How to Create Solid Financial Habits For Your Business

If you want to ensure the long term success of your business, you need to be utilizing solid financial habits on a regular basis. Furthermore, business owners should stay on top of their spending habits and should constantly reevaluate the way they are spending and tracking their money. Falling into complacency is a big issue that business owners face, which can wind up becoming extremely costly. The more in tune you are with your financial habits, the healthier your business is going to be. Incorporating these solid financial habits will increase the likelihood that you find continued success in your business endeavors.

Prioritize Saving


Saving money is one of the most important financial habits to incorporate into your business. There are far too many businesses out there that don’t focus on putting money in the bank, which can wind up being incredibly costly. Furthermore, if you don’t prioritize your savings, you may wind up being unable to capitalize on potential business opportunities that present themselves. If you want to grow your business, you are going to have to have liquid funds that can be accessed at any point in time. Failing to do so can be incredibly costly and can limit your ability to grow your business. Furthermore, having liquid savings available is a safety net that may be critical if your business runs into financial difficulty in the future. Rather than constantly investing money back into your business, it is wise to put money aside and prepare for the unexpected. It is generally a good idea to determine a set amount that you are going to put towards savings and stick to it each and every month. If you make this a priority and run into financial hurdles in the future, you should be able to get over the hump. Additionally, your savings may provide you the resources to capitalize on an opportunity that requires liquid funds.

Track Expenses Accurately


Spending is something that each and every business is going to engage in, although it can get out of control quite quickly. While you typically need to spend money to make money, you need to make sure you know exactly how much you are spending each month. Tracking expenses properly is crucial when it comes to understanding where your business stands financially at any given moment. If you are inaccurate when it comes to tracking your expenses, you might find yourself making financial decisions that may negatively affect your business. These mistakes can cripple a business, so make sure you know exactly how much you are spending.

Set Financial Goals and Stick to Them


Setting goals in life is the key to success and these principles also apply to business. If you want to be successful, you need to sit down and determine the financial goals you have for your business. Be realistic and develop a plan that you believe is attainable and stick to the goals that you have laid out in your business. The more diligent you are with your planning, the greater the chance you are going to be able to achieve your goals. Dictate the necessary steps that you will have to take to achieve each financial goal you have set for your business. Possessing lofty financial goals is admirable, but you need to understand the necessary actions you must take on the micro-level if you want to achieve them. Laying out a solid gameplan with things that must be achieved each and every day will help you to reach your goals for the year.

Use Debt Appropriately


Debt is a word that gets a bad reputation, based on the fact that most people view it as a negative. However, you can use debt to your advantage when it comes to growing a business. A loan is a debt that you may incur, which you might use as a means of expanding your business. The revenue you create from investing can help you to pay off the original loan. In this sense, businesses can profit off of debts and use them to their advantage.

Utilize Financial Counseling


Companies such as Finance Solutions are excellent when it comes to helping businesses create a financial plan. Finance Solutions can help your business to work around high-interest credit card debt, which can be a major problem that drags down profitability. You may be under the impression that you have your business finances in order, but consulting with a professional may help to identify holes where you can increase efficiency


How Much Does a Business Attorney Cost?

Starting a business can be an extraordinarily tough endeavor to place oneself in. However, the rewards of being your own boss and building something of your own is, without a doubt, a very triumphant and rewarding feeling.

When building a business and scaling a business, it would be a great idea to invest in a business lawyer.

There will be a host of legal issues that you will want an expert’s Alice on, and there really is no better an expert than a business lawyer.

In this article, we will explain how much it cost to have a business lawyer on your team and if it will be worth it in the end.

As the old saying goes, “you have to spend money to make money.

And this is very true when scaling a business.

If you would like to learn more Law issues and concerns, then feel free to give Douglas Healy website a look.

The law does need to be as complicated as many make it seem. The more you learn, the less likely you are to fall prey to those who would break and bend the law to their whims.

How Much Does a Business Attorney Cost?

What Is a Business Attorney?

Before we begin to discover the price of a business attorney, it would prove most salient to understand what a business attorney is.

A Business Attorney helps handle certain legal matters.

Legal matters such as (but not limited to):

  • Buying and selling a business
  • Filing incorporate documents
  • Drafting and/or reviewing certain business documents

What your Business Attorney will do (assuming you hire one) is:

  • Help with business information
  • Any Business Disputes
  • Any conflicts that may, and most definitely WILL, arise
  • Make sure your business is in compliance with local laws and regulations
  • Help with international and interstate laws and requirements

How Much Does It Cost To Hire A Business Attorney?

Now, that you have a better understanding of what a business attorney is, let us get into the main objective of this article, which is how much does it cost to hire a business attorney.

The amount that you will pay for the business lawyer is determinate upon the size of your business, as well as the type of ring process you are doing.

Most Business Attorneys are hired out per hour.

And what this means is that you must pat them for their hours of work.

The amount that you will pay is somewhere in the estimated ballpark of $150 to $325 per hour.

It is essential to know that the amount that you will pay out is also influenced by the town or city you may be residing in.

It is very safe to say that if you are working in a small town in the Midwest, you will be paying as much as a person who is living in the “Big Apple” or somewhere out “In Hollywood“.

Your location will be a factor.

What will also be another factor is the amount of work that is needed by the Business Attorney.

Not all cases will demand the same timeframe, and as such, the job and tasks will also play a role in how much you will be paying.

Different Law Firms

Lastly, knowing what law firm company you will be working with will also be something you will want to consider. There are many “affordable” (and we use this word very lightly here) that can do the job for you at a price that makes it seem like a steal.

But this is because most likely these are NEW Business Attorneys trying to get their foot in the door.

It may cost more to work with a more reputable company, but you must take into consideration that you will be hiring someone to do the job RIGHT.

You don’t want to pay someone who will do the job but only cause you more headaches later on.

This is just a piece of friendly advice and something you may want to consider when hiring a Business Attorney.

Want To Learn More

If this article has piqued your interest and you would like to learn more, feel free to reach out to Douglas Healy with the link provided above


How to Manage Money When You’re Self-Employed

There are many things you can do to manage your money when you’re self-employed — things like loans, budgets, and plans that keep your spending to a minimum. There are a lot of ways to save money, budget well, and manage your money to maintain a pleasant profit at the end of each month.

Loans

There are many ways to get a loan and some reasons why there needed. Some reasons why they are needed is that you are just starting up a business, and need funds to be able to get the company up and running. Another good reason is that you need more products to sell if you don’t have the money to buy the items you need to sell, them more than likely a loan is right for you. The good thing about this is that there are numerous options to take out a loan from. The 1st option is getting money from friends or family and paying it back when you can, but that can get messy. There are hard money loans or self employed loans, this option is hard as it puts your property up as collateral, and you need the property to put it up. Another option is Private lending, and this is favorable for people with no or bad credit. The last option is bad credit loans, and this is the best loan for people with no credit or bad credit, they give you the loan with an increased monthly fee, and this works for both parties. Any of these options are good for self employed loans.

Budgeting Your Money

Budgeting your money is crucial, primarily when self-employed. A lot of people think that budgeting costs time and requires sacrifice. Those are both untrue and can lead to losing money if you decide not to budget. We’ll go through a list of everything you can do to budget your finances better. Number one is getting a budget sheet. Then when you get a budget sheet, write down your finances. The finances should include what you make, your fixed costs, optional obligation costs, and variable costs. What you make should be your monthly income, and everything else should be based on that. Second is the fixed costs, and these are things you need to pay each month, like your health insurance, car payments, house payments, rent, etc. Next is optional obligation costs are expenses that you opted into like a phone bill, cable bill, subscription, or membership. Finally, your variable costs are anything left. Any bills or purchases you’ve made over the year should be in this category, including gifts, clothes, and entertainment costs.

After all of that is put into a sheet, you need to work on your financial goals and wishes. This includes things like big purchases such as a car, house, property, stocks, retirement, or anything else. This could also be a vacation so that you have a good trip. This allows you to see how much you can save up a month for it, and know when you can take that vacation. Then prioritize your goals and don’t exclude necessities. This will ensure that you have enough money to do what you want, and you’ll be able to see what you are spending.

Managing Your Funds When Self-Employed

While managing your money may seem hard to do at first, here are some things to consider while setting yourself to a managed budget. First, and an important thing is not to underestimate your expenses. They will add up, and you need to be ready for them by setting aside extra cash to help pay for it. Budgeting your income was covered above, but it is a vital tool in helping to manage your self-employed business. Another thing to consider is to avoid credit cards, don’t use them, and don’t rely on them. Then you want to keep tabs on your taxes, record expenses so that you can write them off during tax time. Keep all your records accurate and factual. If that doesn’t help, get a lawyer to help with all of this if it becomes too much.

Conclusion

With so many options to take out loans, it’s no wonder self-employed people choose to go this route so that they can stay ahead financially. However, it’s always important to keep a record of all of your finances so that you know what you’re spending per month, and how to budget yourself to do things you love. So if you think that this is too hard, you can hire a lawyer to help keep all your information for you and help you to put everything together, or maybe a CPA to help you with your taxes and budget


13 Business Finance Terms You Need to Know

Whether you are just starting out in business or you are a well established. There are business finance terms that everyone should know. It is important to know the lingo of business in order to be successful. Now, there are countless business finance terms but for this blog, we have chosen what we see as the top 13 vital business finance terms.

1. Bookkeeping

Bookkeeping is the process by which you keep a record of all your incoming and outgoing expenses. This is vital information, as it gives you an overview of your business and can help you at tax time.

2. Capitial

If you don’t know how much your business is worth, then you are not a very good business person. The term Capital is used to reference the overall wealth of your business. It is an indication of the current and future success of your business.

3. Gross Profit

This is the term used to highlight the actual worth of the business minus expenses.

4. Depreciateion

Depreciation is the record of assets and their loss in value over a period of time. Depreciation is a good way to decrease values of assets and allows you to get tax breaks on depreciated and replaced assets.

5. Intangable Assests

An asset that is not physical, such as intellectual property.

6. Profit/Loss statement

Profit/Loss statements are used to keep track of the business expenses. 

7. Liability

Liabilities come in the form of liabilities or monies owed now, or in the future. Liabilities include wages, taxes, supplies bills ect.

8. APR (Annual Percentage Rate)

This is the amount of money each year you have to pay in interest on top of the principal balance on a loan.

9. Bankruptcy

Bankruptcy is the legal process that a business goes through, after they have gone broke, or are on the verge of. When your business fails, there is bankruptcy protections in place to protect you, and any creditors you may have.

10. Collateral

This is any asset or securities you pledge to surrender if you default on a loan.

11. Fixed Interest Rates

This is a fixed amount of interest on a loan. A fixed interest rate never changes throughout the lifetime of a loan.

12. Floating Interest Rates

Floating interest rates change with market fluctuations. This may not always be to your advantage. Rex Burgdorfer is an authority on the market and always has vital information. Check him out by searching Rex Burgdorfer Crunchbase or Rex Burgdorfer Twitter.

13. Guarantor

When you have low capital, or a low credit score, it is sometimes a requirement that you have someone who has good credit and a sound amount of capital to vouch for your ability to pay your bills. If you default on the loan, then your guarantor will be obliged to pay what is owed.

There are many more terms but, the ones mentioned in this article are, in our opinion, the most vital business financial terms to know. For more great business advice, check out a finance authority, Rex Burgdorfer Crunchbase or Rex Burgdorfer Twitter


Punch Associates Discuss If Business Credit Card Debt Is Good or Bad

At Punch Associates, a firm that specializes in helping small business owners and consumers get out of debt, we are often asked if it is a good or bad idea to have business credit card debt. The answer is that it depends on a few factors whether the debt is helpful or harmful to your business.

Personal Liability

According to Nolo Press, most business credit cards are issued when business owners sign a clause that makes them personally responsible for the debt. This means, even if you have a corporate identity, you will be personally responsible and your credit score may suffer if you fail to pay the debt.

On the other hand, not every credit card issuer is quick to ding your personal credit score if you miss a timely payment. Nerdwallet compiled a great list of which major issuers of business credit cards report payment history on the business card to your personal credit score or not. Some of the major players do not report your business card payment history on your personal credit score, including Bank of America, BBVA, Citi and Wells Fargo(!).

All of the major card issuers do report your payment history on your business credit card to commercial credit bureaus, except BBVA. Thus, the bad news is that you are usually personally liable for business credit card debt. The good news is that you can choose a card issuer that will not ding your personal credit score for your payment history on your business credit card, and you can use a good payment history on your business credit cards to improve your enterprise’s creditworthiness.

The Interest Rates

The really bad news is that the interest rates on business credit cards are ridiculously high. The average rate is around 14 percent. Obviously, at rates this high, you end up servicing a lot of interest fees, if you carry debt on the card. Also, it can be really hard to pay off the debt at interest rates this high.

Who Gets the Card

We suggest that businesses limit who gets to use business credit cards. Otherwise, you can end up with a nightmare of unexpected expenses. Some companies simply have employees front the expense with their personal credit card, keep a receipt and count upon being reimbursed.

Other Benefits of Business Credit Cards

According to Investopedia, other than helping build business credit, business credit cards have a few more benefits:

  • They are easier to qualify for than a bank loan.
  • They are convenient because they allow one to make online transactions.
  • They help weather the waiting time on accounts receivable.
  • They often provide a rewards program.

The Other Drawback of Business Credit Cards

Other than high-interest rates, the dangers of misuse by employees and the risks to your personal credit by the personal liability clause required by almost all business credit card issuers, Investopedia found that there is one more risk of business credit cards that all business owners need to be aware of. These cards do not have the same legal protections that come with consumer credit cards. Thus, your interest rate can fluctuate without notice, based upon your usage of the card. Also, you may not have much protection when you have a billing dispute or when you need to return an item purchased.

Here at Punch Associates, we suggest that business owners use a business credit card to build the creditworthiness of your business and pay the balance every month or very soon. The danger at the interest rates charged on credit cards today is that one will have tremendous difficulty paying down the balance, which may harm your company’s cash flow.

If you are aware of their dangers and use them responsibly, business credit cards can help shore up cash flow issues for a few weeks at a time and improve the credit score of your business. If you have any questions on business credit card debt, contact us at Punch Associates. We are here to help


Trout Associates Financial Plan

Trout Associates Explain How Credit is Calculated

Some people may assume that only wealthy people can have good credit, but the truth is, a good credit score is available to anyone. Good credit is not the result of having a lot of money, it is the result of good financial habits and practices. In fact many people of very modest income have good credit, while many wealthy people have terrible credit.

HOW IS CREDIT CALCULATED?

Your credit score is like a final grade you might receive in school. Just like your grades in school, there are a number of different factors that determine your final grade, such as homework, tests, quizzes and special projects. Some factors, such as a mid-term or final exam, will carry more weight in determining your final grade than a single homework assignment. In fact, you may even be able to miss a few homework assignments and still get an A, if you do well enough in other areas to offset the damage the missed homework might cause.

The same is also true of your credit score. Some factors are more important than others and carry greater weight in determining your final score. For instance, if you have good credit overall, you may be able to make a late payment or two without significantly damaging your credit. If you credit is already poor, however, late payments can have a far greater impact.

Creditors will generally do more than just simply look at your credit score alone to determine your creditworthiness, the same way that colleges and universities will look at more than just your grades to determine if you are a good fit for their school. That being said, if your credit score is too low, creditors may not look any further. If your credit score is lower than they would like but still within an acceptable range, then they will often look at your overall credit file to determine where the lowered score is coming from. Some factors may influence their final decision more than others.

Here are the main factors that impact your credit score:

  • Payment history: If you have a good record of paying your bills on time, it will have a significant positive impact on your credit score. If you regularly miss payments or make late payments, however, that can seriously damage your credit score.
  • Debt to credit ratio: What creditors are looking for is how responsibly you manage credit. One good habit to have is to not always use all of the credit that is available to you. Conversely, however, if you already have too much available credit, other creditors may be wary of giving you more. A good rule of thumb is to never carry a balance worth more than 30% of your available credit.
  • Length of history: Everyone is going to have financial peaks and valleys. It’s fairly easy to pay your bills during peak times when money is plentiful, but what do you do when crisis hits and things get tight? The longer your credit history is, the more of an idea it gives creditors of how you handle credit over the long haul, not just in the short-term when things are good.
  • Types of credit: Different types of credit will have a different impact on your credit score. In addition, having a mix of various types of credit will also have an impact on your credit score. For instance, you may have $300,000 in total debt, but if $250,000 of it is a home loan, $30,000 of it is student loans, $19,000 of it is an auto loan and only $1,000 of it is credit card debt, that will generate a much better credit score than having only $100,000 in debt, but $30,000 of it is credit card debt.
  • Credit inquiries: When you apply for any type of credit, lenders will request a copy of your credit report. If they extend credit to you, it can take up to 30 days for it to show up on your credit report. Until then, other lenders don’t actually know if the first lender extended credit to you or not. For that reason, if a lender sees that another lender has recently requested a copy of your credit report, they will be less likely to extend you credit.



Having good credit is important for far more than just getting more credit. Your credit score can affect your insurance rates and even your ability to rent an apartment or other housing. Carrying too much debt will not only have a significant impact on your credit, but it can also make you vulnerable to financial collapse. Debt consolidation is one way to help you tackle your finances and get your debt under control. Trout Associates are debt experts that can help you explore a wide range of options to better manage your debt and get your finances back on track. Debt consolidation with Trout Associates can help you make one monthly payment. Not only will this help you avoid missed payments and costly late fees, but it can even help you pay down your debt faster.


Graylock Advisors Income

Graylock Advisors Shares Ways to Get out of Debt Quickly and Responsibly

Amid record high consumer confidence, the debt burden continues to weigh down many households in America. A State of Credit 2017 report unveiled by Experian shows the average American holds credit card debts amounting to $6,350 and non-mortgage debt of over $24,700. The non-mortgage debts are collateralized credit facilities such as car loans, commercial loans and personal loans. The average student loan has also been rising over the years and stood at a record $34,140 in 2017. The debt situation is worsened by reports showing people are spending much more than their monthly earnings. To bridge the gap, many are turning to new lines of credit.

Experts see the debt as an emotional rather than a rational problem. This is demonstrated by the continued practice of buying stuff one can ill afford. According to Financial Mentor, the top habitudes blamed for the rising debt problem include emotional spending, sense of entitlement, complacency, lack of plan and instant gratification. People with emotional spending problems are often tempted to use shopping as a route to escape boredom or relieve stress. The habit can easily cause bills to pile up, thereby making repayment untenable. Lack of a plan causes a disconnection between spending on one hand and earnings and savings on the other hand.

It also leaves the affected individual with no concrete budget, long term earning strategy or retirement plan. Complacency is an attitude that is widely blamed for causing debt escalation. An individual with this mentality believes he or she is already in debt so spending a little more wouldn’t make any big difference. Although the habit may keep you going for a few months, it may cause serious problems down the line such as increased charge offs, bankruptcy and foreclosure. The first step of getting out of debt is accepting you have a problem that needs urgent intervention. According to AARP, here are 6 ways to turn the corner when you are in debt:

Getting out of debt quickly and responsibly

1. Use savings to pay down large debts

It is safe to use part of your savings to pay the initial credit down payment, assuming your savings are at a level to justify this expense. This decision can go a long way to curtail the accruing interest normally associated with high interest debt. You will also get the money sitting idle in the bank to work for you.

2. Use your tax refund to pay debt

Instead of splurging your tax funds to satisfy short-term desires like going on a vacation or buying high value items, you could use the check to clear some of the crippling debts. Paying debts in a lump sum will ease your debt burden and make it easier to clear the remaining debt moving forward.

3. Increase your debt repayment percentages

If you are serious about offsetting your debt, consider setting aside about 15% of your paycheck or social security benefits on loan and credit card debt repayment. Making slightly larger repayments will help you offset the accruing interest and clear the debts quicker. Most credit card issuers usually request around 2% monthly debt repayment on the existing balance.

4. Learn to negotiate lower interest rates

This is a popular strategy for lessening the debt burden. Once you have negotiated for a lower interest rate, you need to strictly adhere to the agreed terms of repayments in order to maintain a good standing with your creditors. This will place you in the good books and earn you better terms of credit in the future.

5. Find ways to earn more

As you work on paying off your debt, you should consider new strategies to increase your income and clear debt in the shortest time possible. Some of the ways to do this include negotiating a pay raise with your employer and looking for a part time position or a side gig to boost earnings.

6. Use Statute of Limitation to your advantage

If you have old, charged off debts and debts you are not obligated to pay, you can use the Statute of Limitation to clear your credit history. Old debts will feature on your credit history for seven years or thereabout and will certainly limit your chances of getting credit or favorable loan terms in the future. Some states have set limits on the types of debts that debt collectors can pursue and the legal means they can use to pursue such debts. A debt expert like those at Graylock Advisors can help clarify the matter.

How a professional debt expert can help

If you are in a bind and do not know what to do about your debts, you need to get in touch with a local debt expert. Debt management entities like Graylock Advisors offer an array of services, including debt consolidation and low interest rate debt consolidation loans to help clients stay debt free. Graylock Advisors will help consolidate your debt into one, low interest payment.


Brice Capital Effects of Debt

Unexpected Side-Effects of Debt According to Brice Capital

Many people today are struggling under a massive load of debt. According to the Washington Post, 7 million people in the United States are now behind in their auto loan payment for three months or more. This means that the debt of their auto loan is now overwhelming them. 

Also NerdWallet stated that Americans have an average of just under $7,000 in credit card debt. Since the credit cards issued today have very high interest rates, many of the people who struggle under this debt don’t think they will ever be able to fully pay it off. 

Brice Capital has found that, for their clients, this debt has many unexpected consequences: 

No Retirement Savings – 

Debtors are unable to save for their retirement, since they are making the mandatory interest rate payments on credit card debt. This will force them to have to work later in life. 

Marriage and Health Problems – 

The stress of trying to keep up with payments to multiple lenders, some of whom have ridiculous interest rates, takes its toll on young married couples. Also, people can have trouble sleeping, be depressed, get headaches and even have a heart attack when they are deeply in debt. 

Credit Score Domino Effect – 

Sadly, according to TheBalance.com, even if you are making those payments on time, 30 percent of your credit score relates to how much debt you carry. If you carry too much debt, your credit score will decline. 

That creates a domino effect, since it can also influence the amount of money you pay for auto insurance and even the type of job you qualify for. 

Juggling Other Expenses – 

Over time, people who are paying exorbitant rates for credit will begin to have trouble paying for other expenses, such as utilities, food and gasoline. 

Precluded from Home Ownership and Other Housing –

If your costs for servicing your debt exceed a certain formula, you will not be able to buy a home because your ratio of expenses to income will be too high to qualify for a home mortgage. 

Even if you are forced to rent an apartment, bad credit could preclude you from being approved by the landlord. 

Staying in a Bad Job – 

Changing jobs is risky. People struggling under a high load of debt and interest payments are hesitant to leave a soul-crushing job because they are afraid things may not work out at the new job, leaving them unable to service their debt payments at all. So, they may stay with jobs that are causing them even more stress and possibly harming their health. 

Paying Too Much for Purchases – 

If you are paying high interest rates on credit cards, you end up paying far too much for your purchases when you take into account the interest payment as well. 

Ignoring Health Issues – 

Since we don’t have a universal health care system in the United States, many people have to pay for their health care out-of-pocket. According to United Federal Credit Union, when one is juggling bill payments, some people opt to skip going to the doctor for a small thing that can morph into a larger health issue. 

Wage Garnishments –

If you get behind in these crushing payments and a creditor takes you to court, you could have some wages garnished from your paycheck. 

Bankruptcy May Not Help – 

If you mostly owe student loans or back taxes, as many in the U.S. do, these debts are rarely discharged in bankruptcy, so you will still owe the student loans and tax payments, even after bankruptcy proceedings. 

United Federal Credit Union also stated that the average credit card interest rate is just under 24 percent. If one could get a loan with a lower interest rate, such as nearer 10 percent, one could save about $260 yearly, if they had a balance of $2,000. 

If you are in excessive amounts of debt, consider consulting industry leaders, like Brice Capital, on debt consolidation and other means of improving your financial stability. Heavy loads of debt carry too many unintended consequences that devastate the quality of life for those who are ensnared in that web. 


Barron Advisors Credit Payment

Barron Advisors Explain the Effect Bad Credit Has on Your Life

Taking out a loan or using a credit card may seem like it makes life a lot easier, because now you can afford the things that you couldn’t afford before. The problem with this thinking manifests when you are not able to pay, whether in full or partially, and in good time. If you find yourself in either of these messes – that is, late payment or non-payment of debt – then you are beginning to have a negative effect on your credit score. Having a bad credit score means that you are in a lot of trouble financially, and although you might not see it right away, shortly you will feel the effects. Barron Advisors, a company that specializes in loan consolidation, explains how bad credit can affect your life as detailed below.

1. Non-Approval for Loans or Credit Cards
Most people with bad credit get rejected when they apply for a loan, and this can be very painful when you urgently need money. Most of your credit card applications will also be denied if you have bad credit. A few lenders may be willing to give you are a loan even with your bad credit, but these lenders are uncommon and will often charge higher fees in exchange. Many lenders are not willing to take the risk of giving credit to people who have been unable or unwilling to settle their loans with their previous lenders.

2. Denial of Employment
Some jobs are very strict, and most employers will check your credit score before they can consider you for such jobs. For instance, most managerial positions or finance related jobs require someone who has good credit, according to these employers. Therefore, as much as you may be qualified for a certain position in your dream company, your bad credit can cost you that job. If they realize you have gone bankrupt, have high debts, or substantial outstanding bills, they may not have confidence working with you. They will be afraid that your position might affect your performance at work. 

3. Landlords May Deny You an Apartment
Most landlords are very strict with their properties and may not be willing to approve you as their tenant if you have bad credit. According to Barron Advisors, you may keep being denied for apartments, and this can quickly become frustrating. If you are lucky to get a landlord who is willing to take a risk, be prepared to pay a higher security deposit than other tenants were asked for, because they won’t risk it without taking precautions. 

4. Paying Security Deposits for Utilities
In normal circumstances, people are not asked for a deposit on utilities, but if you have bad credit, you will have to pay these deposits. It won’t matter whether you have been paying your utility bills on time or not, because the utility companies will still require you to pay the deposit. With bad credit, you may also be forced to settle for a prepaid cell phone on a month-to-month contract, and the cost is usually very high. In extreme cases, you might not get this service at all.

5. Impact on Personal Relationships
In most relationships, finance is a tricky subject. It’s not uncommon for couples to get married before ever discussing income, debt and credit scores. However, the problem comes into play when you are trying to take out a mortgage or any other loan together. The spouse with a lower score will definitely affect the other person’s ability to access the things they want, because your ability to borrow together will be affected by the score of both partners. 


Truman Advisors Share the Differences Between Good Debt and Bad Debt

Loans have helped many to improve their financial position, while others have fallen into deep problems due to the same loans. While it is possible to live an entirely debt-free life, avoiding loans can hinder your ability to own your dream home or car or start a business that could positively change your life. Therefore, a loan can both be a good and bad thing at the same time. The main difference is the reason you are taking out the loan and how you put the money to use after acquiring it.

The first thing to do is note the differences between your wants and your needs. In this case, if you borrow money to cover for your needs or buy things that appreciate in value, then that’s good debt. If you borrow to cover your wants or buy things that depreciate, then that’s bad debt. The following examples of both good and bad debt will give you a clearer distinction between the two.

Good Debts 

1. School Loans

Using a loan to pay for your education is good debt because once you acquire your academic degree, you will be able to earn more money in your lifetime. It’s something that qualifies you for a certain job over those who lack such qualifications. Therefore, borrowing to pay for your education or child’s education is rarely a bad decision. 

2. Home Loans

Being a homeowner is commendable. Unfortunately, not everyone can afford a home at the moment, and while taking out a mortgage loan may be daunting due to the size of the loan, this is typically a good decision. Truman Advisors argue that rather than continue paying for rented housing, that same money can be put toward a home loan and be used to build equity. A mortgage is a good example of good debt and can be a smart financial decision depending on your unique situation.

3. Auto Loans

Some people’s lives are more convenient with their own car, especially when public transport is not available or is unreliable. Buying a car often becomes the only option, and if you cannot afford it, you will be required to take out a car loan. An auto loan can be both bad and good debt. The deciding factors are the type of car you buy and the way that it’s used. A used car with low miles that helps commute to work and make a better living is good debt, while a new Ferrari used to drive to the mall is bad debt.


4. Business Loans

They say it takes money to make money and this is why in most cases borrowing money for business is justified. However, make sure that you borrow with a good plan and have great business prospects so that at the end of the day, the business generates more income than the initial expense. According to Truman Advisors, a business loan is good debt if, and only if, you are purchasing or paying for something that brings more money to the business. 

Bad Credit 

1. Loans for Discretionary Expenses 

Taking out a personal loan to be able to pay for vacations, buy expensive clothes or jewelry or any other discretionary item is bad debt. You should either save for these things naturally or wait until you can boost your income, but never borrow. 

2. High-Interest Credit Cards

Credit cards provide their holders with the ability to make purchases anytime they choose, regardless of whether it’s a need or a want. This freedom of spending using borrowed money makes credit card bad debt. Unfortunately, almost every American has a credit card, and it makes them feel like it is easier to afford an item using a credit card than using cash. The bad news is that it is hard to get out of credit card debt and it is better if you do not acquire it in the first place.

3. Payday Loans 

Most companies that provide payday loans charge excessively high interest rates because they know many people are desperate for cash. Truman Advisors says that you should be very careful because paying off these loans becomes very difficult. A payday loan is one of the worst forms of bad debt, and even if you desperately need a short-term loan, it is better to exhaust all other options rather than relying on such companies. 

You will more than likely find yourself borrowing at some point in your life, and it is good you understand the difference between good debt and bad debt. Watch out to avoid falling into deep debts that could have been avoided in the first place.