Debt can be a useful tool if it's taken on wisely. If, however, your debt repayment begins to take too large a bite our of your income or you suffer a significant income loss, your debts and associated interest on that debt can quickly start you on a downward financial spiral from which recovery may be difficult, if not impossible.
Here are some suggestions for reducing your debt and reversing your financial fortunes. Taking these 10 steps can, if implemented with determination, can put you back in control of your money again.

Develop a comprehensive picture of all your debts, loans, credit cards and the details about each. 

How many are secured.? How many unsecured? What are the highest and lowest balances. Which are more flexible? You need a complete picture of your debt before you talk to your creditors about interest rates and payment schedules.

Put away the credit cards. Stop carrying them. 

Place them in a safe-deposit box or some place where they are hard to get at. You don't want to cut them up or cancel the account as this can have a negative impact on your credit. Keep them for emergencies, but be careful to define what is an actual emergency. If you do use a credit card, determine to pay off any emergency expenditure within 30 to 60 days. Make no more impulse purchases

Call your bank or any lenders with which you have loans. Discuss whether they might lower your interest rate. 

You might be surprised at their willingness to work with you. If you are in financial trouble, it may well be in their best interest to ease your payments rather than risk your defaulting on your loans. The bank may also have special programs to prevent mortgage default for which you may be eligible.

Calculate your debt-to-income ratio. 

Decide which debts, like mortgages and student loans, are with you for the long haul and which ones can be reduced dramatically with a determined effort. Decide how much you need to reduce non-essential debt like car notes, credit cards and store credit in order to return you to a positive cash flow position.

Begin keeping financial records. 

A simple check register type accounting program is easy to use and allows you to periodically pull up a statement of your financial position to help you evaluate your progress toward being free of indebtedness. At first the reports may look discouraging, but as you make progress, you will look forward to charting your success at reducing your debt.

Plan the steps you will take to get out of debt based on the information you have collected. 

Calculate payment schedules, time-lines and dates for clearing various elements of your debt picture. Plan a “Freedom Day” celebration for the date when you will pay down the last non-essential debt and you once again have a positive cash flow.

Check your W-4 form at work. 

If you've been consistently getting a large refund check from the IRS every year, you're taking too much out in withholding. Reducing your withholding can give you more cash with which to knock down your indebtedness. The savings in interest alone can more than make up for the lack of the big annual tax check. Right now knocking off those credit card payments is more important.

Stop paying minimum payments on credit cards. 

The larger your payments the faster your debt drops. Minimum payments often merely pay the interest without reducing the principle.

Stop going out to eat. 

Quit smoking. You can't afford it. Reduce your cable and cell phone packages to a more manageable level. Turn off the lights. Turn down the thermostat in winter and dress warmer. Turn up the thermostat in summer and put up a couple of ceiling fans. The more you reduce your cost of living, the faster you can pay down your debt.

Borrow from yourself. 

If you've got a 402K or retirement account, insurance policy or wealthy relative who will give you a loan at little or no interest, pay off your credit cards now. Secured loans against money you already have or from relatives is much easier to pay off than credit cards. Only file bankruptcy as a last resort. Working your way out of debt through discipline and planning looks good to lenders if you find you need to buy a car or replace the roof after you've restored your finances to a manageable condition.

The discipline required to dig yourself out of a debt hole can be exhausting. Once you’ve figured out your plan, think up some inexpensive rewards for yourself for meeting your time-lines and goals. If you've got something to look forward to, austerity isn't nearly as deadly dull.

The new health insurance reform bill might mean big changes for your business -- or not. Learn how it affects you here. If you are a small business owner you have probably wondered what the Affordable Care Act means for your business. Before you make any changes to your group health insurance learn what the new law means for you.

Size 

If you run a small business there is a good chance that the new law doesn’t affect you at all. If you have a staff of less than 50 employees you do not have to make any changes. You are exempt from the law.

The Basics 

For firms with over 50 employees, here are some basic rules you should know:

• If you offer health insurance to your employees, don’t worry. The new law won’t affect you much. 
• If you don’t offer health insurance you must pay a fee of $2,000 for every worker in your employ if even one of your employees receives a government subsidy to buy health care. 

• The first 30 employees are deducted from the above fee. 
• If you have employees making less than 400 percent of the federal poverty level who spend between 8 and 9.8 percent of their income on health insurance they have the right to purchase insurance on an exchange. You must provide these employees with a free choice voucher equal to what you would have paid for insurance otherwise. 
• If your firm employs more than 200 people and offers health insurance all employees must be enrolled in the plan, unless these employees have alternate forms of coverage. 
• Enrolled employees’ children may remain on their parents’ plans until their 26th birthdays. 
• All changes take affect on January 1, 2014. 
• Plans with aggregate coverage values of over $8,500 for an individual or $23,000 for a family plan are subject to an excise tax of 40 percent on all benefits in excess of these amounts. 
• Waiting periods likewise incur a fee. After 2014, you must pay a fee of $400 for every employee in the midst of a 30 to 60 day waiting period and $600 for every employee waiting between 60 and 90 days.

Evaluating Your Plan 

It’s not a foregone conclusion that you must offer insurance to your employees. First of all, as stated above, the law does not affect small business. Further, even if you have more than 50 employees, it might be more cost effective to not provide health insurance. There are two cases where this might be true:

• If all of your employees earn more than 400 percent of the federal poverty level, you will incur no penalty for not providing coverage. 
• If group insurance health care plans will cost you more than the $2,000 fine, you might be better off not paying for health insurance and taking the hit.

These will not be the final determiners as to whether or not you provide coverage. They do, however, act as a guide to whether it is economically advantageous for you to provide group health insurance for your employees. 

To Provide or Not to Provide

Whether or not you provide health care coverage for your employees is a complicated issue. 

The final decision is not a result of a pure cost analysis. Remember that having a competitive benefits package is part of attracting the top talent. Still, familiarizing yourself with the changes in the law will allow you to avoid paying fines that aren’t part of a cost-benefit analysis.

Not all business debts are bad.

Using financing to lease an office, tackling the rising costs of healthcare benefits, or even borrowing money to buy a company car -- all can be good debts with high return values. 

But there are bad debts, too -- debts that for entrepreneurs can limit or even prohibit cleaning up your student loan debt. Of those bad debts, few are worse for fledgling business owners than credit card debt. Simply stated, credit card debt can kill your small business from a personal finance point of view. 

Massive credit card debt can also choke your ability to deal with all of your other financial responsibilities, taking over your life and limiting your business' ability to grow and prosper.

Business Owners' Reliance on Plastic 

Credit cards are now the most common source of financing for America's small-business owners, according to the 2008 National Small Business Association survey. 

The survey also notes the following: 44% of small-business owners identified credit cards as a source of financing that their company had used in the previous 12 months -- more than any other source of financing, including business earnings. In 1993, only 16% of small-businesses owners identified credit cards as a source of funding they had used in the preceding 12 months. That's not to say you shouldn't use a credit card  it just means you should use one wisely. 

Sure, taking a valued client to a five-star restaurant or expanding your office size are worthwhile pursuits as a business owner -- if you can afford them with what you bring home in profits from your company. 

Here are some action steps to take to reduce credit card debt at your business: But often, using a credit card to finance these endeavors is a long-term loser, if only because most of the stuff you buy with credit cards depreciates rather than rises in value. Those high-top Reebok basketball sneakers may look great in the box, but once you slap them on your feet, their value resides only in your mind's eye, because few others want them anymore. 

Unlike other depreciable items, like a car that provides vital transportation for your company or a pair of eyeglasses that helps your read legal documents, most things you buy with a credit card don't offer much to your personal bottom line.

STEP 1: Understand credit card debt 

From your business' financial perspective, any money that is earmarked toward your credit card debt is money that you can't use to free your business from debt. 

That's the primary reason why credit card debt is invariably bad debt. It's bad from a financial management point of view, as well. Take student loan debt -- one of those examples of supposedly “good debt.”

 

Unfortunately, student loan debt and credit card debt are joined at the hip. 

For decades, credit card companies have targeted college students, offering them their first shiny new plastic card while downplaying the dark side of owning a credit card. 

Well, that plan worked. Millions of young Americans who received their first credit cards in college (and millions more who didn't, but got them right after they graduated and earned their first job) have developed the nasty habit of using their credit cards with alarming regularity. In the process, younger Americans have put a real dent in their financial health and made it even harder to address their student loan debt. 

It's the same idea with credit cards and small businesses. Once an entrepreneur gets that card in hand, it's tempting to use it for non-critical purchases. To alleviate that issue, start racking your daily use of your card, and figure out what is critical and what isn't. Then start using the card for only those “critical” purchases.

STEP 2: Use a debit card 

It's always a good idea to plan your spending on what you actually have in the bank. 

That's where a debit card can come in handy. Knowing you can only spend what you have you'll get a more realistic view of what is necessary to run your business. So ditch your credit card and start using a debit card. 

STEP 3: Pay in full each month 

Get in the habit of paying your small business credit card in full each month, no exceptions. 

That will keep you from falling behind on your credit card debt, which accumulates faster than the ivy grows at Wrigley Field. 

If you think you can't manage that, get an American Express Card. That card has to be paid off in full each month. 

STEP 4: Watch the interest rate 

Focus like a laser beam on your business card's interest rate. 

Credit card companies are crafty, and can up your rate for the slightest reason (like paying your card bill late or exceeding your card limit). 

Fight any uptick in rates, and always be looking for credit cards with lower rates and better rewards deals. Creditcards.com, for example, has a great database of card options for small-business owners. 

Managing your business credit cards is one part diligence and one part creativity. Apply both liberally, and watch your credit card debt melt away.

There are many forms of business insurance out there, and it can be difficult to determine which ones your small business needs, let alone what you can afford. The reality is that insurance needs vary from business to business.
This guide will help you decide which types of business insurance are best for your business and are worth the extra expense to reduce your risk of devastating losses due to liability.

General Liability Insurance 

General liability is a blanket insurance that covers legal disputes due to accidents, injuries and claims of negligence. These types of policies protect the insured business against expenses related to claims concerning bodily injury and property damage caused by your business operations. This is an important and pervasive form of insurance that nearly all small business owners and contractors should have.

Property Insurance

 Property insurance protects your valuable business property, such as real estate, equipment, inventory and machinery. It covers the risk of damage and loss due to fire, theft and certain forms of weather damage. 100% coverage is ideal, but if that’s not financially feasible, determine what would ruin your business in the case that it’s destroyed, stolen or damaged and get coverage up to at least that amount. If the region in which your business operates has a much higher risk of natural disasters that are not normally covered under a standard property insurance policy, such as earthquakes or floods, you may consider purchasing specific insurance to cover the potential damages from such an incident (e.g., Flood Insurance).

Bundle It with a BOP 

Some insurance providers offer bundles of Liability Insurance and Property Insurance, called Business Owners Policies (or BOP) at a discounted rate. For business owners with a critical interest in their property, this is an easy way to reduce the price of both forms of protection.

Product Liability Insurance 

Businesses that manufacture, distribute or sell products may be liable for the safety of users of those products. Extremely expensive claims can sometimes result as a result of production or design flaws, as well as improper warnings and instructions.

Product liability insurance

protects the insured from the costs that may be incurred when found liable when the products cause injury or bodily harm. The amount of product liability insurance may vary depending on the potential danger associated with your products; for example a clothing store would have significantly less risk than an appliance store. Professional Liability Insurance Professional Liability Insurance (also called Errors and Omissions Insurance) is an important insurance option for service providers. It protects doctors, lawyers, consultants and other professionals who provide advice from the heavy cost of defense against and liability for negligence claims. Some professions are required to carry this insurance - such as physicians who are required to purchase malpractice insurance in certain states.

Home-Based Business Insurance 

Home-based business owners commonly assume that homeowner’s insurance will cover some degree of their business liability. Depending on the circumstance, some homeowner’s policies offer riders in addition to regular home insurance, but these only go so far. A home-based business owner may consider purchasing additional policies to cover other general and professional liability risks, as well as the potential for loss of income if their home-based office is damaged.

Workers’ Compensation Insurance 

Workers’ compensation insurance is legally required by almost all states (with the exception of Texas) for any business with employees. It protects your company from financial liability for the injuries incurred by employees on the job, as well as the loss of income due to disability. It does not apply to independent contractors.

Life Insurance 

It’s important that a business owner strongly consider purchasing life insurance in consideration of their loved ones and their company in the case that they die unexpectedly. Different forms of life insurance have the capacity to protect your family from your business loan obligations, and cover the costs of lost skills or connections made by the previous owner, as well as finding their replacement.

Business Interruption 

Insurance Also called Business Income Insurance, this insurance covers the loss of revenue while your facilities are closed or being restructured after a disaster. It is supplemental to Property Insurance, which covers the cost of damaged property, but not the loss of income associated with a fire or break-in. This may be useful for retail stores or brick and mortar businesses that depend on operating in one physical location to stay afloat.
If you have any further questions or concerns, don't hesitate to consult with an insurance agent.

Most individuals have some type of insurance. When you first receive the policy document, nearly all clients glance at the fancy words and file it away. However, if you are spending a large sum of money each year on insurance it is beneficial to learn about those tricky terms and exactly what it says.

Fundamentals of an Insurance Contract 

The first step to acquiring insurance is filling out the proposal form and sending it to the company. 

This is considered your offer to the insurance organization. If they agree you are insurance-worthy, this is known as an acceptance. In many instances the insurance agent will accept your offer with a few changes to the proposal. To enter into any agreement you must be legally competent and not a minor. However, insurers can be considered competent if they are licensed under specific regulations. The next step is consideration, which details the money paid if you must file a claim. Otherwise known as a premium, consideration designates that each legal entity in the contract must provide some amount of value. 

Indemnity Contracts 

With the exception of life insurance, the majority of insurance agreements are known as indemnity contracts. These apply to specific types of insurance where the loss incurred is quantifiable by monetary gain. Therefore, the principle of indemnity outlines that insurance organizations are not required to pay more than the actual loss. The idea behind an insurance contract is that you are left in the same financial position prior to the claim. Additional factors of an insurance contract include excess and under-insurance. Excess refers to the insurance company paying you in excess of a specific amount of damage. For instance, if you have a car accident with an amount totaling $6,000 and the applicable excess is $5,000, the insurance company will pay you $6,000. However, if the damage is only $3,000 then the company will not pay a penny. Under-insurance designates insurance that is less than the total value of item to save on monthly premiums. If there is a partial loss then you must pay any costs over that amount. For instance, if you insure your residence for $90,000 while the total value is $100,000, during a partial loss the insurance company will only pay $90,000 and must cover the remainder. This is not a recommended practice. 

Principle of Subrogation 

The Principle of Subrogation permits the insurance company to sue a third-party entity that has instigated a loss to the insured client. During the suit the goal of the insurer is to retain some or all of the money that they have paid to the client from the loss. 

Insurable Interest 

As a customer it is your legal right to insure any type of property that could result in financial loss or induce a liability. This is known as insurable interest. This prevents future owners of vehicles, residences or properties from insuring the entity because they do not own it. Also, insurable interest helps married couples complete life insurance policies on their spouses and can exist in business arrangements between a creditor and debtor or between employers and employees. 

Doctrine of Good Faith 

The doctrine of good faith or uberrima fidei specifically outlines the presence of a mutual faith between the insurance company and the insurance client. For instance, when applying for life insurance, it is your duty of good faith to divulge previous illnesses. Similarly, the insurance company cannot hide information about the coverage. 

Doctrine of Adhesion

 The doctrine of adhesion recognizes that you are required to accept all the terms and conditions of the insurance contract without negotiating. Since the client does not have an opportunity to change the conditions of the contract, any uncertainties favor the insurance company. This concept was created to protect the consumer. During the insurance purchasing process, most clients rely on their advisor for all aspects from selecting the policy to completing the forms. Most people steer clear of the legal jargon found in their lengthy and boring contracts. However, it is always important to be familiar with this terminology as well as the conditions of your contract since you have to live with it.

Mybe You are facing problems understading many terms that have relationship with business that's why today i'm presenting To you a Glossary of business Tips to let know every single word about Business.

Actual Cash Value: An amount equal to the replacement value of damaged property minus depreciation.

Adjustable-Rate Mortgage (ARM): Also known as a variable-rate loan, an ARM
usually offers a lower initial rate than a fixed-rate loan. The interest rate can change at a specified time, known as an adjustment period, based on a published index that tracks changes in the current finance market. Indexes used for ARMs include the LIBOR index and the Treasury index. ARMs also have caps or a maximum and minimum that the interest rate can change at each adjustment period.

Adjustment Period: The time between interest rate adjustments for an ARM. There is usually an initial adjustment period, beginning from the start date of the loan and varying from 1 to 10 years. After the first adjustment period, adjustment periods are usually 12 months, which means that the interest rate can change every year.

Amortization: Paying off a loan over the period of time and at the interest rate specified in a loan document. The amortization of a loan includes the payment of interest and a part of the amount borrowed in each mortgage payment.

Amortization Schedule: Provided by mortgage lenders, the schedule shows how over the term of your mortgage the principal portion of the mortgage payment increases and the interest portion of the mortgage payment decreases.

Annual Percentage Rate (APR): How much a loan costs annually. The APR includes
the interest rate, points, broker fees and certain other credit charges a borrower is required to pay.

Application Fee: The fee that a mortgage lender charges to apply for a mortgage to cover processing costs.

Appraisal: A professional analysis used to estimate the value of the property. This includes examples of sales of similar properties.

Appraiser: A professional who conducts an analysis of the property, including examples of sales of similar properties in order to develop an estimate of the value of the property
The analysis is called an "appraisal."

Appreciation: An increase in the market value of a home due to changing market conditions and/or home improvements.

Arbitration: A process where disputes are settled by referring them to a fair and neutral third party (arbitrator). The disputing parties agree in advance to agree with the decision of the arbitrator. There is a hearing where both parties have an opportunity to be heard, after which the arbitrator makes a decision.

Asbestos: A toxic material that was once used in housing insulation and fireproofing. Because some forms of asbestos have been linked to certain lung diseases, it is no longer used in new homes. However, some older homes may still have asbestos in these materials.

Assets: Everything of value an individual owns.

Assumption: A homebuyer's agreement to take on the primary responsibility for paying an existing mortgage from a home seller.

Balloon Mortgage: A mortgage with monthly payments based on a 30-year amortization schedule, with the unpaid balance due in a lump sum payment at the end of a specific period of time (usually 5 or 7 years). The mortgage contains an option to "reset" the interest rate to the current market rate and to extend the due date if certain conditions are met.

Bankruptcy: Legally declared unable to pay your debts. Bankruptcy can severely impact your credit and your ability to borrow money.

Capacity: Your ability to make your mortgage payments on time. This depends on your income and income stability (job history and security), your assets and savings, and the amount of your income each month that is left over after you've paid for your housing costs, debts and other obligations.

Closing (Closing Date): The completion of the real estate transaction between buyer and
seller. The buyer signs the mortgage documents and the closing costs are paid. Also known as the settlement date.

Closing Agent: A person who coordinates closing-related activities, such as recording
the closing documents and disbursing funds.

Closing Costs: The costs to complete the real estate transaction. These costs are in addition to the price of the home and are paid at closing. They include points, taxes, title insurance, financing costs, items that must be prepaid or escrowed and other costs. Ask your lender for a complete list of closing cost items.

Collateral: Property which is used as security for a debt. In the case of a mortgage, the collateral would be the house and property.

Commitment Letter: A letter from your lender stating the amount of the mortgage, the number of years to repay the mortgage (the term), the interest rate, the loan origination fee, the annual percentage rate and the monthly charges.

Concession: Something given up or agreed to in negotiating the sale of the house. For example, the sellers may agree to help pay for closing costs.

Condominium: A unit in a multiunit building. The owner of a condominium unit owns the unit itself and has the right, along with other owners, to use the common areas but does not own the common elements such as the exterior walls, floors and ceilings or the structural systems outside of the unit; these are owned by the condominium association.
There are usually condominium association fees for building maintenance, property upkeep, taxes and insurance on the common areas and reserves for improvements.

1. Don’t give your account number and bank routing information to anyone you 
   don’t know.

Give out your account information for transactions only if you are familiar with the company you are dealing with. And if you have not done business with a company before, give out account information only if you have initiated the transaction. Criminals may ask you for your bank account number and then withdraw money from your account by creating a demand draft (sometimes called a "remotely created check") or making an electronic transfer. They may also ask for your debit or credit card number and other personal information. Don’t fall for these scams and don’t let yourself be pressured into "free trial offers." To be removed from telemarketing lists, sign up for the National Do Not Call Registry online (https://www.donotcall.gov) or by calling, toll-free, 1-888-382-1222.

2. Review your monthly statement.

Make sure all the checks, debits, automatic payments, and other withdrawals are ones you authorized. If you see a transaction you did not authorize, notify your bank immediately. If your bank has online banking, you don’t have to wait until your bank statement comes--you can check your transactions at any time.

3. Notify your bank about any problems as soon as possible.

The sooner you alert your bank to a problem, the sooner they can get it resolved. In some cases, your bank may require you to notify them in writing. Keep copies of any documents you give the bank until the problem is resolved. If you think the problem is a result of fraud, you should also contact your state attorney general.

4. If you don’t have enough money in your account, don’t write the check or authorize the debit.

Checks are being processed more quickly these days, which means the money may be debited from your account sooner. Also, many stores and utility, insurance, and credit card companies will convert your check to an electronic payment, which also means the money will be debited from your account sooner. If you don’t have enough money in your account when you write a check or authorize a debit, you could find yourself paying a fee. For more information, see the Federal Reserve Board’s publications "What You Should Know about Your Checks" and "Protecting Yourself from Overdraft and Bounced-Check Fees."

5. Know your rights under consumer protection laws.

If you have a problem with an electronic debit or electronic fund transfer, you have certain rights under the federal Electronic Fund Transfer Act (EFTA), as explained in the Board’s "Consumer Handbook to Credit Protection Laws." You also have rights under the EFTA if you have a problem with a check that has been converted, as described in the Board brochure "When Is Your Check Not a Check?" The Federal Trade Commission’s publication "Automatic Debit Scams (175 KB PDF)" explains your rights and what to do if you have a problem with a demand draft or remotely created check.

Strategy 4: Manage your debtors

A sale isn’t a sale until the money is in the bank. A well managed debtors system is critical for a successful business. Ensure your debtors system has preventative measures as well as a step by step plan to recover overdue accounts.

Some examples of how to improve the debtors system:

• Credit checks for all new customers.
• Receiving deposits on signing of contract.
• Discounts offered for early payment.
• Make it as easy to pay as possible. Offer to take credit card details to move the risk to the credit card company.
• Send out invoices immediately.
• Bank regularly.
• Regularly review aged receivable report and consistently follow a step by step plan to follow up overdue accounts.
• If the customer cannot pay the whole amount, be flexible and arrange a payment plan. Take the first payment straight away while on the phone by asking them to pay by credit card.

Strategy 5: Manage the stock

Controlling how much stock is on hand can be both an art and a science. Not enough stock will lead to lost revenue. 

Too much stock can impact on cash flow. I have seen how both can have a major impact on profit and cash flow. For example, a retailer increased the amount of stock on hand and sales increased dramatically when customers saw the availability of products. 

This is more the exception than the norm. Generally, businesses have too much stock that is tying up valuable resources. 

One possible reason is that the owner doesn’t want to realise a loss on the sale of the stock. However, they have not considered the hidden costs by holding onto old stock such as missed opportunities due to poor cash flow and shelf space that could be used by a fast moving product. 

Knowing what the right stock level for your business may require some trial and error. 

However, with a good accounting program you will be able to make an educated guess about how much stock to carry.

Examples of how to improve stock control:

• Monitor stock regularly. Use ratios such as inventory turnover and days inventory to compare to previous periods and industry standards.

• Clear old and outdated stock by packaging together or discounting.
• Don’t buy too much stock even if a discount is offered if it will take an extended time to sell.
• Conversely, for fast moving stock, buy in bulk to receive a discount.
• Focus on a ‘just in time’ ordering system to save build up of stock.
• Set minimum and maximum levels of stock and stay within these levels.

Strategy 1: Get your pricing right

Determining the price to charge for a product is frustrating for most businesses. However, getting your pricing strategy right is critical to your success in business because it affects many areas of your business.

 The pricing strategy impacts the type of customers attracted to your business, the quantity of product sold, how the product is perceived, product promotion and your profit.

There is no single way of determining the best pricing strategy for your business. The following is a list of factors that you may consider when developing your pricing strategy:

• The type of customers you are targeting.
• The positioning of your products in the market.
• The relationship between the price and quantity sold.
• How you will promote your products.
• How you will distribute your products.
• The costs associated with your products including the fixed and variable costs.
• Your competitors and their pricing decisions.
• The objective of your pricing strategy.
• The method of calculating price.

Strategy 2: Reduce your cost of goods sold

This strategy complements the first strategy ‘get your pricing right’. The gross profit margin is the difference between the price you sell your product for and the price you paid for it.

Increasing the margin between the two will increase your profit and your cash flow. There are two ways to increase your gross profit margin: increase your price (as discussed in strategy 1) and/or decrease the cost of goods sold. The cost of goods sold is the cost of the product to you that was sold to your customers.

Examples of ways to reduce your costs of goods sold:

•  Negotiate with your suppliers for a better price if you buy in bulk. Only use this strategy if you can turn over the stock quickly.
•  Negotiate with your suppliers for a discount if you pay early if there isn’t a discount already in place.
• Shop around with other suppliers to ensure you are getting the best value (this is not necessarily the best price).
•  Purchase new equipment or implement new processes to produce the goods more efficiently.

Strategy 3: Control your expenses

Regularly review your expenses by comparing them against your budget and prior periods. If an expense is greater than budgeted or than the previous year then investigate the reason for the increase.

Examples of how to control your expenses:

• Compare expenses against your budget.
• Compare expenses against the previous year or period.
• Compare expenses as a percentage of sales.
• Train your employees to be thinking about how expenses can be reduced. Reward them forideas that reduce expenses. Rewards don’t have to always be monetary. Be creative with the reward system.
• Review the transaction listing to understand each expense.
• Prepare regular financial reports.
• Require quotes from various suppliers.
• Rearrange annual payments into small payments. This generally costs more and should only be used when needed. Revert back to annual payments once you are able.
• Implement performance measures to monitor your expenses. For example, measure the costs of vehicles on a cents per kilometre basis.

End #Successful Business#business-tipsndtricks.blogspot.com.

Both my husband and I are recent college grads who are in over our heads in debt. My credit card is the worst and I was curious as to whether I need to cancel it or not.

We never use it, so is it really necessary to cancel it? What exactly happens when you close an account?

Is it a strike on your credit history to cancel a credit card? Is the only benefit of canceling a card the certainty of not using it?

Cynthia’s questions really go a bit deeper than just whether to close a credit card account. Underlying is an understanding that she needs to manage her credit. And we all should take an interest in that subject. Because how you manage your credit will determine whether you can borrow money in the future and how much you’ll pay for the privilege. 

Before we look at her questions, let’s take a moment to look at credit management. Once we do, the answers to Cynthia’s questions will become clearer. There are two aspects of credit management that are important for individuals. The amount of credit you have available and your history of payments. The amount of credit available to you will be a concern for potential lenders. They look at a credit file to see how much you could charge or borrow without needing anyone’s approval. They’ll look at the total and decide whether they want to grant a loan that would add to that amount.

Every credit card in your wallet has a credit limit. If you total them all and add any other lines of credit you’ll find out how much credit you have available to you. Whether you intend to use it isn’t important. The fact that you could is enough for potential lenders. Too much credit available can raise the rate you pay to borrow.
You can also have too little credit. Closing your last credit card could leave you with zero credit available. That, too, would be a warning sign to lenders. Generally only the young or people in financial trouble have no credit available to them.

Your payment history is the other big factor in your credit rating. Obviously it’s best to have a record of paying your bills completely and on time. Lenders understand that anyone can have one or two late payments in their life, but if it happens often you’ll find yourself paying higher interest rates.
Now let’s get into Cynthia’s questions. First, is it necessary to cancel the card? The simple answer is no, it’s not really necessary. But it still might be a good idea. Especially if she doesn’t intend to use the card there’s no advantage to keeping it open.

Many companies will allow you to close an account by phone. Unless you need evidence that you closed the account, that should be sufficient. However, if you need to be certain, you’ll want to notify the card issuer by letter and keep a copy for your files.

OK, so what happens when you close an account. Basically the credit card issuer reduces your available credit to zero. That reduces the amount of credit available to you. If you have a lot of credit cards that could help your credit score. But a canceled account will still show up on your credit report. In fact, it will appear for seven years after the last payment on the account.

Canceling an account doesn’t have any affect on any balances owed or payments that are due.
Could Cynthia be penalized for closing her account? Canceling a credit card is not a “strike” against the card holder. It’s expected that you’ll open and close accounts as your needs change. One warning though: You can close too many accounts. People who are continually transferring balances and closing accounts demonstrate a pattern that concerns potential lenders.

Another caution is to make sure that the account is closed properly. It’s important to have the card issuer report that the account was canceled “at the customer’s request”. That tells anyone checking your credit report that you made the decision to close the account.

If the card issuer initiates the account closing that would probably mean that the credit card company felt that you were a bad credit risk. Naturally, that doesn’t help your credit rating.
Finally, Cynthia hints at one advantage to closing the account for those who have trouble controlling their purchases. You can’t put charges on a canceled card. It’s also safer because thieves can’t use it either.
Should Cynthia close out the account? In most cases it’s not that important, but it is probably still worth the time it takes to close it.

Introduction To Credit Restoration

Rebuilding Damaged Credit

Bad credit can happen to good people. Don't despair.

As you do so, your credit score will improve, resulting in better credit offers and a substantial savings in money.

With patience and timely repayments, you'll likely be able to build a new credit history that creditors will look upon favorably when making decisions about your ability to handle even more credit.

The key to having great credit is to understand the factors that can hurt your Credit Sscore or Rating.

Bankruptcies, tax liens, judgments, student loans, credit counseling, numerous inquiries, repossessions, collections, late payments and chargeoffs bring your score down and hinder your chances of obtaining a new loan.

How It Works

Pull 3 separate credit reports from the 3 credit reporting agencies, Experian, Transunion, and Equifax, and dispute any and all negative items.

The entire dispute process is done online and does not generate any inquiries or put any negative marks on your credit report.

What to Expect

Results can be expected within 30 - 45 days and are mailed directly to the client from the 3 credit reporting agencies.

Once these results are received, you can dispute any remaining items a second time.

Usually the results we are reached within that time frame.

Why Your Credit Score is So Important 

The credit scoring model seeks to quantify the likelihood of a consumer to pay off debt without being more than 90 days late at any time in the future.

Credit scores can range between a low score of 350 and a high score of 850.

The higher the score, the better it is for the consumer, because a high credit score translates into a low interest rate.

This can save literally thousands of dollars in financing fees over the life of the loan.

Only one out of 1,300 people in the United States have a credit score above 800. These are people with a stellar credit rating that get the best interest rates.

On the other hand, one out of every eight prospective home buyers is faced with the possibility that they may not qualify for the home loan they want because they have a score falling between 500 and 600.

Mortgage lenders consider a score of 700 or above to be very good.

The Five Factors of Credit Scoring

1. Payment History– 35% Impact
2. Outstanding Credit Balances– 30% Impact
3. Credit History– 15% Impact
4. Type of Credit– 10% Impact
5. Inquiries– 10% Impact

Credit reports contain errors on a regular basis.  So, before applying for new credit or beginning your credit repair journey make sure that all of the information contained in your credit report is yours.

Reasons for such mixes include:  

1. Common name.  For example, a father and son who live at the same address, or who don’t add “Sr.” or “Jr.” when completing credit applications. 
2. Loan officers make clerical mistakes.  For example, spelling names wrong, transposing social security numbers when pulling the credit report, or even entering incorrect addresses.
3. When reporting data to the Credit Reporting Agency (CRA) personal information is entered incorrectly.  For example, an address at which you never lived.
4. If married, the social security number of the incorrect spouse is entered.  This is not good because each credit report should be individual.  What can happen is a merged credit report resulting in incorrect scores. 
5. Co-signing for children or other people.  Sometimes the lender will match the social security number with the wrong person.
6. Individuals with the same name mixed at the CRA's side.  For example, John L Smith and John M Smith all is the same except the middle initial. This is a very common mistake.

It is not easy finding these mistakes, but if you know you see information that does not belong to you, then call the CRA specifically to ask, “Is my file mixed?”

Mortgage lenders pull three bureau credit reports through different systems. Sometimes the system has the capability to pull in mixed reports or split files, which will show the conflicting information. This is something consumer reports don't always show.

1. Experian: Experian is the best for this because the mix can show two ways.
   1. It will show additional names and addresses and possibly incorrect accounts that are not obvious.  If the consumer gets the chance to review the credit report and knows something is not right, then the consumer will have to write directly to Experian and provide a copy of a driver’s license (with DL number marked out) and request to un-mix the file. 
   2. Sometimes it is obvious showing additional social security number of the other individual mixed on the file. Fix the same way by writing to the CRA with request to un-mix the file. 

2. Equifax: On the mortgage side when the files are split, the files are received as Equifax 1 and Equifax 2.  What is different is that on the credit report are two credit scores, one for each file. But it is all merged on the mortgage reports.  These are very complicated.
   1. It may very well be all of the consumer’s information that just got split because two names were used.  For example, a married name versus maiden name.  If that is the case, Equifax advises to add both scores and divide by two for the end score to be used. But also follow up informing Equifax that the file needs to be re-merged. 
   2. Other splits may be by common name, for example father and son, where there are two people making up the files. These need to be unmixed. 
   3. Consumers using and pulling their personal credit report on a daily basis from monitoring services can cause problems, compiling soft hits to the credit report.  If the file gets too large, Equifax cannot handle it and will result in a split file. Some accounts will show on one credit report while other accounts show on another credit report. 

3. TransUnion:  Like Equifax, TransUnion doesn't show additional social security numbers, only additional names, addresses, and possible accounts that don't belong. The consumer must contact TransUnion with a copy of their driver’s license in order to update the file. 

So, depending on the vender and software used, besides the type of creditor, different things can result when trying to pull credit reports. Sometimes it just looks like you have no credit history, and other times it mixes other people’s credit reports right in with yours.  If creditors don't know to look for the warning signs, they will flat out decline credit because they think it was all your credit that was bad.

The CRA’s don't go first and foremost by the social security number.  Listed below is how the repositories assign importance to this information (from most important to least important).  Notice the SSN is not the most important (Information provided by California Association of Mortgage Brokers, Orange County Chapter, “Shedding Light on Credit Scoring” by the NAMB Credit Scoring Committee Chair, March 12, 2002):

Equifax	TransUnion	Experian
Last name First initial Address SSN	Zip Code Address Last name First name SSN AKA/Alias name	Last name First name SSN Address

With this in mind, understand that it is quite easy for the creditors to mix consumer files.  Even if you catch this and fix it completely, it can happen again.

You must take precautions to just use one deviation of spelling your name, especially if you have a father and son with similar names living at the same address.

Finally, be sure to obtain a copy of your credit report at least once a year or 60 days prior to applying for credit so you can catch and fix mistakes in time.

Debit cards have become a very popular way to pay for everything from fast food to rental cars. The Federal Reserve reports that debit card transactions have been growing more than 20 percent annually and have surpassed credit card transactions.

The appeal is understandable. Debit cards are quick and easy to use.

But using a debit card can cost you hundreds, even thousands, of dollars. We'll show you why you should never carry a debit card.

More Risky than Carrying Cash

In its 2007 Debit Issuer Study, PULSE EFT Association reported that U.S. financial institutions lost an estimated $662 million to debit card fraud in 2005. There is no end in sight.

You'd be safer carrying cash. Although you don't have much recourse if it's lost or stolen, but at least your loss is limited to the amount of the missing currency.

Carry a debit card, and you put the entire balance in your bank account at risk. If you link your checking account to your savings account to avoid overdrafts, you put the balance in both accounts at risk.

More Dangerous than a Credit Card

If a thief gets your credit card, the federal Truth in Lending Act limits your liability for any fraudulent credit card charges to $50. You may not have to pay even that amount, as many financial institutions don't impose any charge on their defrauded customers. And while the theft is being investigated, you can refuse to pay any part of the unauthorized charges.
Debit cards fall under a completely different law, the Electronic Fund Transfer Act. To limit your liability to $50, you have to notify your bank within two business days of discovering that you're debit card has been lost or stolen. Wait longer than that, but give your bank notice of the fraudulent transactions within 60 days of when your statement is mailed, and your maximum liability jumps to $500. Miss that deadline and you could lose all the money in your account.
Because the debit card accesses funds directly out of your account, you can be left without your grocery money while the fraud claim is being investigated.

The $350 Taco

One trip to Taco Bell was enough to send Joseph Rizk's checking account into freefall.
Rizk made the mistake of paying for fast food with his debit card. He figures he spent only about $5 more than he had in his account. Unfortunately, by the time he realized there was a problem, the bank had hit him with about $350 in overdraft fees. At $25 to $35 per occurrence, it's easy to rack up hundreds of dollars in needless NSF fees.
"I overdrew, and they pretty much pummeled me with charges," said Rizk.
The Center for Responsible Lending, a consumer group, estimates that overdraft charges cost people about $17.5 billion each year. The center's research reveals that about 45 percent of those overdrafts are the result of using a debit card or taking out cash from the ATM.
Banks used to refuse any debit card transaction that would overdraw a depositor's account. But not any more. Banks could warn depositors when their accounts are close to being overdrawn. But they don't.
Instead, most financial institutions automatically enroll their depositors in a program that loans them the amount of the overdraft--but at a steep price. The Center for Responsible Lending estimates that Banks that offer these lending programs can expect a sharp increase in overdraft revenues, as much as 200 to 400 percent.
Calculated as an interest rate, rather than a fee, the cost of these loans is astronomical. The average amount of a point-of-sale purchase that overdraws an account is $14.75. The average fee is more than double that amount. According to the agency, most consumers only use these loans for a few days. So on an overdraft loan, the annual percentage rate can be as high as 20,000 percent.
In defense of this practice, bankers like to point out that it's the responsibility of the account holders to monitor their account balances and avoid overdrafts.
Of course, that requires the account holder to know how much money is in their account.

How Can You Know Your Account Balance?

R. C. Welborn, learned the hard way about the risks of using debit cards. To make sure he didn't overdraw his account, he checked his online bank statement. Since it showed $80 in his checking account, he felt free to make several small purchases a few days before his paycheck was deposited. Using his debit card, he bought two gasoline fill-ups, snacks and cigarettes, totaling about $65.
Although the balance in his account was more than enough to cover the price of what he bought, when he checked his account about ten days later, he found he had incurred $120 in overdraft fees.
"I couldn't figure out what was going on, I knew I had money in the bank," Welborn remembered.
Like most people, Welborn didn't know that merchants can place a pre-authorization hold on a customer's account. In situations where the exact amount of the transaction isn't settled when the approval is given, it makes sense that a merchant would want reserve a little more to cover their transaction cost. If you give your debit card to a waiter, hotel clerk, car rental company, or gas station, the merchant is likely to get an approval of a higher amount to cover any tip on their service, higher purchase amount, or room service. Car rental companies that accept debit cards routinely place holds in the amount of $300 to $500.
Now Welborn understands that the pre-authorization hold the gas station put on his account resulted in overdrafts on at least six other small transactions. He estimates that he paid over $2,000 in overdraft fees because he used a debit card.
"The quickest way to bankrupt yourself is not knowing what's going on with your debit card, but if you don't get a warning when you're doing it, how do you know?" Welborn asked. "I won't touch a debit card anymore. I do everything with cash."
Pre-authorization holds placed by merchants are just one of the factors that make it difficult, if not impossible, for a depositor to know his or her available account balance. It's becoming more difficult to tell when a transaction hits an account.
Some debit cards allow for both signature-based debit card transactions, that, like a check, take a few days to clear, and PIN-based transactions, which hit the depositor's account instantly. Take into account paper checks that merchants and service providers frequently convert into electronic drafts, and, without real-time account information, it's impossible to know what's in any checking account.
Nessa Feddis, Senior Federal Counsel for the American Bankers Association in Washington, explains that even the banks don't have up-to-the-minute information. "We don't have real-time transactions. There will always be outstanding transactions that the consumer has authorized but have not hit the bank."
Comparing debit card transactions to paper checks, some financial institutions instruct depositors to keep track of their purchases, just like in the old days when checks and drafts were the only way to draw funds from a checking account.
But in the old days, a depositor could wait for their bank statement to reconcile their balance. Now, by the time the statement arrives, the damage may already be done.
"The debit card is really where it's a serious problem," argues Ed Mierzwinski, the Consumer Program Director of the U.S. Public Interest Research Group in Washington. "It's harder to keep track of your balance because of the tricks banks use."
In addition, there are no regulations or statutes that limit the amount of a pre-authorization holds, or the length of time that it can be imposed on an account.
When Penny Chaissons bought $20 worth of gas, the station put a hold of $75 on her account, more than 3 times the amount of her purchase. She contacted both the gas station and her bank, but each pointed a finger at the other. Even after escalating her complaint to management, it was 72 hours before the hold was released.
These holds stay in place until the bank or the requesting merchant gets around to releasing the amount held in excess of the purchase amount. Generally, this takes a few days, but it could be longer.

How You Can Protect Yourself 

Promptly reconciling your account to the monthly statement or monitoring your account balance online won't always prevent loses associated with the use of a debit card.
There is only one solution--Don't carry a debit card. When opening a checking account, it is standard practice for a bank to send the depositor a combination debit/ATM card. However, you can pick and choose the services you want to accept. If you want to avoid the risks of having a debit card, but would like the convenience of ATM access, your bank will issue you a card for just that purpose, without the debit card function.

You can always pay for your purchases with cash or a credit card, since both are safer than using a debit card.

If you are resolving to hop off that debt treadmill or get your credit in order in 2006, here are my tips to help you succeed:

1. Review your statements

If you have run up larger balances than usual, your credit score may take a dip after the holidays. And that could trigger an increase in your interest rate on your major credit cards. Check your statements to confirm your rate. If it's higher than you think you deserve...

2. Check your credit report if you have not done so in the past year.

Go to AnnualCreditReport.com to get your free annual credit report from all three major agencies.

3. Clean up your credit

Dispute errors or incomplete information. Credit reporting agencies must investigate within 30 days to confirm the item or remove it. Some credit repair firms like to initiate disputes around the holidays in the theory that they are more likely to fall through the cracks. It's a bit questionable whether it will work with technology today, but may be worth a shot. Another tip: Don't close all your old accounts, or your credit score may drop.

4. Ask for a better deal

Credit card companies will be salivating over consumers' after-holiday credit binges. Now is the time to ask for a lower rate or threaten to take your balances to another card. Be polite but persistent. The squeaky wheel will save money! DebtSmart.com’s Scott Bilker is the expert. Take his advice!

5. Create your exit plan

If your debt levels are creeping up, look at your options for paying it back this year. If you can do it yourself, create a rapid repayment plan and target the highest rate debt first. If you need help, talk to a reputable non-profit counseling agency or consider debt settlement or bankruptcy.

6. Shred!

As you start preparing for tax time, cleaning up records etc. make sure you shred documents containing personal information. Consider using online services to review statements and pay your bills. Research by the Better Business Bureau has found that consumers who are using online services to review and pay bills experience one-eighth the fraud losses of those who rely on paper statements.

If there is one question I’m asked by consumers more than any other about credit, it’s this “What’s the fastest way to raise my credit score?”.
My response is always the same “How much do you want to raise it?” If you wish to increase your score from 580 to 650 then your strategy will be very different from someone wanting to go from 670 to 725.

Why?

Because you starting point is different which requires a different approach.
Also, while the removal of negative items from a report will almost always lead to an increase in score, it’s a basic concept at best. Therefore, within this article, we’ll discuss somewhat inside techniques known by very few (since this is what our company specializes in publishing—our flagship product being the Credit Secrets Bible).

In relation to just removing negative items, these are techniques which you can use even if you have NO derogatory information on your credit report.
We’ll start with the most overlooked strategy first and that’s your…

DEBT TO CREDIT RATIO:

The most fraudulent belief I’ve been hearing for over 15 years is “I have excellent credit, I pay all my bills off in full every month!” This is a false belief for one to buy into and understanding your debt to credit ratio holds
the key to getting your “credit mindset” right.

Your debt to credit ratio is your ratio of debt to total available credit you have been extended (revolving accounts only). For example.
If you have $10,000 in total unsecured revolving credit accounts and you’re currently in debt $2500, then your debt to credit ratio is 25%. Since the main way lenders make money is by charging interest, one of the elements of the credit scoring model is driven by your ability to maintain balances and pay over time.

This shows your true (long term) credit worthiness which is most profitable to lenders since they make money primarily via interest and not annual fees.

Over the years we’ve discovered without question that carrying the proper debt to credit ratio will boost your score faster than paying off your bills in full each month. I have argued with the Better Business Bureau on this topic and they still disagree (despite my sending them proof from Fair Isaacs own website www.MyFico.com the organization which invented the credit scoring software used by credit bureaus).

Of course, what do you do if you’re like most Americans and your debt to credit ratio is too high? For example. You have $10,000 in unsecured revolving accounts but you owe $8500, thereby giving you an 85% debt to credit ratio.

How can you bring it down without selling everything you own? The answer is simple and takes us to the next technique which is…

SUB-PRIME MERCHANDISE CARDS:

The single most cost effective (and powerful) tool for consumers to increase their high credit limit and decrease their debt to credit ratio is the use of Sub-Prime Merchandise Cards which report to one of more of the major credit bureaus.

Unfortunately, despite their immense benefits, these are the most misunderstood cards in the credit industry. A large portion of the misunderstanding is due to marketers misrepresenting the cards and the growing number of companies promoting them.

When you learn how they work one quickly understands why they have been the subject of much misrepresentation.


A Sub-Prime Merchandise Card is nothing more than a card attached to a line of credit which allows you to buy merchandise from a specific vendor (usually the company that sold you the card).

The merchandise (in most cases) will be purchased through a catalog or online mall.
Where the problem arises is that the cards are marketed almost exclusively to the sub prime market via email, telemarketing and direct mail etc.

The reason for this is they can advertise almost irresistible offers like “$5,000 Credit Card… GUARANTEED! No Credit Check! NO Cosigner! You cannot be turned down!” or “Unsecured $10,000 Credit Line! Everyone Approved!”.

I’m sure you get the idea…While there are many companies which do this and are a “shady at best”,
there are a few which do it legitimately and it’s the best kept secret to build your credit and build it fast.

Here’s how it works: the company approves anyone with a pulse (literally) and gives them a card for $2,500 to $12,500 with NO credit check and NO cosigner.

However, the card is only good for merchandise through their website or catalogs and the consumer is required to put down a deposit on whatever they purchase. After the deposit is paid, the remaining balance is
financed on the card.

For example. A person buys $1,000 worth of merchandise. Their deposit is $300 so they then finance $700 on their merchandise card and make payments.
Sound like a scam? If you say “Yes” like most people then you’re missing the point… big time.

With a legitimate Sub-Prime Merchandise Card your credit line WILL be reported to at least one major credit bureau (or more). This means if you get a $5,000 card and you finance $500, on your credit report it will look like any other credit card and will do three extremely important things for you.


1.) It will increase your current “High Credit Limit” by $5,000 almost  overnight as the account “looks” like any other unsecured revolving account.

2.) By carrying a small outstanding balance it will positively impact your credit report by building and showing potential lenders your credit worthiness.

3.) With a good payment history you are virtually guaranteed to receive “legitimate” pre-approved credit offers in the future due to other lenders renting your name from the credit bureaus.

This technique is hard to beat for both cost and effectiveness. Of course, the whole key is knowing exactly which cards report to the credit bureau and offer the best rates. The only thing more effective is…

PIGGYBACKING:

Despite its virtually unlimited potential, piggybacking is not used by nearly as many consumers as it should be. It’s easy, effective, and extremely fast.

Unfortunately, it’s mostly used among parents and siblings while those who can really benefit stay in the dark.

How it works. Almost every credit card or credit account will allow the primary account holder to add on (at a later date) what’s known as an “Authorized User” or “Secondary Account Holder”.

In most cases, when this is done, the entire account history (retroactively) gets posted to the authorized users credit report regardless of their current age or credit history!

For example. If it’s a credit card with a $10,000 limit which has been paid as agreed for the last 10 years, then that complete history will be posted to the authorized users’ credit report. I once saw a clients’ credit report who used this technique with his mother. He was only 24 at the time and he had a $15,000 Gold credit card on his report with history going back 11 years! I laughed as I thought to myself that this kid would have had to be approved when he was 13 years old for this account to be his!



As you can see, this strategy is usually only used by parents and their children and in most cases with no regard to the benefits the children are reaping credit wise! In fact, in recent years, due to its’ effectiveness this technique has led individuals with excellent credit scores to “rent out” authorized user accounts on one or even multiple credit cards in return for a fee!