Go over all your bills to see what must be paid first and then set up a payment schedule based on your pay days. You will want to leave yourself some catch-up time if some of your bills are already late. If this is the case, call the bill companies to see how much you can pay now to get back on track toward positive status. Tell them you are catching up and going on a stricter budget. Be honest about what you can afford to pay. Sometimes it’s instinctual to say you’ll pay the full amount on your next paycheck, but you may not have the full amount available after other expenses take their cut.
Ignore the 10% Savings Rule, For Now
Stashing 10% of your income into your savings account is daunting when you’re living paycheck to paycheck. Balance your budget before starting incremental savings. It doesn’t make sense to have $100 in a savings plan if you are fending off debt collectors. Your piggy bank will have to starve until you can find stability in your finances. (For more savings tips, see Five Strategies For Surviving Tough Times.)
Review Your Past Month’s Spending
Online banking and online budgeting software help you categorize spending so you can make adjustments. For instance, with online banking, with a few mouse clicks you can categorize your money for expenses, such as dining, food and utilities. (To learn more, see How does online banking assist with budgeting?)
If you have good credit, call your credit card companies and ask for an interest rate reduction. If you don’t ask, you won’t know, as it’s unlikely that credit card companies are going to initiate a reduction on their own. (For details, checkout Cut Credit Card Bills By Negotiating A Lower APR.)
Eliminate Unnecessary Expenses
Do you need to cut back on coffees? Or movies? Or do you often have spoiled groceries? All cutbacks should start with items you wouldn’t miss, such as switching car insurance companies to get a cheaper rate, or reducing your fresh food purchases if you find food spoiling before you can eat it. Eating out is even more costly, so examine how much and how often your really need to do this.
Journal New Budget for One Month
Once you’ve gone through the first eight steps, monitor your progress by journaling for one month. You can do this by noting everything you spend in a notebook, budgeting apps on your phone, or with financial software. How you track your money isn’t as important as how much you are tracking. Focus on ensuring that every cent is tracked by dividing your expenses into categories, such as rent, food, clothing and utilities. (For more information on budget organization, check out 8 Steps To An Organized Financial Life and Budgeting Basics – Setting Up A Budget.)
Make Friends with a Lawyer, a Tax Professional and a Banker – If you find that you like owning rental properties, a network including these three professionals will be essential if you want to increase your holdings.
Make Sure You Have the Right Kind of Insurance – After learning the rules, you will need to buy insurance to cover your liability. You will need the help of an insurance professional to select the proper package for your type of rental property.
Create an Emergency Fund – This is essentially money earmarked for unexpected expenses that are not covered by insurance. There is no set amount for an emergency fund, some say 20% of the value of the property, but anything is better than nothing. If you are getting current income from a property, you can pool that money into an emergency fund.
Investing in a rental property can be an excellent decision if you go into it informed. Consider these words from Donald Trump: “It’s tangible. It’s solid. It’s beautiful. It’s artistic … I just love real estate.”
No one wants to have to use a collection agency to collect overdue rent. Unfortunately, almost every landlord has a story that involves police cars escorting his or her tenant out of the property – erasing all hopes of getting the five months’ worth of overdue rent. Bad tenants can also increase your unexpected expenses and even hit you with a lawsuit. No money coming in means that you have to make the payments out of your own pocket. If you have an emergency fund for the rental property, you will be able to survive long vacancies with little trouble. If you don’t have one, you may find yourself scrambling to pay the rent to the harshest landlord of all – the bank. (For further reading, see Build Yourself An Emergency Fund.)
Minimizing the disadvantages of owning real estate is actually quite simple. While you won’t be able to eliminate the pitfalls completely, following these guidelines will take the teeth out of their bite.
Keep Your Expectations Reasonable – Have the goal of positive cash flow, but don’t expect to be purchasing a new yacht at year’s end. If you keep your expectations in check, you won’t be tempted to jack up the rent and push out good tenants.
Find a Balance between Earnings and Effort – Are you “hands on”, or should you work with a property management firm? Current income doesn’t seem so great if you are putting in another full-time shift working on your rental property. There are property management firms that will run your rental property for a percentage of the rental income.
Disadvantages of Rental Real Estate
For every upside, there is a downside, and rental real estate is no different. Rental real estate may expose you to the following:
Liability – What happens if a stair breaks under your tenant’s feet? With the increase in frivolous lawsuits and the unquantifiable nature of “emotional distress”, liability can be a scary thing. Providing someone with shelter in return for money puts you and the tenant in a relationship where both parties bear responsibility. You have to be certain that the property you are renting out meets all government codes.
Unexpected Expenses – What do you do when you pull up the basement carpet and find a crack that opens onto the abyss? It is impossible to prepare for every expense related to owning rental property, so there are bound to be some unexpected ones. Things such as boilers, plumbing and fixtures often need to be replaced and are not prohibitively expensive. However, faulty wiring, bad foundations, compromised roofing and the like can be very expensive to repair. If you can’t find a way to pay for repairs, you will be left without a tenant and with the grim prospect of selling the property at a significant discount. Also, as building codes evolve over time, lead paint, asbestos, cedar roofing tiles and other materials that passed inspection in the past may be reevaluated to your disadvantage.
Suffering from a lack of cash? It’s likely that you don’t follow a budget that reflects your earnings. Smart budgeting prevents eviction, increased credit card debt, and ruined credit scores. It’s never too late to achieve your financial goals – get started now with these 10 steps to make your financial life less stressful.
Avoid Immediate Disasters
Don’t be afraid to request bill extensions or payment plans. These requests are often granted. If your biggest worry is eviction from your apartment, talk to your landlord, but, also, see if you can get extensions on any other expenses to free up money for keeping your home.
For instance, suppose that your rent is $650 and you’re $200 short. Your bundled phone bill and cable bill is $60, your electric bill is $100 and your cell phone bill is $40. If these bill payments are postponed until your next paycheck, you can pay your rent now and avoid eviction.
Review Credit Card Payments and Due Dates
If you are only making the minimum payments on your credit card(s), you are flirting with a disastrous credit score. However, avoiding credit card payments will only worsen your debt.
For example, suppose that your minimum payment on a $1,000 balance is $40. You fail to pay $40 on time, so you are charged a $35 late fee. In addition, your interest on future charges is charged at the default rate of 25%. Now your credit card is even more difficult to pay off. Before you know it, you have an overwhelming collection of piled up late fees and missed payments. (For more on credit cards, read 6 Major Credit Card Mistakes and Understanding Credit Card Interest.)
Current Income – This refers to the rent money that is left over after the mortgage and related expenses have been paid. Current income is basically monthly cash that you did not have to work for – your property produces it for you.
Appreciation – This is the increase in value that properties generally experience as time passes. Appreciation is not guaranteed. However, if you own a property in a stable area (cities), the property will likely increase in value over the years. Even properties in sparsely populated and less desirable areas may appreciate due to general inflation. (For more on this, see the Inflation Tutorial.)
Leverage – Rental properties can be purchased with borrowed funds. This means that you can purchase a rental property by putting down only a percentage of the total value. Essentially, you can control the whole property and the equity it holds while only paying a fraction of its total cost. Also, the property you purchase secures the debt rather than your other assets. You may lose the rental property, but you shouldn’t lose your own home.
Tax Advantages – Your rental income may be tax free if you do not receive net cash flow after expenses are deducted. This means that your mortgage is being paid down and you own more of the total value of the property (rather than just controlling it), but you do not pay taxes on the money that is doing this for you. In addition to this, you can also pull out tax-free money by refinancing your loan if the property appreciates and the interest rates have fallen. Lastly, you may be able to avoid paying taxes on the sale of a rental property if you sell it and reinvest the money in another property (called switching or tax-free exchange). (To learn more, read Smart Real Estate Transactions.)
The average price of a liter of gasoline in Spain stood at 1.354 euros, representing a new record and an increase of 1.3% over the previous high, set last week, according to data collected in Europe Press from the Oil Bulletin European Union (EU).
Meanwhile, a liter of diesel reached days before the start of Holy Week the 1.308 euros per liter, which exceeds for the first time since late 2008, the threshold of 1.3 euros and stands at only 2.1 cents of record. This fuel prices increased by 1.2% in just one week.
Diesel fuel consumed by about 80% of the fleet, is costing less than gasoline since early 2009, but the balance of power could change if we apply the European Commission’s proposal to raise by 2018 at eight cents per liter the price of fuel.
The new maximum fuel also coincide with the consolidation of a barrel of Brent crude at around $ 122, and with a drop of about a dollar per barrel of Texas, the U.S. benchmark, to $ 107.
Gasoline prices increased 7.8% so far this year and 15% over the same week last year, while diesel has accumulated a 10% increase from January and 21% from the second week April 2010.
With the current price scenario, half fill a 55 liter tank of gasoline costs 74.47 euros, ten euros more than in the same week last year, while filling a diesel car has a price of 71.9 euros, 12 euros.
Despite the new highs, gasoline prices are behind countries like Denmark, Greece and the Netherlands, where more than 1.6 euros per liter, while diesel is far from the 1.5 euros to countries like Sweden and the UK.
The retail prices of fuels in Spain are below the European average. In fact, gasoline reaches EUR 1.536 per liter in the EU-27 and 1.572 euros in the euro area. In the case of diesel, the price stood at 1.401 euros in the EU-27 and 1.387 euros in the eurozone.
This situation occurs despite the price without tax in Spain is higher than the EU average. The tax-free level of a liter of gasoline reaches 0.705 euros in Spain compared to 0.683 euros in the EU-27, while the tax-free diesel stands at 0.762 euros in Spain compared to 0.733 euros in the EU 27.
Declined to make public any information about possible new partner until the judge has ruled. Sound in two years Similarly acted Victor de la Fuente, chief of Hyperion who refused to comment at this time but told this newspaper that there would be “a presentation, when the transaction is closed.” De la Fuente is a member of Hyperion who have moved to the island in recent months for meetings with administrators and the various parties involved in the case of GPS. Apparently, the fund manager for four months has made a study on the viability and growth potential of the hotel chain. The entry of an investor group in GPS welcomed by institutions and also from union platforms, because Hyperion has said that not only keep more than a thousand jobs linked to GPS but aims to grow the company a 20 percent. In the meetings held with various parties, investors have marked a period of two years to revive the company and have said they intend to make improvements to all facilities and open throughout the year several of the group’s hotels are closed now in winter.
Although all parties want to be cautious, most optimistic and believes that Hyperion is a company “reliable” for his career, and has successfully participated in the rescue of several companies both in hospitality and other sectors.
Plan to keep more than a thousand jobs related to the Grupo Playa Sol, recovered in two years, improvements in its facilities, opening some of them throughout the year and the hotel chain to grow by 20 percent. The capital management company risks Hyperion Capital Management seeks to enter GPS, inject liquidity into the group and take over the management in a deal that still must receive the approval of the holder of the magistrate No. 4, but unions are institutions and as how to ensure the viability of the company of Fernando. Venture capital is a financing instrument by which an investment company injects capital to a company in a minority and for a short time. Normally in this type of units are seeking a balance between the percentage of ownership and control of the company, investors assume a greater risk that is often willing to take a lender and in return get higher gains from the sale of its stake in the subsequent departure of society. Thus, Hyperion GPS insuflaría to the capital necessary to meet payments and intervene in management by using its experience in similar situations to clean the chain. Once healthy, the investor would sell its stake in the group after some time.
Sources close to the parties who in the case against Ferré, which instructs the magistrate Santiago Pinsach, the magistrate No. 4, say it has been at least two preliminary hearings (last Monday) to inform all parties of the offer Hyperion. In these meetings, which was attended by the prosecutor, state attorney, court administrators, representatives of the Balearic Government and trade unions CCOO and UGT, the judge announced that he would decide on the convenience of accepting this participation to the next day 20. This will open a time to study the suitability of this group as an investor and to allow the parties to suggest other potential investors.
Javier Perelló, one of the two directors of Grupo Playa Sol, said yesterday about the financial transaction “in theory everything is fine” but declined to make public any information about possible new partner until the judge has ruled.