credit Archives | Page 7 of 9

A Newbie Freelancer’s Guide To Getting Paid On Time

According to the recent survey by Freelancers Union, 44% of the participants (freelancers) reported problems with getting paid. Some are even tracking their clients for owning more than S$13,000 (US$10,000). Yes! Getting paid is one of the most frustrating and stressful aspects of being a freelancer.

In a world of fixed expenses and variable income, the stress of a freelancer comes when they have to deal with stubborn clients. While frustration arises when the client piles up more work when you still have not gotten paid yet.

Although this dilemma can be overwhelming at times, find fulfillment with this clever plan to get what you de$erve:

GET PAID FIRST

For your first client, shall you charge a flat rate or shall you give a discount? No matter what you choose to do, do not start working until you get upfront. This is the best case scenario!

As cash flow is the core of most freelancers, you do not want your finances to crash just because of the debt of your clients. Ask them to pay at least two weeks in advance before you commence your work to avoid chasing for your clients.

REQUIRE A DOWN-PAYMENT

If your client cannot pay upfront due to valuable reasons, consider requiring a down-payment to send a message that you mean serious business. As a newbie in the field, it is understandable to feel uncomfortable as you do not want to make demands that could ruin the new relationship you have with your client. I felt the same way in the first few months. However, like any professional services firm, you must require a down-payment to ensure that your client is capable of paying you.

SET A SCHEDULE FOR PAYMENTS

It is better to stick with a billing schedule to keep track of everything. Whether you would like to send the invoice every month or bi-weekly, you must bill on time. To put things in perspective, you may treat your client’s payment as something you can deduct to your credit. For example, deduct the “total bi-weekly due amount” to the credit pool upon making an invoice for it. This way, you are giving more importance to time and money management.

SEND A FRIENDLY REMINDER

For late payments, act immediately by sending a friendly reminder to your client. Give him and her the benefit of the doubt by assuming that the lack of payment is due to a mistake, medical reason, or an oversight. That is all it takes to get paid – sometimes.

PUT EVERYTHING IN WRITING

To prevent the unwanted “late payment scenario”, you need to have a contract that defines when you will get paid and includes a clause for when you do not get paid on time. In your contract, you must guarantee that…

a. the client does not own anything they have not paid for,
b. the client will be charged with an interest for overdue invoices, and
c. the court shall give you the right to get your money back.

Image Credits: pixabay.com (CC0 Public Domain)

This binding contract protects you in case legal matters arise.

Sources: 1, 2, 3, & 4

Bank Loan and HDB Loan: Which Has More Advantage?

For any potential home buyer, home loans should be a serious business. Pick the wrong kind and it can cause a cascade of unfortunate events, including being trapped in a huge debt and even losing your home.

But between a bank and an HDB loan, which one is better? Let’s compare them:

How much can you borrow?

Under the HDB loan, you can borrow up to 90% of the purchase price or the market value, whichever is lower.

Banks, on the other hand, can provide you with up to 80% Loan to Value (LTV) of the property. This the ratio of the loan quantum to the property’s appraised value.

Take note, though, that both HDB loans and bank loans cannot guarantee the full LTV. Simply stated, it can be lower than 80% or 90%. This means that you have to use your own money to pay off the rest of the mortgage or consider other bank loans.

Taking out a personal loan to cover the rest is an option, but this might affect your debt servicing ratio. Always compare to find the best personal loans.

How much is the down payment?

HDB loans would require 10% down payment, which may be fully covered by your CPF savings. Banks would need 20%, 5% of which should be in cash as only 15% can be absorbed by the CPF. Regardless of which loan you choose, though, repayments may be made through the CPF.

How do they calculate the interest rate?

One of the biggest differences between HDB loan and bank loans is in the way they determine the interest rate. For a home buyer, you need to learn this as it’s the basis for the amount you pay on top of your principal loan.

The HDB loan is pegged at 0.1% above the CPF Ordinary Account (OA) rate. Do note that the CPF rate is reviewed quarterly, so the rate may still change, although it is quite consistent.

Banks can offer either a fixed or a variable rate, although the fixed rate is not perpetual: it’s fixed for only a few years, say, three to five years. Then the rate becomes variable.

Either way, banks have three possible bases for computing their interest rates: SIBOR Singapore Interbank Offered Rate (SIBOR), Swap-off Rate (SOR), and Internal Bank Rate (IBR). On top of that, the bank adds a spread, which is the bank’s charges. As an example, the SIBOR rate (we’ll use this since it’s the most preferred bank rate) may be 1.1% and the spread is 0.9%, which means the overall interest rate is 2%.

Banks express the interest as 0.5% + 3-month SIBOR, which means the rate is revised every three months.

Although banks can offer similar home loan packages, they can still differ on the interest rate alone. Thus, to make sure that you can make the right decision about that, speak to a mortgage broker.

Over the last few years, homeowners with bank loans have been enjoying lower interest rates, but that’s due to quantitative easing (QE), which somehow repressed the bank’s interest rates. But now that it’s over, the rates may significantly change.

Hopefully, with this article, you can make a much better choice whether to get an HDB loan or a bank loan.

(This article is brought to you by SingSaver.com.sg)

Newbie’s Guide To The Dynamics Of Debt And Credit

DEFINITION

Before anything else, we must define two terms: debt and credit. Debt is the amount borrowed by one party (e.g., corporations or individuals) from another (e.g., banks). While Credit is the lawful agreement in which a borrower receives something of value today and agrees to repay later on in the future, usually with interest. Simply, when you use your credit card, you create debt. Debt here is the result from your ability to borrow – from your credit.

Now that you know the definitions and the differences between these two terms, you must discover the pros and cons of using credit as well as the 3 C’s of worthiness. All these are according to the Credit Bureau Singapore. Credit Bureau Singapore was set up in lined with the Monetary Authority of Singapore’s vision to enhance the public’s risk management abilities.

Image Credits: pixabay.com (License: CC0 Public Domain)

PROS AND CONS OF USING CREDIT

The pros and cons of using credit or credit card are plain and straightforward.

Pros

Being able to buy what you need right away

Not having to carry cash

Automatic record of purchases

More convenient than cheques

Cons

Interest especially for items of higher cost

Have additional fees

Financial difficulties may arise

Elevation in impulse purchases may occur

Image Credits: pixabay.com (License: CC0 Public Domain)

3 C’S OF WORTHINESS

Before swimming in a pile of credit, know if you are worthy to take the plunge by asking yourself a set of questions.

1. Character (Are you the type of person who will repay his or her debt?)

Does your credit history show that you are honest and reliable in paying debts?

Do you pay bills on time? Do you have a good credit score/report?

Can you provide a couple of character references?

How long have you been at your present occupation?

How long have you lived at your present home?

2. Capacity (Are you able to repay the debt?)

Is your job income enough to support your credit usage?

Is your job stable and steady?

How much is your salary?

How many loan payments do you have in total?

What are your current debts?

How many people are dependent on you?

3. Capital (Do you have back-up if you cannot repay the debt?)

Do you have a savings account?

Do you have various investments to use as a collateral?

Can you enumerate the properties that you own to help secure loans?

What other valuable assets do you have that could be used to repay debts?

It is essential to know all these to assess whether you are truly fit to apply for a credit card or loan. Furthermore, you may use the information to guide you in your responsibilities as a borrower. 🙂

Sources: 1 , 2 & 3

Lost? Here Are Sensible Money Tips From 3 Financial Experts

Tangled in a financial dilemma? Who will you ask for monetary advice or practical financial tips? If a professional is out of your reach, the next best thing is to read about their nuggets of wisdom.

This is why I collated the best financial advice from three experts. These experts are no other than Suze Orman, Cullen Roche, and Jeanne Kelly. Suze Orman is an American Financial Advisor, Author, Motivational Speaker, and Presenter. Cullen Roche is the Founder of a financial services firm called Orcam Financial Group, LLC. Lastly, Jeanne Kelly is a media acclaimed Credit Coach.

1. TAKE CHANCES

Suze Orman tells us that nobody achieved financial security by being frightened and weak. Being confident in one part of your life is contagious, as it will bring more opportunities to you. You won’t get there unless you try!

2. INVEST MORE IN YOU

Cullen Roche shares that the primary way to financial success is more than just saving. It is by investing more…in you. Since your primary source of income is the person you see in the mirror, a good way to maximize your wealth is to make yourself valuable to other people or other companies.

To be valuable and different from the rest, you must never stop learning. Education that improves your skills so you can adapt to the ever-changing economy. I personally recommend you to start with free Internet education from YouTube’s Khan Academy or Crash Course.

3. BAD CREDIT IS EASY TO AVOID

Jeanne Kelly claims that it is easier to maintain good credit by avoiding bad ones than to rebuild a new credit once it has been declined. She says that a quick way to avoid bad credit is by regularly reviewing the credit reports – at least two times a year. In merely 15 minutes, you can minimize the errors of your credit report and save more money!

4. EQUATION FOR YOUR INCOME

Lastly, Cullen Roche suggests for you to try the 50/30/20 budgeting rule. Spend 50% of your income to the basics or essentials such as rent, food, and utilities. 30% should go on your personal needs such as entertainment, vacation, and leisure. And the 20% left should be allocated to your savings.

Image Credits: 401(K) 2012 via Flickr with CC Attribution-ShareAlike License

Take in their knowledge only if it applies to your situation. Then, fuse the elements together and enrich your life.

Sources: 1 & 2

Marriage With Credit: ‘Till Debt Do We Part?

Whether you like it or not, along with your marital vows comes the union of your finances. Your partner’s financial habits can either boost or ruin your financial future especially if he or she has a pile of debt. One’s credit history can affect several facets of your life such as loan eligibility, loan rates, and job applications. This is why it is important to openly discuss about your credit history and to plan your future finances together.

Here are some steps you may take…

1. HAVE A TRANSPARENT DISCUSSION

To prevent unforeseen monetary issues, understand each other’s view by explicitly discussing your differences on financial issues. For example, if your partner is a saver then, he or she may view money as an important currency that shall not be wasted.

Then, for honesty’s sake, show a copy of each other’s credit report. Know what your debt and income are actually worth so that you can realistically plan on how to pay for the remaining debt. Your partner’s lack of credit history will reflect on your credit score if you combine accounts.

2. PRACTICE THE ART OF MINDFULNESS

Gone are the days when Mindfulness is practiced solely for meditation. You heard that right! Actively paying attention to the present situation can affect your finances. As you are aware of what is happening in the present, you can make better decisions about money no matter how important it is. For instance, you will keep your credit score healthy because you are aware of the billing schedules. Also, having a present mind will allow you to be vigilant in checking whether the statement breakdown (e.g., phone bill’s data usage) is accurate.

3. LIMIT THE USE OF CREDIT CARD/S

It takes no genius to conclude that overusing your credit card will jumpstart your credit. So, if you cannot say farewell to the plastic card, you might as well limit your usage. As much as possible, keep your usage to a minimum, 25% below your credit limit is a good start. Then, pay off the balance monthly. Examine your progress together as you end the month.

Image Credits: Gareth Williams via Flickr with Creative Commons License

May these simple steps pave way for a happy and credit-free marriage! 🙂

Sources: 1 & 2

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