Category Archives for Finance

Hidden Credit Card Expenses to Beware Of

Can you imagine conducting your financial affairs without a credit card?

Most of us rely on our credit cards to meet our daily expenses or to shop without the need of cash in our pockets. But a lot of us don’t really take out the time to understand the finer details associated with using a credit card. The result? We end up in a never-ending debt cycle where we keep on borrowing to pay previous bills, piling up considerable interest in the process.

But there are ways to keep your credit history spotless. You just need to know some of the hidden credit card expenses and how to avoid them.

Higher interest rates on cash advances
You’re reaching the end of the month and there still are bills to pay. You’ve spent your entire salary but you can’t wait for the next paycheck. Surely the sensible thing to do is to borrow some cash against your credit card, right? Wrong. Getting a cash advance on your credit card may seem like the right thing to do at the time but it’s extremely expensive. The interest rates on cash advances are significantly higher than regular purchases on the card. Therefore, it’s better to borrow some quick cash from a person you know instead of doing it against your credit card.

Over the limit penalty on a maxed out card
One of the most important rules of using a credit card is that you have to know your limit and when you’re about to go over it. This is why it’s essential to always keep track of your statement. If you’re over the card limit and the company approves your transaction, you can be charged not just the over the limit penalty but an additional late fee as well.

Time-specific late fee
If you are a regular user of a credit card, you know that even a single late payment can add considerable weight to your statement. To avoid this, you know you have to pay it on or before the due date. But did you know that, in addition to a due date, there’s a due time as well? So let’s say the due date for payment is the 15th of January. What you might know that missing the due time on the 15th of January can also cost you the late fee? That’s why it’s always better not to leave your payments till the last moment and pay up well in advance.

Inactivity fee
This is one of those things that might sound ridiculous to you, but it’s true. Some credit card companies charge a fee if you don’t use your card for a particular period of time. Others set an annual spending limit and, provided if you don’t reach it, charge you extra for it. Your company may also ignore the inactivity fee for the first year but charge for the subsequent years. If you want to avoid that, you need to discuss this with your representative beforehand. If you haven’t, it’s not too late to pick up the phone even now.

Is Getting Your Own Car Important?

People often associate car ownership with the freedom of moving and transporting. However, the car ownership industry, with its high consumerism values, is becoming a mousetrap for many. In contrast, some people really need to own their car, despite high maintenance costs, high APRs, and unpredictable fuel rates.

The purpose of purchasing a car is an important deciding factor to know if you need your own car or not. Many travel aficionados are quitting their jobs and buying camper vans to tour around the world. Some people, living in big cities, buy cars to save time. Is getting your own car really important? Have you seen people living their prosperous lives without owning a car?

Evaluate Cost to Value Ratio

Sometimes, you need to spend £100 to save £200. Buying your own car is an investment itself. However, you can only calculate the worthiness of this investment by calculating the cost to value ratio.

The total cost of a car, including APR, instalments, miscellaneous fees, documentation, ownership transfer fee, and more is £600,000. Your instalment plan is of 12 years i.e. £50,000 per year.

You spend £20 on carpool five days a week to go to your office. Your spouse spends £10. You pay £250 to school van for each of your two kids i.e. £500/month. Calculate!

Yearly carpool cost: {(20 x 5 = 100) x 4} x 12 = £4,800
Spouse office cost: {(10 x 5 = 50) x 4 = 200} x 12 = £2,400
Kids School van: (250 x 2 = 500) x 12 = £6,000
Total yearly expense = 4,800 + 2,400 + 6,000 = £13,200
12 month cost = 13,200 x 12 = £158,400
Differential cost = 600,000 – 158,400 = 441,600

These are rough estimates to provide you a general idea of how you can evaluate your cost to value ratio.
Benefits of Getting Your Own Car

It brings the freedom of travelling to your office or even to another city.
• Getting your own car saves a lot of time. A majority of the businessmen prefer keeping their personal
vehicles to avoid extra travelling time. If you are a student and also a full-time employee then buying a
car becomes a necessity.
• You don’t need to worry about visiting countryside or areas with lack of public transportation.
• You may build your career by joining a well-recognized corporation located miles away from your home,
without worrying about the transport.
• You may use your car for passive income by shaking hands with contractors like Uber. Amazon is also all set
to introduce their own scheme.

Drawbacks of Getting Your Own Car

• You need to keep it maintained to avail its benefits.
• You need to search for parking everywhere – grocery store, office parking, shopping centre, community
centre, and such.
• You walk less, and become lazy.
• You may spend more by visiting places that were not on your list before buying a car, or by dining out
every weekend.

The drawbacks of buying a car are many. But the options of financing your car without disturbing your monthly savings are also many. Seek out your priorities to identify your options!

The Spending War: Who Spends More? Men or Women?

Who spends more? Men or women?

No, you got the wrong answer. A recent study says that men spend more time and money in shopping stores than women. The study was conducted on one thousand Americans, and was also published in Dailymail. According to this study, men spend around three hours in the shopping stores a week whereas, women spend around 2.5 hours a week. Similarly, a man spends $85 on clothing monthly and a woman spends $75 on clothing in a month.

Did Millennial Generation Alter the Framework of Shopping?

Consumerism has greatly changed in recent years. The current generation is more interested in an upgraded lifestyle than buying a house or investing in real estate or stocks business. For example, the British women own four time more clothes than the clothes owned by British women in 1980s. Similarly, around 10.5 million tons of clothes are stacked in the thrift stores and resale centers in the US, whereas only 20% of them are sold within the country. Rest of the clothes are either given in charities or sent to other countries for resale at lower rates. An average American owns $550 worth of clothes, which they never touch or wear in their entire lives.
It seems that millennial generation enjoys shopping.

Why Do They Enjoy Shopping?

A team of researchers from MIT, Stanford, and Carnegie Mellon conducted an in-depth study on the neurological processes of shoppers. They used the fMRI technology to determine the effect of shopping on human brain. The technology detected high scores when the subject found their choice of items in the grocery stores, or when they were closer to buy those objects. Further study revealed that happiness from shopping is the result of pursuit or fulfillment of desire. Furthermore, it also revealed that two factors contribute to pursuit of happiness. These include the item of choice and its price. In marketing terms, this union is known as transactional utility.
These facts are surprising against the common belief that women spend more money; however, various factors in the framework of spending habits contribute to the overall statistics.

This Study Reveals Surprising Statistics

The US Urban Land Institute constituted in a report that 50% of men and 70% of women consider shopping as an entertainment. This means that women get their happiness from shopping, and may not require other types of entertainments to achieve satisfaction. In contrast, men require separate money for shopping and entertainment, whereas, men are likely to spend more money on entertainment as compared to women. Simply put, women acquire need and entertainment by shopping clothes, cosmetics, shoes, bags, and such. Men consider these items as a necessity and require separate funds for sports, movies, gaming consoles, and other forms of entertainment.
This report also states that women spend more time in looking, checking and comparing the objects than purchasing them. Women compare the prices, try clothes to see how they will look in these clothes, match makeup products, and buy only if they find a perfect match.