In order for you to know where you want to go, you must first know where you are currently. To reach your financial goal, the first thing you must do is figure out where you are. For if you don’t know where you are, you can’t expect to get where you want to go. Knowing where you are means taking an honest inventory of your financial situation—filling out a financial statement—and taking a good hard look at the results. This may sound difficult, and maybe even a bit scary, but it’s a

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Opportunity cost analysis is one of the main foundations used in making financial decisions. In strict accounting terms, opportunity cost is not really a cost or an expense. However, it maybe relevant in making decisions with financial repercussions. Wikipedia says that opportunity cost has been described as expressing the basic relationship between scarcity and choice. When you are torn between making decisions with mutually exclusive results, then one benefit should be sacrificed and

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Well, aside from the obvious reason that you need it, whether for capital or other expenses; borrowing money can help you to manage your finances if you know how to leverage debt. That is to know the difference between good debt vs. bad debt. In this article, I will expound more on the idea of debt leveraging by using other people’s money instead of yours. Good debt makes the rich gets richer. There are very few entrepreneurs who did not borrow money to grow their business. If you can

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We are all experiencing economic recession. There are low demands of products as consumers cut spending. Companies cut costs thereby closing some of their plant operations and laying off thousand of is workforce. What lessons have you learned so far in this economic recession? What are the things will you do just in case another deep recession comes into our economy in the near future? It is better to be prepared and arm yourself with a weapon to survive an economic crisis. Save for the

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Recently, with the onset of the global financial crisis, there has been an increase in the number of companies declaring bankruptcies. But why do companies declare bankruptcy? What causes these companies to declare bankruptcy? As a research analyst of Chapter 11 bankruptcy filings, I’ve been involved in various Chapter 11 bankruptcy cases. And during the past reports that I’ve made, here are some of the reasons why do companies declare bankruptcies: Liquidity. Because of low

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Are you drowned in debt? Taking out a second mortgage once meant you were in financial trouble. Today, people take out home equity loans, which is another name for a second mortgage, to pay for everything from home renovations, weddings, and other loans. Although some people consider it as a smart way to borrow money, this type of loan can be hazardous to your finances. Equity is the amount left over after you subtract your home loan from what your house is worth. People think this type of

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I remembered before that I chatted with a foreign exchange (forex) trader when I was thinking to try foreign exchange trading online as one of investing. And I asked him: “What Makes Currency Rise or Fall?” In our discussion through Yahoo Messenger, he stated that currency trading is more stable than the stock market. He said that ‘currency trading is a balancing act between a particular currency against a basket of other currencies.’   If one currency fall, then

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The Rule of 72 is a formula used in finance particularly in investments. This is a general rule that answers the question: ”How many years will it take to double your money?” You don’t have to make difficult calculations as this rule makes it easy for you to calculate. Depending on the given rate of interest, you can probably evaluate it mentally in your head. Let’s see the following examples to determine how it works:   In how many years can you double your money

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What makes rich gets richer? We notice that the rich keeps on getting richer while some of the poor gets poorer. Kiyosaki continued his teachings on his “Rich Dad Guide to Investing”. If you are not familiar, there’s this one rule originated by the Italian Economist Vilfredo Pareto in 1897 called “Pareto’s Principle or 80/20 Rule” also known as the Principle of Least Effort. In business, we can apply it and we can say: put most of our efforts on the 20% of things that bring in 80%

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As I mentioned in my previous article on return on investments, we will now tackle the power of compound interest. You will see how powerful compound interest is as it is one of your allies in achieving financial freedom. Let’s see how compound interest works by comparing simple interest vs. compound interest. You will see that it is really advantageous that you should really leave your money UNTOUCHED in the bank.   SCENARIO 1: Suppose you were able to save your first 100,000 at the age

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