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Getting Financially Stable: Everything You Need to Know About Taking Out a Loan

Being optimistic about your finances is only natural. Most people have high hopes concerning their job prospects, lifelong earning capacity and financial management skills. But, reality might have another plan.

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What Is Financial Stability?

 Financial stability is both an objective and subjective quality. The objective standard is having an income that is higher than your expenses. You must make more money than you spend.

But, the subjective character is based on your financial status. Most people will admit that rich people have a different life style than others. For many of them, they can coast for a while before the day of reckoning arrives.

But inevitably, it will arrive. Everyone pays the piper. So, even though the wealthy have a higher income, they also must develop wise management skills. We will discuss a few of these.

Make a Budget

 Musicians practice, athletes practice … pretty much anyone who wants to succeed practices and prepares a plan. How can you control your expenses, when you don’t even know what your credits and debits are? You need to start by making a budget.

Some people don’t want to face financial reality. They want to believe that they are wealthier than they are. We see this a lot with athletes and celebrities. When their salad days are over, they might file for bankruptcy.

If you fail to plan, you plan to fail. = Benjamin Franklin.

Create a budget. If you are continually dipping into your savings, then you know you are not making ends meet. And, something that cannot go on forever, will not go on forever.

Write down your expenses and income. Then, see what your surplus or deficit is. Decide how you are going to make up that deficit.

You might try to add more hours at work. Or, you might consider taking out a personal loan. Saving money requires having higher income than expenses.

Balance Your Cheque Book

 Once you have a planned budget, see how you are doing each month. Balance your cheque book. Many people assume that bankers are never wrong. But, they do make mistakes.

After balancing your cheque book, you can identify any errors made by your bank. This also gives you a better understanding of your spending habits. You need to know how you spend money before you can improve your money-spending habits.

Count Pennies

 Remember the parable of the grasshopper and the ant. The grasshopper liked to visit the grocery store in the middle of the week and throw large parties. He had a great bar-be-cue, but didn’t produce anything of note.

While, grasshopper partied, ant was working hard, storing up food for winter. Grasshopper wondered why ant worked so hard. Ant told him that when winter arrived, those who stored away wealth would survive. Eventually, winter arrived and ant had plenty of food stored up while grasshopper starved.

How will you reap, when you have not sown? 

Those who save money, count their pennies. If you need help calculating your pennies, then you can use the Acorns App. Financial management has never been easier.

This money management app helps you earn found money, grow your knowledge, invest for your future and spend smarter. It is like having a financial assistant with you all day long. Sometimes, people need a little nudge to improve their saving habits.

Cut Corners

Paying off debt requires both a physical and spiritual commitment. Physically, if you don’t have enough credit, then you need to reduce your debt. You need to cut corners.

Enjoy some home cooking and reduce your visits to five-star restaurants. You might want to watch an old movie on date night. Reduce your expenditures to create a better threshold for your budget.

Find New Income Sources

 Sometimes, debtors need a little financial boost to help them regain their composure. When you are priming a pump, you introduce a similar liquid to draw out the liquid. Find new income sources to increase your cash flow.

After you learn more about personal loans, you can find the best financing means. Use the new funds to pay off the bills with the highest interest rates. Compound interest can quickly drag you underwater, like a drowning swimmer.

Create Rainy Day Fund

 You wear a seat belt just in case you get in an accident. A rainy day fund can help you overcome little glitches in the budgeting process. For example, your rent is probably due the beginning of the month, while your pay cheque arrives every two weeks. Sometimes, these two periods of time don’t mesh perfectly.

Instead of incurring late fees, create an emergency spare cash fund. You might even include a full month’s rent. This ensures that you are always on time.

Landlords and bankers expect you to pay your bills on time. They have a very fine-tuned system that will deposit the funds into their bank accounts immediately. There is a “Domino Effect” when they’re not paid – managers ask where the money is.

A rainy day fund smooths over many rough edges. It can be used to keep everyone happy. Toss a $20 therein when you get paid.

Healthy Financial Management Skills

Changing bad financial management habits can take some time. Psychologists believe that the development of good skills might take at least two weeks of constant repetition. Send yourself an alert from your smart phone, urging you to save more every single day.

After two weeks, there is the hope that this new habit will be well-ingrained. Use a multi-dimensional strategy for regaining financial stability: make a budget, cut costs and find new income sources. Develop healthy financial management skills to pay off your debt. Then, you can sleep better at night.

Important Steps In Getting Your Loan Approved

Getting approved for a loan certainly isn’t the easiest process in the world. With Brexit pushing the future of the nation’s economy into uncertainty, lenders are less strict than they were during the recession of the noughties, but more strict than they have been in the past. Bottom line: it’s still very important to present a great package if you want your loan to be approved. Here are some important steps to getting your loan approved…

Review your Personal Preferences

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Before you head straight to your bank and start asking questions, spend some time researching the market, and seeing what your alternatives are. This is an essential step to ensuring you can get your hands on some of the best offers on the market. This means thinking about the type of loan you’re looking for, the terms that you can reasonably afford, and how you’re going to pay off the loan in the shortest period of time possible. When you’re looking for a specific type of loan, such as a personal loan, auto loan, or a mortgage, scouring the market and avoiding impulsively jumping at any of the offers that arrive in your email inbox, is absolutely essential to coming out on top.

Know your Limits

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When you’re pursuing a loan, it’s important to be aware of your current credit score and your history. All good lenders will tell you the bracket of credit scores required for approval for a certain loan. You can prepare in advance by requesting a copy of your credit and history a few weeks prior to your actual application. Start reviewing your history for accuracy, and make sure you have enough time for correcting any kind of errors in your history. These days, lenders put a lot of emphasis on how you’ve used credit in the past. If there are any mistakes left in your report, you may wind up with a much lower score, which can obviously hurt your chances of being approved. Always consider your personal finances when you’re planning to pursue a loan, and target deals based on your limits, and realistic ability to make repayments which you can comfortably afford.

Manage your Expectations

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We’ve said it once and we’ll say it again: rushing through the process of applying for a loan is never a good idea. Loan officers have very strict protocol to follow when they’re approving loans and getting the money to applicants. Through the entire process, you should be discussing the sequence of your events so that you’ll know what to expect moving forward. While some loans can be pre-approved right out of the gate, you may not know all the specifics until a number of weeks have passed. Ask the experts when it comes to following up. Your overarching goal should be securing a loan that you definitely have the means to repay. Getting turned down for loans can be frustrating, but it’s important to understand your situation thoroughly and manage your expectations, and not to ruin your credit by applying for loan after loan.