Tag: balloon payments

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GOOD DEBT BAD DEBT USING CREDIT WISELY: WHAT YOU REALLY NEED TO KNOW

good debt, bad debt, credit card debt, balloon payments, APY – Annual Percentage Yield, debt, credit, expense ratios, cash flow, trusteeGOOD DEBT BAD DEBT USING CREDIT WISELY

Good debt bad debt using credit wisely: Introduction

Good debt bad debt using credit wisely are another one of those financial terms like Balloon Payments, APY – Annual Percentage Yield, Expense Ratios and Cash Flow that are often misunderstood. As we continue our series of confusing financial terms we thought that the holiday season seemed like the opportune time to explore the concept of good debt.

Good debt bad debt using credit wisely: What is good debt?

Typically we define good debt as borrowing money for something that will appreciate in value and increase your net worth. Examples of good debt are taking out a mortgage to purchase your home and investing in your education.

Good debt bad debt using credit wisely: What is bad debt?

Typically we define bad debt as borrowing money for something that will depreciate in value and does not increase your net worth. Examples of bad debt are credit card debt and debt for luxury items you can’t really afford like fancy cars and expensive vacations.

Good debt bad debt using credit wisely: Is good debt a myth?

The old adage that there’s no sure thing except for death and taxes is true. Although taking out a mortgage to buy a home and investing in your education seem like sure things, sadly that isn’t always the case. If you take out a mortgage that’s the maximum you can handle and the interest rates go up, how will you pay for your house? What would happen if you lost your job? Would you lose your house as well? Investing in your education isn’t a sure thing either. There are many PhDs waiting tables. A good education is no longer a guarantee of a good paying job. Good debt is a myth, unless you are also using the credit wisely. At the end of the day, debt is still debt and must be repaid.

Good debt bad debt using credit wisely: What to do about your debt?

Canadians are struggling with debt like never before. Whether you’ve taken on what you consider to be good debt or bad debt, it still needs to be dealt with. And, to deal with debt you need the help of a debt professional – a trustee. Dealing with debt is not a DIY project. Call Ira Smith Trustee & Receiver Inc. today and make an appointment for a free, no obligation consultation. We can give you back peace of mind and put you on the road to debt free living Starting Over, Starting Now.

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Brandon Blog Post

I NEED FINANCIAL HELP IMMEDIATELY

I need financial help immediately: Introduction

“I need financial help immediately” is something we hear daily. With so many people struggling to make ends meet and living paycheque to paycheque, it’s not a surprise that they’re looking for ways to get ahead. Unfortunately it’s easy to get seduced by financial newsletters or websites that offer nothing more than get rich quick schemes disguised as financial advice. Please keep the old adage in mind when considering investment opportunities – if it’s too good to be true, it probably is.

I need financial help immediately: 3 things to watch out for

The Ira Smith Team has fully licensed, federally regulated financial professionals and we don’t have any get rich quick advice for you. However, we do have advice about how to protect yourself from get rich quick financial newsletters. Here are three things to watch for:

  1. Run, don’t walk from headlines like “beat the market”. There is no such thing as a get rich quick scheme that works. Remember Bernie Madoff? He paid unbelievably high returns to his investors and that ended up with Bernie in jail for life and many others in financial ruin. Even savvy investors got seduced.
  2. Watch out for newsletters with confusing terminology. They’re designed to confuse you so you won’t really understand that what they’re selling is all hype and no substance. Financial terminology is so confusing that we’re doing a series of blogs about it. So far we’ve covered Balloon Payments, APY – Annual Percentage Yield and Expense Ratios. Knowledge is power.
  3. Creating a sense of urgency is a classic ploy to suck you in before you’ve had the time to really scope things out. Beware of offers that are only open to the “first 100 that sign up” or “register within the next 48 hours or you’ll miss out”.

I need financial help immediately: What to do if this is you

We know there are many people who feel “I need financial help immediately”. Our most viewed blog ever is from May 2014 that people looking for cash find through a Google search because it is titled: Bad Credit Loans Guaranteed Approval.

We’re certainly not saying that there are no legitimate financial opportunities out there, but you really have to be careful about where and who you take financial advice from. If you’re walking a financial tightrope, a get rich quick scheme is not the answer. Contact a licensed trustee. Ira Smith Trustee & Receiver Inc. will review your file, discuss your options and come up with a solid, financial plan that will put you on the road to debt-free living Starting Over, Starting Now.

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Brandon Blog Post

INVESTMENT FUND: EXPENSE RATIO CAN INSTANTLY PRODUCE AWFUL RETURNS!

investment fund, expense ratio, high expense ratio, balloon payments, APY, Annual Percentage Yield, financial health, prospectus, confusing financial terms, trustee, ira smith trustee, financial health, investment fund types, private investment fund, national investment fund, investment fund wiki, hedge fund, investment fund vs mutual fund, real estate investment fund, romspen mortgage investment fund, expense ratio formula, expense ratio insurance, expense ratio calculation, expense ratio example, expense ratio etf, expense ratio mutual funds, operating expense ratio, expense ratio in banksInvestment fund introduction

We have handled many insolvency cases of people and companies where an investment fund with negative returns, combined with a highly leveraged balance sheet, was a major reason for financial problems. This week we’re continuing our series on confusing financial terms that can cost you more than you bargained for. As trustees we see people in financial distress from a variety of reasons, but there seems to be a commonality – most people find financial lingo confusing.

This confusion magnifies when it relates to an investment fund they have bought, but don’t really understand. We have handled many cases where people having read articles about the tax and investment benefits of leverage, borrowing for investment purposes, do so by borrowing against the family home to invest in financial products they don’t understand!

Sometimes, if they have invested too heavily, not only is their investment at risk, but so is their family home! This series of blogs should clarify many confusing financial terms and with this knowledge help you to make more informed financial decisions. We’ve previously discussed Balloon Payments and APY – Annual Percentage Yield. Our current topic is expense ratios.

What is an investment fund expense ratio?

An expense ratio is a percentage of your investment fund or ETF that’s charged annually to cover its operating costs. These operating costs may include administrative charges, management fees, custody costs, legal expenses, marketing and transfer agent fees among others.

How can I find out what the expense ratio is on an investment fund that I’m interested in investing in?

Every investment fund has a prospectus (a legal document providing details about an investment offering for sale to the public) containing the expense ratio. The prospectus is sent to shareholders every year and shared with potential investors. And, since we live in the information age, a fund’s expense ratio can also be found on financial websites and in newspapers (both online and in print).

How can an expense ratio negatively impact my investment funds?

The expense ratio directly reduces an investment fund’s returns to its shareholders, which reduces the value of your investment. The lower your costs are the greater your investment’s return will be. Every dollar you pay in operating costs is one dollar less that’s earning money for you. Even small differences in fees can impact on your investment over time.

What if my investment fund heads south and I can no longer service my debts?

Making the right financial decisions is crucial to your financial health. Unfortunately many Canadians are now struggling with debt that seems insurmountable. The Ira Smith Team is here to tell you that we’re here to help, regardless of how dire your situation seems now. Make the right decision and give us a call today. Starting Over, Starting Now we can get you back on the road to financial health. Watch for future blogs when we’ll be discussing other confusing financial terms that can impact you financially.

 

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Brandon Blog Post

FINANCIAL DEBT COUNSELLING: THE #1 SECRET THAT ALWAYS SHOCKS PEOPLE

financial debt counselling, bankruptcy alternatives, starting over starting now, APY, Annual Percentage Yield, balloon payments, annual percentage rate, APR, compound interest, credit card, interest rate, trustee, bankruptcy, ira smith trustee, hoyes, a farber, david sklar

The #1 secret we have learned through financial debt counselling

When performing financial debt counselling, we discovered many people are confused by financial lingo. As a result people have been negatively affected financially.

As a result we started a series on confusing financial terms. We began with Balloon Payments Can Cost You More Than You Bargained For. Today we’re going to be discussing APY – Annual Percentage Yield. Interest rates play an important role in borrowing and investing. Understanding your APY can will give you a clear picture of what you owe or could maybe gain.

What is APY?

APY is the true annual rate of return taking into account the effect of compounding interest. If you have a credit card and carry a balance each month you’ll be paying interest on top of the previous principal and interest. The interest each month (in effect it’s interest on interest) calculates on a daily basis. It is an important aspect of financial debt counselling.

Why is APY important?

APY is a great tool for evaluating the true interest rate paid on a loan or the return on an investment. It takes compounding into consideration and thus is actually higher than the stated annual interest rate.

If you owe money on a credit card, your APY will almost always wind up being higher than your card’s listed APR (Annual Percentage Rate). Interest charges added to your balance for every month you fail to pay it off in full is the reason. This means that over time you’ll be paying interest not only on the principal amount you owe, but on the interest as well.

In our financial debt counselling sessions, we always expose the APY secret. We will now expose it for you. Say your credit card has a stated APR of 19.99%. If you carry a credit card balance from month to month, an APR of 19.99% compounded daily equals an APY of 22.1214%.

Are you unable to make your monthly payments? Were you not aware of APY?

The reality is that you could be paying a much higher amount than you bargained for. It also may be a much higher amount than you can afford. Most people we counsel are not aware of or didn’t understand APY. In our financial debt counselling sessions, this is everyone’s “AHA” moment.

If you’re dealing with insurmountable debt for any reason contact Ira Smith Trustee & Receiver Inc. today. We’re a full service insolvency and financial restructuring practice serving companies and individuals throughout the Greater Toronto Area (GTA) facing financial crisis or bankruptcy that need a plan for Starting Over, Starting Now. Give us a call today.

We can help. Maybe all you need is some financial debt counselling. Perhaps you need to explore one of the many bankruptcy alternatives. Either way we can devised a plan that allows you to carry on a debt free, stress free life.

Watch for future blogs when we’ll be discussing other confusing terms that can impact you financially.

 

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Brandon Blog Post

BALLOON PAYMENT CAN COST YOU MORE THAN YOU BARGAINED FOR

balloon payments, balloon payment, loan, car payment, mortgage, personal loan, debt, ira smith trustee

A balloon payment is one example of financial lingo that can be very confusing. Often we get involved in situations that we don’t really understand. We’re going to be delving into financial terms that not only cause confusion, but can cost you more than you bargained for. Balloon payments are a perfect case in point.

What is a balloon payment?

A balloon payment is a lump sum payment that’s attached to a loan which could be in the form of a mortgage, car payment or personal loan. It has a much higher value than your regular repayment charges and is typically applied at the end of the loan period.

What is the advantage of a balloon payment?

A balloon payment allows you to defer a predetermined amount or percentage of the total amount of your loan to a lump sum at the end of your finance period. This allows you to make much lower repayments than you would if the entire amount owing was spread out during your finance term.

What is the disadvantage of a balloon payment?

The disadvantage of a balloon payment is that at the end of the term you have to come up with what can be a HUGE lump sum payment to pay off the remaining balance of the loan in full. Unless you’ve been very diligent about budgeting and squirreling away the money for being able to make that special payment, chances are you’ll be left in financial hot water.

Is a balloon payment right for me?

If you are VERY sure of what your financial situation will be by the end of the loan term and you know with certainty that you’ll be able to make your balloon payment, then it may be right for you. However, for the majority of consumers, this type of financing may pose too big a risk. At the end of the loan term if you don’t have the money for the larger repayment amount and if refinancing isn’t an option you could lose your car or house (or whatever you’ve financed).

Are you heading into financial trouble due to an upcoming balloon payment?

Are you in financial hot water as result of an upcoming large loan repayment? Are you struggling with debt? Contact the Ira Smith Team. We’ve got the solutions to your debt problems. Book a free consultation today and Starting Over, Starting Now you can rid yourself from an unmanageable debt load. Watch for future blogs when we’ll be discussing other confusing terms that can impact you financially.

Call a Trustee Now!