3 Secrets Of The Pro Traders In The Forex Market

When it comes to the secrets of pro traders in the Forex market, there aren’t really rules or tricks of the trade that can apply to everyone. Because everyone is different. Not to mention everyone has different training and backgrounds and feelings towards trading!

So whether you’re trying to avoid burnout with your current trading strategies, or you simply need a new perspective, here are some secrets that pro traders use every day!

Strategy and Implementation Are Only a Small Part

Having your personal edge, your strategy, as well as learning how to implement those strategies will only be about 25% of your work. You need to educate yourself on the “Ins and outs” of the Forex trading world. Understand terminology, research market behaviors, as well as comprehend the technical analysis of the market.

research secrets of pro traders
via https://pixabay.com/photos/laptop-computer-browser-research-2562325/

Because not everyone has the opportunity to go to school for finance, there are a lot of ways you can do the research for yourself. Firstly, you can use online resources. There are many trading sites where you can read more about Forex trading from professionals. Not only that, but also find audiobooks and e-books written by trading professionals online.

Not to mention you can go to your local library, as well as take online courses. All things considered, there are lots of ways to learn and study the secrets of pro traders!

You Need an Edge

All in all, you can read books on market strategies and understand market behaviors, but when it comes to actually trading, you need an edge. An Edge is a Forex term that means you use all of the tools in your tool belt to create your own personal strategies. The best kept secrets of pro traders can sometimes be something as simple as knowing when and WHY you are trading a stock.

Here are some of the things that can help you create your own ‘edge’ over the market:

  • Technical analysis
  • Support and resistance
  • Researching market behaviors
  • Account management
  • Large portfolio
  • Diversified portfolio
  • Understanding retail and market trends

Finding your edge may mean having a detailed understanding of the retail industry, or reading social media trends, or being in tune with technical analysis of the market. Understanding the difference between investing in Index Funds, as well as understanding WHEN and WHY to invest are equally important!

Because there are so many different ways to get an edge and get ahead with your personal perspective, finding your unique trading style doesn’t have to be hard!

Find a Mentor

Trading can sometimes feel like a very lonely profession. However, one of the best kept secrets of pro traders is that finding a mentor is key to your future success as an individual. Sure, you are the one who will be dealing with your own portfolio, but learning from other professionals is a GREAT resource for your future income.

find a mentor
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Finding a mentor in this profession doesn’t have to be hard. Here are a few things you should do in order to find someone who will take you under their wing and help you start tracking your net worth and success for the future!

  • Proper Vetting. You can’t just train with some random person off the street! Do the research to find the right professional who will fit your style of trading, as well as someone who is successful in the industry!
  • Pay for Their Time. Finding a mentor isn’t going to be easy. Not to mention it may not be free! So be willing to pay for mentoring sessions, as well as advice.
  • Knowing the Ideology. Find one person, work with them closely, understand their unique ideology, and you can find success.

All things considered, there are a LOT of different approaches you can take to trading. However, finding a mentor that can take you down a singular trading path, and help you be successful is very important! We all aren’t experts overnight.

The Secrets of Pro Traders Just for You!

Now that you’re aware of some of the “secrets” of pro traders, you can start to find success in your trading! All in all, finding the right mentor, knowing your edge, and understanding more about the Forex market will be your best weapons against and ever changing market. Keep these secrets of pro traders close and you’ll find your own success in no time!  

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What Is Wealth Management?

“Wealth management” is a term that is often thrown around, but if you’re new to investing, it can be a difficult concept to grasp.

Although there are lots of financial planning tips around, unless you can develop a wealth management mindset and know-how to track your wealth management, you’ll struggle to see the desired returns.

So, here we’ll explore this topic in more detail and discover the ways that you can easily track your wealth management.

The Wealth Management Basics

In simple terms, wealth management is the principle of enhancing or solving your financial situation. The term was coined by finance professionals as the ability to choose the best types of investments rather than just investment advice. Wealth management should consider all aspects of a person’s financial life, so there is a holistic approach where all the services needed to manage money and plan for the future are covered.

Many wealth management strategies are based on specialisation in particular areas of focus. So whether you decide to consult a professional or do it yourself, you may have some aspects of your wealth management outsourced to others to develop the most beneficial strategy.

There are four main areas of comprehensive wealth management. These are:

Each of these areas requires different planning strategies to ensure that you are completely covered.

The DIY Approach

Although JP Morgan statistics show that individual investors make an average of 2.6% per year, far lower than the 7-10% typically enjoyed with the stock market, it is still possible to take a DIY approach to wealth management. Of course, you’ll need to understand the best types of investments for your specific risk profile.

DIY wealth management requires some basic abilities and resources, including having the proper emotional constitution. This means that while you can go with your gut if you feel strongly, you don’t get caught up in an emotional whirlwind of investing. You also need to feel comfortable with numbers, so you can analyze financial reports without falling for any deceptively positive spin.

You will also need to develop the skills to complete present or future value calculations, but there are tools available to assist you with this. It would help if you also made an honest assessment of your unique limitations. This will enable you to start in areas where you feel confident and see help for all other areas.

For example, while you may feel confident about structuring and managing your individual stocks to create a diversified portfolio, if you’re not sure you could accomplish this with bonds, you could use an outside manager to handle these investments.

As your abilities grow, you’ll start to feel more confident that you can bring some or even all of these outsourced areas back under your direct control.

Tracking Your Wealth Management

One of the most crucial areas of DIY wealth management is a way to reliably and accurately track the performance of your financial products and investments. You need to honestly assess how your investment efforts are matching professional portfolio performances to determine if you need to seek help or can continue going it alone.

Fortunately, there are some great tools and apps that can help you to track your wealth management. These include:

  • Yodlee.com: This platform offers a variety of online money management services, allowing you to track all of your investments and accounts. You can not only track investment values but also create budgets, track spending, and even pay bills through this site.
  • MoneyStrands.com: This is a money management tool that can gather all your financial information automatically. This allows you to see all of your investments and accounts in one place, and you can even sign up for personalized financial advice.
  • Money-rates.com: This website allows you to compare interest rates on credit cards, CDs, savings accounts, and money markets quickly. This allows you to maximize the interest you earn on your investments and savings while minimizing the interest charged on any debt. The site also offers tools and information to help you to make informed choices.

Getting Started

The first step to getting started with your wealth management strategy is to get an understanding of your financial situation. You can only start to address investments and financial planning once you have an accurate and reliable picture of your finances. Unfortunately, according to US Bank, only 41% of Americans follow a basic budget; one of the fundamentals of financial planning.

Fortunately, there are lots of tools that can help you to not only establish a budget but also keep track of your expenses and costs. These tools can also be used to streamline your expenses to create disposable income to start your investment journey. These include:

  • Mint.com: This is one of the most popular finance websites to track budgeting and cashflow. It can help you to analyze your financial situation and will even offer some suggestions on where you can save on your expenses. You can also use the site to research bank accounts or credit cards to get the best deal.
  • BudgetPulse.com: This website provides a basic budget system to monitor your savings and spendings. You can also track finances in multiple currencies, so it is ideal for those who frequently travel or have overseas investments.

So, Are You Ready to Start Your Wealth Management?

If you want to have a strong financial future, it is crucial to develop a wealth management mindset and take a more proactive approach to your finances.

Fortunately, there are professional experts and some great DIY tools to help you tackle all aspects of wealth management, from managing your budget to making investments, allowing you to establish a solid portfolio to meet your financial goals.

Author Bio:

Lorraine Halton enjoyed a successful career in the finance industry and now uses this expertise as a professional writer. Through her blog posts and articles, she helps people to improve their financial health. Whether you need to organize a budget, save money or plan your financial future, Lorraine can help.

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How Sole Traders Can Separate Their Personal And Business Finances?

Sole traders are more than just individuals; they’re business people who are self-employed and running their own business alone.

As a sole trader, it can be easy for your life to become entwined with that of your business, as it means that your finances become combined and you find it difficult to separate a business expense from an individual one.

This can make your life difficult, particularly when it comes to paying taxes, creating budgets and accurately assessing how much money you’ve spent on your business over a period of time.

To help, here are some practical ways you can divide your business and personal finances as a sole trader and make both facets of your life enjoyable.

Use An App

There are a variety of apps out there that are designed to allow you to track your business expenses, invoices and more, meaning that you can accurately log your business finances in one place and keep them separate from your personal expenditure. This will make accounting easier and allow you to track how much money your business is costing.

Be More Careful With Money

It sounds obvious, but when you become a sole trader you need to be more careful about your spending in general. Learn ways to save money, such as buying some items in bulk and avoiding using tempting, but hard to keep track of spending methods, such as contactless. This approach will help you to save money and keep your business and personal finances under control.

Keep Your Borrowing Separate

In the finance market, there are personal and business loans, but in some cases services like overdrafts and credit cards can make the lines between borrowing for business and personal use blurry. To avoid any confusion, take out dedicated personal and business loans instead of using short term financing options. This approach will save you money and time in the long term. Check out https://www.citrusloans.co.uk/ to find a selection of personal loan options to suit any personal need, so that you don’t end up using your work credit card or dipping into savings designated for your business.

Mark Every Transaction

If you have several transactions in your bank that you are unsure of, then you’ll be unable to accurately plan your spending and completely understand your business’ cash flow. As such, you need to make sure that you label every transaction accurately and are clear about where all of your money comes from.

Create Separate Budgets

Draw up a personal budget alongside your business one, and make sure that you stick to both. This will show you how much money you have to spend, and where you need to be spending it. In both your personal and business budgets, you need to make sure that you leave a little money aside for emergencies, and some to be put into a savings account to accumulate and help you prepare for any serious emergency expenses that you encounter.

Learn To Do Your Accounts Yourself

Doing your accounts might seem time consuming and boring, but it’s an important part of running a business. It will teach you to appreciate the value of money and understand the rate of tax you need to pay for every pound you earn. Whilst it might be tempting to outsource your accounts, doing them yourself will allow you to price your services accurately and learn a valuable skill that will stand you in good stead throughout your time in the business market.

A Business Bank Account Is The Ultimate Way To Separate Your Money

Unlike other forms of business, as a sole trader, you’re not legally obliged to have a business bank account, and as such in the beginning, when you first became a sole trader, you might not have thought it necessary to open one. After all, it was just more hassle and work for you at an already busy time. However, now that your business is up and running, with more transactions, it will be tough to keep your business and personal money separate without a business account. Business bank accounts also offer a wide range of additional benefits for your company, making it easier for you to conduct your business and provide your clients with the services they want.

Separate Your Savings Too

As well as your current account, budgets and borrowing, you should also separate your savings when you become a sole trader. Create a separate account for your business savings, so that you can reinvest your profits into your business and prepare for the future. Alongside business banking options, there is also a wide range of business savings accounts on offer so that you can separate your personal and business savings.

Being a sole trader can be a serious challenge, but by using these tips you can be organised, separate your finances and make your accounts easier.

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Small Business Investment Opportunities That Aren’t Risky

There are many business investment opportunities that can give you a chance to be your own boss. Being a handyman is one of them and the best part is that your investment and risk are minimal.

Are you tired of working for somebody else? Well, if that is the case it might be the time to put your entrepreneurship skills and ambition to good use. Many would like to start their own business. However, it is easier said than done. Starting a new business demands funds and specific skills. At first, this might sound intimidating but hold on! Don’t give up before you even started. There are some great small business investment opportunities for you. All these suggestions demand minimal investing, which minimizes your business risk.

How To Put Your Handyman Skills to Good Use?

Some people just have a knack for fixing things. So, why would you put those skills to good use? To be an official handyman you might need to obtain a license and you might need to get registered. These types of regulations are largely dictated by the state that you live and work in. Your startup costs would include tools. In addition to tools, you need to be mobile. The best vehicle for a handyman is a pickup truck.

Appliance Repair Specialist

In order to pursue this business investment opportunity, you need to be a handyman with a supplementary set of skills. Therefore, you would need to have knowledge of appliances and their inner functioning and mechanisms.

Appliance Repair Specialist business

To fix appliances you must have a greater understanding of how they work.

Smartphone Repair Expert

We all have smartphones and we drop them, hit them and do all sorts of things that might damage them all the time. Thus, it is no surprise that smartphone repairs are in demand. Investing in a toolset might be all you need if you have the necessary skills. If not, you might need to take a course. Be aware that the demand is there, but so is the competition. Big producers of such hardware, like Apple and Samsung, will be your biggest competition. Still, you can be very successful in this line of business, but you might need to start off with lower prices in order to attract new incoming business.

Smartphone Repair Expert investment opportunity

People have their entire life on their phones, so imagine their panic when it gets broken. The demand for smartphone demand will only continue to grow.

Business Investment Opportunity in Web Development

Many business owners are too busy to work on their business’ websites. Also, some might not have the skills even if they had the time. You would need to write content, make sure the information on the website is up to date and all other activities that are included in website maintenance. To do this you would need to have some sort of background in this or similar field. The great thing about this business option is that you can work from home, which is a pretty great workplace benefit.

Pour Your Creativity into Your Own Blog

If you are a word wizard, becoming a professional blogger is an excellent business investment opportunity for you. You would write a blog about something that you know and something you are passionate about. For example, if you are an expert in all things beauty related, you will not start a blog on digital marketing. You will write about everything related to beauty. The way you will make money is through direct advertising. The more eyeballs you have on your blog, the more advertisers you will attract. This is another great business opportunity that can come to life from the comfort of your home.

Resume Writer

Your resume is the first thing your future employer sees that represents you and your past business ventures. Of course, you want it to be as impressive as possible. In today’s tough and competitive job market, people are willing to pay good money for professional assistance on their resume. To do this, you must have good writing skills and some type of knowledge of editing. It might take you time to build up a client base, but once you get the ball rolling you will have clients coming at you left and right.

SEO Expert

SEO experts are focused on your website’s content and your SEO ranking. The following obligations fall under this popular job description: keyword analysis, Google Analytics, writing content, staying up to date on current SEO trends and strategies, etc. To be able to run this type of business you would need to have related prior experience. Nevertheless, there are classes that you can take, but you will have extra costs related to your additional education. Once your business takes off you will need a website for marketing purposes. The great thing is that you will know how to work on your website’s SEO ranking.

Wedding Planner

Those that have a background in hospitality or event planning might have a bright future as wedding planners. If you top that with great communication skills and a bubbly personality, you are golden. However, be aware that wedding planners are always on the move. You cannot do food tastings and venue research from home. Also, weddings die down during the winter months. Yet, this is not true for cities like Los Angeles and Miami that are warm all year round. Thus, you might want to move if you plan on seriously entering the wedding planning business. For those that need professional and reliable assistance during their relocation visit movingkings.com.

Wedding planning for small business investment

Put your communication skills to good use and start a wedding planning business.

Professional Photographer

You can be a general photographer, but you can also specialize in something. For instance, you can be a wedding photographer or a fashion photographer. For those that want to dive into this business investment opportunity, but they do not have relevant experience, they can start off as an assistant to a more experienced photographer. Professional equipment can be expensive, but once you invest in it, you will be covered for quite some time. Investing in this type of equipment would be a great way to spend your last bonus check.

Do You Have An Idea on How To Turn Your Skills into Cash?

As you can see there are many small business investment opportunities that do not carry a big risk. It is important to realize that every investment carries a certain amount of risk, so you always need to think twice before diving into a business opportunity. It doesn’t matter how small or big it is, always keep your eyes wide open.

There is no doubt that you will pick the best possible business venture to dedicate yourself too. Make sure you are dedicated, determined, persistent and patient because every business will demand these qualities out of its business owner. Happy investing!

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What Is A Personal Line Of Credit & How Does It Work?

A personal credit line can be seen as a loan from the bank that functions like a credit card system. This means that you will have a particular amount of money under the loan, just like the limit of a credit card. You can then use this money for anything that you want.

It is quite easy to secure a personal credit line, as all you will need is proof that you are the kind of person who repays a debt on time. You will also need a credit score of 700 and above to qualify for this service.

Personal line of credit

The Uses of A Personal Line of Credit

There is no limit to what you can use a personal line of credit for. However, the failure to repay a loan at the specified time can result in complicated financial issues.

A personal credit line can be used to tackle your needs at home. However, there are various scenarios that make taking it worth considering, for example, its flexible repayment and interest rate options.

Here are a few ways to use a personal credit line:

Funding Projects with Challenges: Getting funds for projects can be challenging to anyone, especially when an unforeseen project that needs urgent attention comes up. For example, while planning the wedding of your daughter, your roof suddenly needs replacing. You can easily fix these situations with a personal line of credit.

Irregular Incomes: This is for those who have no means of determining the exact amount they earn within a given time. The type of people that usually fall into this category are people who work on commission and those who are self-employed. They can easily pay monthly bills by using a personal credit line as they wait for the next paycheck to arrive.

Emergency Scenarios: Everyone gets into situations that they cannot control. We are all victims of emergency scenarios at some point in time. For example, you were about to pay your son’s college tuition when the credit card and tax bills come up at the same time. A personal credit line can help to boost my credit and consolidate debt.

Advantages of A Personal Credit Line Over A Credit Card

Here are a few benefits that a personal line of credit has above a credit card system.

·         A personal line of credit is a better alternative to the credit card system because it offers a lower rate of interest than the credit card does.

·         It also affords different access to cash instead of a loan for a single purpose or lump sum.

·         If the credit line remains open, you can take loans in increments, pay them back, and then borrow again.

·         It is quite different from a regular loan because you only pay interest on the borrowed balance instead of repaying in fixed installments.

Personal line of credit different from a regular loan

Challenges with A Personal Credit Line

Everything with an advantage has a disadvantage, and a personal line of credit is not exempt.

·         Getting your request approved and the interest rate that banks charge are the two greatest challenges.

·         Banks take a huge risk when giving out loans because all they have from the client is a good credit repayment history. This makes getting one very difficult for those who have a poor credit repayment score.

The bottom line is that a personal credit line often comes handy in emergency situations. If you are in urgent need of some funds and have no idea where to get them fund, a line of credit is a great means to do so.

However, as stated earlier, there are a few setbacks that you may need to consider. Defaulting in payment can have a negative impact on your credit. It is possible that you lose any collateral used in securing the line of credit in the first place.

If you are struggling to gain financial stability, easy access to funds can be a challenge in the long run. Hence, it is important that you develop a payment strategy before securing the credit line.

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Should You Invest in Single or Multi-Family Rental Property?

Choosing the right investment property is a very personal endeavor—and one that should not be taken lightly. Is it better to go with a single-family property or is a multi-family rental a better option? It is probably the most common question that long-term buy and hold investors ask.

And there is no straightforward, easy answer.

When you are looking for the right place to invest your hard-earned money, you have to carefully consider all the choices available to you. There are advantages and disadvantages to each. Because of this, each investor should approach the matter systematically weighing the benefits based on their own needs, portfolio, and financial goals.

Single-Family vs. Multi-Family Rentals

Single-family properties are not only stand-alone homes. They can also include condos and townhomes as well. A single unit is purchased or owned, and there is just one tenant (individual or family) living in it. By contrast, a multi-family rental is a residential property consisting of multiple units that are purchased or owned together. One tenant or family lives in each unit, but because there are various units, there are also multiple families in a single structure or property.

Single-Family vs. Multi-Family Rentals

Management of each type of property is often dramatically different. Often investors will hire a property management company to handle most issues, including maintenance, rent collection, tenant issues, and property rental. The investor would need to consider financing, financial goals, and cash flow. However, selecting the right property for your portfolio could prove to be quite lucrative and work to your advantage.

Advantages of A Single-Family Property

When you have multiple families living under one roof, there are bound to be conflicts. Single-family properties remove the tenant-tenant conflict issue because each unit is separate. Maintenance is a very important aspect of any property. A well-maintained property will yield a higher return.

On the one hand, single-family properties are often easier to maintain because there are usually no common areas. However, maintenance on multi-family properties allows you to make extensive repairs in a single blow, such as repairing the roof. Contrast repairing the roof on multiple single-family properties to repairing the roof on a multi-family property where the repair covers several units at once.

From a financial standpoint, investing in single-family properties allows you to diversify your portfolio across various neighborhoods, cities, or real estate markets. The liquidity of single-family homes is much higher than a multi-family property.

Advantages of A Multi-Family Property

For the most part, multi-family properties are, overall, easier to manage. All the units are under one roof which means, maintenance, repairs, and renovations can be done at a single site in one shot instead of having to travel to multiple units that may not even be in the same city. For instance, painting one multi-family property is less expensive and time-consuming than painting several units located in various parts of the city or state.

Advantages of A Multi-Family Property

Rental income is typically higher for multi-family properties simply because there are several units under a single roof. Instead of collecting rent on one or two single-family units, you collect rent from 10 or 20 units, give or take a few depending on the size of the property. That can be a significant boost to your financial profile. This also offers some protection against the risk of not getting any income for a month or even several months.

Should You Consider Investing in Real Estate?

You have to weigh the pros and cons of each property while examining your own financial goals to determine which type of real estate investment is right for you. Several areas to consider:

  • What type of financing are you able to get? Or do you have savings that you want to invest? If so, how much can you afford for a down payment? What can you afford in monthly payments even if it takes some time before you receive rental payments from tenants?
  • How much rental income do you want to receive each month? Can you manage financially if you don’t receive rent for a month or more?
  • Do you plan to maintain the property or properties yourself, or will you hire an individual or company? What about managing the properties?
  • Do you plan to sell the property at some point, or will you buy and hold?

Investing in single-family or multi-family homes can be quite rewarding for your long-term financial goals if you take the time to choose your property wisely.

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What is Bad Debt Expense in Business?

Finding your way through the ins and outs of owning your own business can be difficult, but extremely rewarding! Along the way, you will not only find new and interesting ways to create profits, but you also learn a lot about business expenses and debt. Bad debt expense in business is one of those things that can hurt your business, but you may not have any idea what it is until it is too late!

So what exactly is bad debt expense? Much like learning how to calculate the cost of debt, or even learning how to file your taxes properly, bad debt expense is a part of doing business. In order to make that clear to you, here is a breakdown of examples, as well as steps you can take as a business owner to avoid it!

Defining Bad Debt Expense

Unless you’re an accountant or have been in business for years, defining bad debt expense can sound intimidating. However, once you understand exactly what it is, and how it can affect your business, then it’s quite simple!

Defining Bad Debt Expenses

Your company’s accounts receivable will be where you should be looking for bad debts expense. It can also be called “doubtful accounts expense”, or even “uncollectable accounts expense”. This means that your business has provided goods or services to a customer on credit. Unfortunately, when the time came to collect on that credit, the customer did not pay what was owed.

However, this doesn’t mean you get to just go after the customer for the amount owed legally. Bad debt expense is basically when the customer is no longer able to pay. This is generally due to things like bankruptcy, going out of business, or other unfortunate issues.

How Do You Account for Bad Debt Expense?

Finding how to both report, file and account for bad debt expense in your business finances doesn’t have to be tricky. They are typically sorted as either general administrative expenses, or even as a sales expense. However, bad debt expense does create an obvious obstacle for your accounts receivable!

In addition to losing goods and/or services, your accounts receivable will also be out of balance. Although businesses can always retain the right to collect the amount due if the customer’s financial situation changes, your business is in the red for that account for now.

Two Main Ways to Recognize Bad Debt Expense

Within your company’s financial records, there are two primary ways to acknowledge bad debt expense:

  • Allowance Method: This means that your company will take steps to predict this type of expense before it happens. The losses can be calculated into expected income for the year. Therefore, a company can avoid an account overstatement. This can be calculated from previous losses of this kind from the company, as well as from other companies in the same field.
  • Direct Write-Off: This is a method of dealing with bad debt expense that is extremely straight forward. Instead of calculating the non-payments into their overall budgets, businesses can write off the expense. All in all, this means that uncollectible funds are written off as a base expense by the business. However, this method can lead to more difficult accounting in the future for many different reasons.

Within your business, how you deal with bad debt expense is completely up to you. Not to mention what is best for the company as a whole.

write-off debt

Avoidance and Modern Business

All things considered, it’s extremely difficult to avoid bad debt expense in the modern business world. When dealing with many different clients, or even different companies, it’s extremely difficult to predict their successes or failures. That being said, there are a few ways to avoid this expense altogether.

As bad debt expense only occurs when dealing with credit for customers, you can simply avoid this expense by not dealing in credit. Simply allow for payments to be made upon receipt of services, or goods.

Because businesses allow customers to receive goods or services on credit, they run the risk of this debt becoming uncollectable! However, this isn’t always a black and white, clear picture kind of decision to make. There are a lot of reasons why you may allow a customer to receive credit from your business, as well as whether or not you aggressively collect those debts.  

Finding Your Way Through Bad Debt Expense

Altogether, owning a business is filled with many ups and downs. From learning how to deal with people one on one, as well as wading your way through corporate takeovers, finding your way through bad debt expense doesn’t have to be a challenge! You can find great ways to collect debts, to deal with clients, but some expenses can’t be avoided.

Overall, how you deal with your bad debt expense is up to you and your business. Whether you prefer the direct write-off method, the allowance method, or trying your hardest to avoid it altogether, there are a variety of paths! However, you can’t predict how well, or how poorly your customers will do. Bad debt expense is simply one of the many, many costs of doing business in the modern, credit-driven world.

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How to Calculate the Cost of Debt

Trying to calculate the cost of debt?

Being in debt is never easy. Whether you’re struggling with student loans or walking a tight rope with credit cards, being in debt can cost you a LOT. In order to help you make your life a little less stressful, here is a breakdown of how to calculate the cost of debt.

What Exactly IS the Cost of Debt?

There is a cost to being in debt! The cost of debt is the rate at which an individual, or even a company, pays down debt. Basically, taking into account after-tax costs of debt, as well as interest paid. After taxes are taken out, you can determine the interest expenses that are deductible, like valuable above the line deductions!

What Exactly IS the Cost of Debt

Basically, this means that the cost of debt is the return someone has for creditors, as well as debt holders. If someone has lent money to another individual, it is essentially the capital compensated for risks. All in all, it is money owed before taxes, after taxes, and after investments.

Why Calculate the Cost of Debt?

Breaking down the cost of debt for anyone is so much easier than finding out your cost of equity. It is a more straightforward approach to finding out an individual’s worth Essentially, it can show the default risk and the level of interest rates for anyone.

Calculating the cost of debt is also a critical component of determining your WACC. For individuals, it can also mean finding where you can afford to save, invest, as well as dramatically decrease your debt.

Calculating the Cost of Debt: Need to Know Information

There are several factors that go into calculating the cost of debt. However, in order to calculate this number you need two important factors. The marginal tax rate and the effective interest rates paid.

Effective Interest Rates

Finding the effective interest rate that you pay on your debt is simple. You divide the annual interest by the total amount of debt owed and then multiply it by one hundred.

Looking over debt

Marginal Tax Rates

Marginal tax rates are the tax rates people pay for both federal and state combined. Here is a break down of the tax brackets in the US:

  • 10% tax rate means a taxable income of $0 to $9,700
  • 12% tax rate means a taxable income of $9,701 to $39,475
  • 22% tax rate means a taxable income of $39,476 to $84,200
  • 24% tax rate means a taxable income of $84,201 to $160,725
  • 32% tax rate means a taxable income of $160,726 to $204,100
  • 35% tax rate means a taxable income of $204,101 to $510,300
  • 37% tax rate means a taxable income of $510,301 or more

There are of course other stipulations. Taxes owed, as well as deductions can make a difference in your federal tax rate.

State income tax rates vary from state to state. However, they are not typically over 12%.

The cost of debt can then be calculated from these two sets of information! All in all, calculating the cost of debt is essentially multiplying the effective interest rate by the one minus the marginal tax rate.

Example of How to Calculate the Cost of Debt for You!

When it comes to calculating the cost of debt, it is best to put it into simple math. Instead of tracking your net worth, sit down and track your own cost of debt!

If you make $100,000 a year and pay 24% federal taxes, then 5% in state taxes, your marginal tax rate is 29%. Your debt is paid at an effective interest rate of 7%. There fore, your cost of debt is as follows:

Cost of debt = 7% x (1-29%). 0.07 x (1-0.29) = 0.049. This means your personal cost of debt would be 4.9%!

Uses for Cost of Debt

Now that you are aware how to calculate the cost of debt for yourself, WHY it is important to do this, as well as what variables you need to know beforehand you’re able to look into your company’s credit situation.

Once it is clear that your debt is at a minimal percentage against the size of your net worth, you can understand where you stand with creditors and your debt more accurately!

Knowing How to Calculate the Cost of Debt

This information is not only vital to the outward success of your personal finances, but also to your personal success! Now that you know how to calculate your cost of debt, you can successfully create a clear financial picture for your future!

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What Happens to Your Debt When You Die

If you’ve ever been in debt, you know how hard it is to see the light at the end of the tunnel. However, even if you DID find a way to start reasonable payments, your debt still follows you no matter where you go. Even past the grave! So, what happens to your debt when you die?

Can Debt Be Collected After You Die?

All in all, it’s hard to say whether or not your estate will have to pay up once you’ve passed on. As a matter of fact, your debt and debt recovery can indeed follow you past the grave! However, there are lots of laws and policies that regulate how debt is collected when you die.

Can Debt Be Collected After You Die?

Once you’re dead, your estate, or the assets that you’ve left behind, has the responsibility of being in charge of your debt. If you leave your estate to one person, or even several people, they are not responsible for paying off what you owe. This process is called probate.

What is Probate?

There are several things that happen once you are deceased. Your last will and testament will allow for your assets to be distributed as you please. Similarly, if you don’t have a will, then your assets will be allocated to all of your closest relatives. As well as distributed to creditors.

Probate is the legal process for dividing up your property, assets, and even accounts. This is a court-supervised process that includes the following:

  • Authenticating a Last Will and Testament
  • Locating assets
  • Valuing all assets
  • Paying final bills, taxes, as well as debts owed
  • Distributing the rest of the assets to beneficiaries

Is Probate Always What Happens to Your Debt When You Die?

Not all deaths end in a probate, however. Probate is only required when estates are valued above a certain level and are not being automatically transferred to a surviving joint owner. Like if a wife died, and the husband was legally the joint owner of all of their property.

What Can I Do to Help My Family If I Die?

In addition to having a will, there are many other things you can do to make sure your family and close friends aren’t struggling with what happens to your debt when you die. It’s not necessarily difficult to put things in order for your loved ones, however it’s not always the foremost thought in people’s minds.

Write A Will

One thing you can easily do is make certain you have a last will and testament set aside for your beneficiaries. This will not only allow for you to set aside certain assets for certain people, but it can also mean not leaving a financial MESS for your executor.

Will and Testament

Finding An Executor of Your Estate

The person primarily responsible for dealing with your will and your estate after you’ve died is called the executor of your estate. While it can be one person or several, it is always a good idea to name someone that you trust to handle writing checks to your creditors. Together with handling your debt, your executor may also see that all of your accounts, or property, are evenly distributed.

The Importance Of Life Insurance

Life insurance is a great way to make certain that your loved ones don’t have to deal with your debts when you die. Finding the right insurance that will not only cover debts but also the cost of your funeral expenses as well, will be extremely helpful.

Times When Others Are Responsible for Your Debt

There are circumstances where other people may hold the task of dealing with your creditors once you’ve passed. Primarily this only occurs when someone has co-signed for a loan, live in community property states, as well as being a joint account holder.

Laws Against Collectors and Collections

In addition to having only specific people who may have to deal with what happens to your debt when you die, there are lots of laws that protect your assets as well.

Debt collectors are not allowed to contact a dead person’s spouse, parents or guardian, or executor of the estate to talk about the debt. They are also not allowed to lie or trick the family members into believing they are not responsible for the debt.

Creditors cannot go after certain things once you’ve passed. They are not allowed to attempt to collect from life insurance policies or retirement benefits passed onto a beneficiary.

Laws Against Collectors and Collections

What Happens to Your Debt When You Die Can Easily Be Controlled!

If you’re looking into finding solutions for your loved ones NOW, while you’re alive, then there are lots of steps you can take to make sure it doesn’t follow your family. You can have a set will, you can take out a life insurance policy, as well as naming a trustworthy executor of your estate to handle all of your debts for you.

 No matter where you go, your debt follows you. However, that doesn’t mean you have to let it follow you beyond the grave!

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Most Effective Debt Recovery Solutions

Looking for an effective debt recovery solution?

Collecting money from people who are in debt to your company, is never a fun task. Going after the money you are owed can create unnecessary trouble for you and your business. That’s why there are debt recovery solutions available to take the stress out of retrieving the money owed.

You will find this helpful: 4 Interesting Ways to Spend Your Tax Refund

However, the debt you are collecting is indeed owed to YOU. As a creditor, it is legally your right to attempt to collect the debt after a missed payment. Unfortunately, there is only so far you can go before you move from debt collection into debt recovery.

What Is Debt Recovery?

Debt recovery is when a debt has gone unpaid for a long period of time. As soon as the debt has been unpaid for an extended period, the creditor, or company, hires a non-biased third party to recover the money owed.

Debt recovery is different from debt collection. Debt collection is when you as the creditor attempt to contact the consumer. After the loan, or bill has gone unpaid for an extended amount of time, it is time to bring in the professionals!

Effective Debt Recovery Solutions In the Modern Age

If you are a consumer, ignoring your debt, you no longer live in a world where you can rip up the bill and be done. Maybe you fell for a minimum payment plan, or fell on hard times. Regardless, your debt follows you all over the world!

Digital Footprint debt

As digitizing has made credit scores, as well as recent contact information more available, you simply can’t outrun what you owe!

As a creditor, there are several debt recovery solutions that are extremely effective today. Find a debt collection company that will not only include these strategies but also use all of them in order to close the account!

Finding the Debtors

Collecting up-to-date information on the debtors is vital to debt recovery. However, this information isn’t just about physical addresses!

Here are a few things a good company will uncover about consumers:

  • Phone number
  • E-Mail address
  • Most recent address
  • Commercial Information

Being able to locate, as well as contact a debtor attempting to run out on their debts is one of the most practical and necessary debt recovery solutions!

Creating Debt Recovery Solution Priorities

A good debt recovery solution is finding the right amounts, as well as knowing you can collect them! Altogether, this means that if a debt seems to have the potential to be repaid, industry specialists will likely prioritize collecting this debt first.

Technology allows for this to be done not only with by researching consumer patterns, but also experimenting with new collection strategies. Prioritizing certain collectable debts will not only get you your money faster, but it will also keep the debt recovery company in business!

Digital Collection and Virtual Recovery

All in all, the internet and your digital footprint make it easier and easier for debt collectors to find you. This means that if you are a creditor, you will not only WANT digital debt recovery solutions, but you may NEED them.

Debt Recovery Programs

There are a growing number of programs available to different debt recovery companies. These technological advancements will not only allow for your debt to be collected, but will also help to discover if the debtor is in a better place to pay more on their debt!

Using the information that is practically alive on the internet will be an invaluable way to collect the debts you are owned.

debt recovery solutions company

Debt Recovery Platforms

There are also companies that use digital platforms to collect debt, but also allow consumers to negotiate payment plans, pay back their debt in a timely manner, and do it all online! Using available technology to collect, as well as pay off debt!

The Most Effective Debt Recovery Solutions Are Always Fair

When it comes down to the wire, as a creditor, you want to collect the money you are owed, but you should also be able to keep your company’s hard-earned profile. Finding fair, legal, and effective debt recovery solutions will help to not only get your money to you faster but keep your company in consumer’s good graces!

Find a debt recovery company that will incorporate all of these debt recovery solutions. Avoid the burnout and hire a professional! Because you want the best solution so you can be on your way to getting paid!

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