabilities. In fact, liabilities can be classified into 4 major types: Financial, Physiological, And Psychological (Mental). We will be discussing in the following paragraphs how to identify and cut down liabilities of each of the different types.
First and foremost, we will start with financial liabilities. This is the most well-known type of liability in which everyone will be able to identify with. Examples of financial liabilities include using loan or credit card balances, mortgages, etc. Financial liabilities can be cut down by adopting the following method:
1. Identify and list out how much debt do you actually owe.
2. Increase your ability to pay off these loans
• Track your spending and find extra money to pay off the debts. Save money by cutting down on unnecessary spending. Finding ways to lower your expenditures allows you to have more money to pay back your debts.
• Create a monthly spending budget and stick to it. This allows you to control the urge to spend more than necessary.
• Invest in things that bring in more money than the accumulating amount of interest of your debt. This allows you to create more money with the money you have. Making money work for you!
3. Learn how to return your debt. Return your debt in the most efficient manner so that you do not have to fork out any unnecessary money in the form of interests, late payment charges etc. This is achieved through prioritizing your debts. Break your debt down into small chunks of bite-sized pieces and then pay off those you can afford while not letting the amount of those you can’t snowball through interests.
Next we move on to physiological liabilities. Many people seem to know about these liabilities but do not really seem to care about them until it severely affects their quality of life. Examples of physical liabilities are cancer, high-blood pressure, illnesses etc. They are considered a liabilities since it affects you not only financially (paying of medical bills) but also cripples your productivity to generate more wealth and it also affects your family members be it financially (trying to help you pay off your medical debts) or emotionally (taking care of you). Now some of these liabilities cannot be cut-down. Family history, the environment you are living in, Genes can all affect you involuntarily, however, there are some which are alterable and you can make the choice! Firstly, physical liabilities are mainly caused by the few major but alterable habits, e.g. smoking, eating unhealthy food, not exercising regularly, etc.. Once you are able to alter your lifestyle, the chances of you getting a physical liability would drastically fall. In fact, for a smoker who quit smoking for a mere 5 years, his risk of stroke has declined to that of a non-smoker! Make the right choice, not the easy one and get your body in good shape and get into the pink of health!
Lastly, the last type of liability would be the psychological liabilities. Not many people know about this but it has a major impact on your life. Examples of these are a wrong paradigm, a negative self-fulfilling prophecy, low self-esteem, and biased thinking/mentality. All these are considered liabilities because it affects the way you think and act, and stops you from proactive actions that will make your life better. For example, having a biased thinking is like sitting in a boat with holes, just because you know that the boat has holes doesn’t mean that water won’t gush in! Biased thinking distorts your thinking and prevents you from making the right choice, because it just doesn’t seem right with the biased thinking you have. The only thing you can do is to try and patch these holes one by one, and hope that least water enters. This may sound a little abstract but let me give you a real life example. I am a Liverpool supporter. No matter how many people tells me how good Chelsea is, I will NEVER admit it! In my view, Liverpool FC will always and will be the best football club in the world! (See my biased thinking clouding my rationale?) Although I have to say that this season Liverpool is beginning to show their credentials as a title contender, they are still far from the best team in the world! By bringing yourself out of the picture, you are able to think properly. Same can be said of a negative self-fulfilling prophecy, saying that “I’m a loser” will also be a liability for you to chase the girl you like, when you compete with people. Changing the way you think, shifting your paradigm, all starts by identifying your psychological liabilities and then doing some proactive in changing them.
All in all, the ONLY way to cut down on your liabilities is to CHOOSE TO. This may sound cliché but no one can help you if you do not help yourself! The more important question is not really about “How do you cut down on your liabilities?” but rather “Do you want to cut down on your liabilities?” With making the choice to do so, the “how” will come naturally. Make that decision to do something to improve your life. You have much to gain and practically nothing to lose. (Noticed I say do, not try, implying that you will succeed!)
You ask why?
I say why not?