Mind Over Money

Guide To Not Stress Out When You Are Broke

Living paycheck to paycheck can be very stressful. You’re always wondering how you’re going to pay your next bill. I’ve been there and it sucks. After a while of living paycheck to paycheck, I realized that unless you can control the outcome, then there’s nothing to worry about. If you can control the outcome then you can either worry about it and not change your life or do something about it and stop worrying.

Stress has a lot of effects on your health and you need to change the way you live in order to live healthier. Changing your whole mindset isn’t easy to do, but it’s something that needs to be done, otherwise you’re going to be stressed out all your life. You are in control of your life, so you can’t wait for something to happen. You have to make it happen.

Plan

If you have a plan in place for when you’re low on money, you will be able to take stress out of the equation. You are stressed because you don’t know what to do, but you’ve been here before. So now that you’re here again make a change. What are you going to do this time? Once you come up with a solution, write it down and use it next time. But how do you come up with a solution?

Brainstorm

So let’s take an example. Your rent payment is coming due, but you don’t have all of it. If you’re just going to shut down, then you’re not going to be able to pay rent. What do you do? Well, what can you do? Brainstorm it. You could get payday loans, but that’s just going to delay the inevitable. So come up with something constructive like selling something, going to a temp agency, sell plasma, go to a day labor place. These are just a couple of brainstormed ideas, but you get the point. There are other ways that are more constructive than getting a payday loan, which are going to have you stressed out again in two weeks.

Action

Once you have found a solution that is going to give you the best outcome without as much negativity, then put it into place. Start doing it and write it down so you know what to do next. Hopefully there won’t be a next time because you got rid of the stress. But like I said before, it’s good to have a plan so you don’t stress over the situation. If you constantly find yourself back in this situation then work on the next step which is changing your spending/making money habits.

The point is to get rid of the stress points. It’s not the lack of money that’s stressful, it’s the lack of a proper solution. Yes, the ultimate goal is to make more money but you can’t do that if you’re stressing out all of the time. Once you get rid of your stress points and have a plan for what to do when you’re running low on money, you’ll be able to focus on increasing your income.

How do you deal with stressful situations?

 

Investing

It’s all about AIM Shares

The contemporary UK investment scene is bustling with AIM shares, pulling in more and more investors everyday. According to market pundits, Alternative Investment Market seems to be a grand launch for LSE. AIM was founded 2 decades back in 1995 with the goal to magnet small firms from all over the globe- to ensure they get adequate capital for a flourishing growth. It launched with simply 10 constituents (homegrown) with a net market worth of 82m pounds.

Growth of AIM

Cut to 2015 February, AIM is boasting around 11oo firms with 217 names from overseas. The market reports reveal that over the last 2 decades, over 3,000 firms have signed up with Alternative Investment Market in between, raising over 60bn pounds of capital.

Easy listing criteria

Dubbed as the entry-level platform of LSE, AIM is usually tagged as “junior market” that stresses on small firms. For the investors, it’s also referred to as (quite often) “lightly regulated”. It’s because the very admission regulations for the firms looking to be listed on AIM list are comparatively less onerous compared to main market listing.

You should know that when a company is looking to join main market, it has to declare its audited finance records for minimum 3 years & should carry an overall worth of 700,000 pounds. But when it comes to AIM, there is no such rigid trading record obligation & also no restrictions on minimum mandatory market capitalisation. Moreover, with AIM-listed firms, the shareholder approval would be required for largest transactions chiefly. Reporting requirements and financial disclosure are usually less demanding compared to main market.

It’s tax free

One of the major reasons behind the popularity of AIM shares is their tax-free status. The Government has removed the stamp duty from the AIM shares in 2014 and AIM sticks have been placed under tax-free Isas. Additionally, a fair share of the stocks here has been exempted from the inheritance tax obligation. The main idea is to get investment in the minnow Brit companies which might emerge as corporate giants tomorrow.

Though some of the AIM shares are considered to be risky given that you would be investing in small companies- yet the contemporary market status has brought to light investment opportunities in several good firms which boast solid management, prospects & profitability. The most successful companies over AIM are Stanley Gibbons, Majestic Wine, James Halstead, ASOS, Mulberry & Domino’s Pizza.

If you are planning to try your luck with AIM shares, it’s best to proceed with a specialist investment management company. The most credible names in the market undertake in-depth research on company & market so that you can land up with an informed decision.

Home Ownership

Beware of Hidden Costs in Mortgage Deals

Whether you are buying your first home or have purchased and refinanced several homes over the years, you no doubt are making your best effort to budget and plan financially for your mortgage. The most obvious expense associated with a mortgage pertains to the regular monthly obligation of your mortgage payment. However, a mortgage also comes with various loan fees and closing costs. Some of these are required to be paid at the beginning of the loan process, and others will be paid at the closing table. While effort is made to fully disclose these fees and costs to a mortgage applicant, there are some hidden costs and fees that often take a mortgage applicant by surprise.

Taxes and Insurance

Many mortgage lenders require you to establish an escrow account when you open a new loan. This escrow account will be used to pay for property taxes and interest, and lenders generally prefer to keep approximately three to six months’ worth of property taxes and homeowner’s insurance payments in the escrow account. The actual amount collected from you, however, will vary based on the time of year it is and the lender’s requirements. A collection of several months’ worth of property taxes and homeowners insurance is a significant expense that is often overlooked.

Loan Origination Fees

A loan origination fee is a fee that a broker charges you to work on your loan, and some lenders will also charge this fee. Some may call it an origination fee, and others will call it a generic loan fee or a lender fee. In some cases, this is a flat fee that is easy to budget for. However, it is common for this fee to be listed as a percentage of the loan amount. A seemingly small percentage, such as one or two percent, may be overlooked by a typically borrower as a small fee. However, in reality, a one or two percent fee can be rather significant.

Loan Points

Loan points or “buydown” points are often tacked onto a loan in order to reduce the interest rate. Some lenders and mortgage brokers will advertise a very low interest rate that has several loan points tacked onto it. You may believe that you are getting a great deal on your loan request because of the unbeatable interest rate you are receiving. However, the loan points that are being used to buy down the interest rate will generally need to be paid at closing, and these typically will range from a half a percent to two percent or more. The cost of loan points coupled with other closing costs and fees can be expensive.

It is common for total loan costs on a typical loan to be approximately three to five percent of the loan amount. However, there is a great deal of flexibility and variation in this area. Some fees are negotiable, such as loan origination fees, and some borrowers have been able to reduce their closing costs through negotiation. Other fees may be needed. For example, mortgage protection insurance or a borrower may need to buy down the interest rate with a loan point in order to qualify for the loan amount needed. Regardless of the total loan costs, these expenses and fees ultimately can catch you off guard if you have not planned for them. With this in mind, ask your lender or mortgage broker for an estimated closing statement very early on in the loan process. If any factors change during the loan process, request an updated estimated closing statement. This effort can help you to better plan for the closing costs and fees associated with your loan.

Investing

Are you concerned about your trading capital?

Rookies in the trading business will always have tensions of losing their money. In the case of the traders who barely have any experience in trading, they are most likely to think about the profit potential of the business. But right after starting to trade the market, the concept will change. Because you will learn how it feels to trade the real market. From each trade, the traders will get new experiences and results.

According to a recent study more than 95 percent of traders are losing money. So it’s obvious, the rookies are inevitably going to lose their capital. But this doesn’t mean every trader will blow up their trading account. By following some simple strategies you can easily protect your trading capital. In this article, we are going to discuss some necessary concepts of ensuring money management is working to its full potential. With the best possible strategies, you can define the right control over the capital. At the same time, decent risk to profit margin can be ensured too.

Hold the excitement of earning profits

When you have no skills or knowledge on a certain topic, emotions tends to prevail strongly. That is why the novice traders think about the profit potentials from CFD trading business. After starting to trade the real market, they blow up the trading account. But most traders cannot effort to lose too much just to learn the process. They need some secure strategies to work with. To manage that, they have to control their excitement first. This is because disturbance from your emotions is prominent and it is not going to help you in real life trading.

You might think to risk 2% of your account balance at the initial stage but this is not how things work. You have to determine the risk exposure for each trade based on the quality of the trade setups and buy stocks at the right price. Emotions should never play a vital role and determine the lot size of risk factors in trading.

Developing your risk management policy

To run any business successfully, you need to think about risk management because it is a process to control all the costs associated with the system. But when it comes to Forex trading profession, things are little bit different. Here, you may not get the associated costs but the result of trading is highly dependent on money management skill. Think about following the same 2% risk management policy we mentioned earlier. The trading approaches will be much more subtle with simple market analysis. Your mindset will not hype for big profits. This will eventually help you to find high risk reward ratio trade setups.  It helps you to trade with proper risk exposure without compromising the quality of your trades. Try to embrace the idea of quality over quantity for your business.

Strictly follow a certain strategy

While you are following the plans made by yourself, it has to be maintained strictly. Drifting apart from your trading edge is not so helpful for the business performance. Being a rookie trader in Hong Kong, your mentality can fall for any expert’s policies or strategies at any instant. Though the style may be the same as yours, executing the trades with a random strategy will end with poor results. You can still take opinions from others but with proper testing. Use the demo account to testify what you get from others. If it ends up effective, place the live trades accordingly. At the same time try to adapt yourself with new ideas or plans. This is because without acceptance, it is very hard to improvise or modify a particular edge of an individual.

Mind Over Money

Father’s Day Should Be Renamed

I'm right behind you
photo credit: LaPrimaDonna

My parents are divorced and remarried to others. When they got a divorce I chose to live with my mom. This led me to only see my dad every other weekend, if that. I never really got to be close with my dad, and I think I missed out on some great life lessons.

My Dad’s not perfect, and I need to realize that no dad is perfect. He’s always been there for me physically (ex. money) but not really emotionally with a heartfelt “I love you.” I think a lot of dads are like that, reserved in their emotions, and it’s a shame. Those three words can really mean the world to a son.

Now that me and him have grown older I’m trying to draw his emotions out more and more. And to hear him say I love you really makes me happy. And some more words that always bring a smile to my face are “I’m proud of you.”

I know today is called Father’s Day, but it should really be called Bond with your Father’s Day. It should celebrate the bond between a Father and his child(ren).

For this Bond with your Father’s Day go and throw a ball around, play a little basketball, or ask him to do something what you’ve always wanted to do with him.

So fathers out there tell your child(ren) that you love them, how proud of them you are, and give them a big hug. And child(ren) out there, give your father a big hug and tell them you love them too. You’re really going to regret not celebrating that bond when it’s gone.

Happy Bond with your Father’s Day

I’ll leave you with this heartfelt post @FrugalDad Raising a Frugal Dad: An Open Letter to My Son