Useful Money Management Tips During Tough Financial Challenges

It is a fact that personal money management can be a real challenge when you are tight on cash and the end of the month seems to always come long after your pockets are empty. Here are some essential money management tips that could help you struggle less through these challenging times and succeed in your endeavors to master your personal financial affairs.

But, while tough financial times can be extremely stressful, fraught with anxiety and frustration, sometimes such challenges can be an opportunity to make changes in your financial affairs that can make a significant positive impact on the personal financial management in your life for years to come.

One of the first and most important money management tips anyone can give you is to know exactly where you stand financially. Many people hate looking at the reality of their situation; however, in order to develop a workable personal finance money management plan you must have a clear understanding of where you are.

This means that you need to know precisely how much cash is coming into your household from all sources each month. As well, you should know where every last penny is going when it flows out from your bank account or your wallet. This is the essence of household budgeting and without a solid monthly budget, most other financial management tips that you might learn will not be terribly effective.

Going right along with the budget, which lists all of your income, your monthly fixed expenses and allotments for other flexible expenses, such as clothing, meals out, entertainment and such, is tracking all of your expenditures. Most people end up squandering a great deal of cash on a monthly basis because they do not keep a careful record of where and how they spend their cash, especially the cash in their pockets and wallets.

By tracking each and every purchase that you make and noting what you spent the cash on and how much you spent, you will begin to see where your discretionary money is going and you will start to see how cash is "leaking" out of your control. This can be one of the most powerful personal money management suggestions you will run across because it can quickly demystify that age old question of "where has all my money gone?"

Two other important money management tips are to be realistic about what you spend and to carefully assess and prioritize all of your expenditures. Both of these suggestions are easier to implement when you also endeavor to track all of your expenses. By taking these simple steps, you can, with time and commitment, transform your personal financial management strategies and take full control of your hard earned money.

You Can Get Valuable Service From Money Management Firms

While not everyone likes to admit it, businesses and corporations realistically exist for one reason and one reason only: to make a profit for the owners of the company or for the shareholders of the corporation. For many businesses of all sizes, making use of the services of money management firms can help to assure profitability and cash managerial procedures so that the business can continue to grow and flourish.

On the flip-side of companies being in a growth mode is the situation where companies are not making cash. In that case, there's really no viable reason for them to exist. This leads to business failure, shutting down the operation and putting people out or work. Typically, unpaid debts will be left in the wake and will cause a ripple effect and impact other companies and their business cash managerial systems.

The professional money management firms are fully capable of handling a variety of monetary needs and financial managerial solutions, providing many financial services for their customers. Typically, the clients can range from individuals with significant investments and assets that need to be managed, to various sized companies, and to many types of governmental agencies as well.

Within the many financial management firms, which exist in virtually every city and state across the country, are skilled and experienced cash managers who each have their own approaches, techniques, philosophies and styles when it comes to business financial management and personal money management. Some financial planners and money managers will specialize in certain types of investments or in serving certain types of clients, while others will work with a broad spectrum of clients and financial managerial solutions and systems.

There are many financial management firms that specialize in buying and holding fixed income securities, such as securities backed by mortgages, asset-back securities, or various types of bonds, such as municipal bonds or corporate bonds. Other money management firm operations will have a stronger focus on equities, such as large and small cap stocks, international investments, or emerging market stocks.

It can be a rewarding, challenging and interesting career choice to go into money and financial management services, and money managerial companies are always on the lookout for people who can flourish in this fast-paced and demanding field. Typically, people who have strong social skills, a high level of intelligence, strong motivation to succeed and a desire to help their clients improve their financial situation will be a good match for a career in this area.

People who have an interest in changing careers and going into the field of money management or financial planning and working for any of the large money management firms will find numerous opportunities, if they are motivated and prepared. Preparation for this field should include learning the various portfolio managerial theories, understanding the different investment vehicles, and studying the financial markets.

All Business Facets Benefit From Healthcare Financial Management

With inflation taking a bite out of just about everyone's budgets these days, from single people, to families, to business and government agencies alike, it has become evident that quality healthcare financial management is increasingly important. With so many troubles related to the economy nowadays, and the uncertainty and turmoil that is being experienced by so many, providing good financial management in the healthcare sector is of the utmost importance for all parties involved, from patients to providers to insurance companies.

These days there are a number of financial management services for healthcare that provide specific solutions and have been specially designed for the healthcare organizations and the medical professionals involved in providing care for their patients. While there are many money management software programs and many common needs in the healthcare industry, not all of these solutions are right for every healthcare provider and so it is essential to find the right match in order to gain the best benefits for the situation.

Many of the healthcare financial management companies that offer professional money management services for the healthcare field provide basic, stock solutions that cover the needs and demands of most healthcare groups. These basic managerial solutions more than often will provide all of the functionality that is needed for the majority of healthcare providers.

This is because, in general, there is a great deal of commonality in practices and procedures throughout the healthcare industry, from individual doctors, to clinics, to large hospitals. These operations run under very traditional and standard practices and typically enjoy being able to implement standard managerial solutions, which are very effective in the overall business financial management needs of the organization.

At the same time, as with all companies in the business world, there are those healthcare organizations that have unique and special needs, in terms of the cash management products and financial management solutions that they need. For these providers, there are many healthcare related financial management solutions that can be custom tailored to perfectly match the needs of the business and help the company to reach any unique business objectives that have been set up by the managerial side of the company.

Healthcare related financial management solutions are often able to provide the healthcare organizations with significant savings. There are many clients of some of the best systems available that claim that they were able to save 20% to 50% by using the right services.

The complete healthcare financial management classifications that are available today are fully capable of dealing with every facet of money management for a particular healthcare organization. Some of these functions include medical bill reviewing, medical audits, claims, collections and many other crucial functions that are all absolutely essential to operating a solvent healthcare concern in this day and age.

Selling Your B&B? How Much Can Your Borrower Borrow?

Thinking of Selling? How Much Can Your Buyer Borrow?

Let your mind roam ahead in time for a moment. You have put your B&B on the market and you now have an offer. The buyer is going to apply for a mortgage. What do you have to sell? To a lender, you are selling first an income stream. The most critical items for any lender in any commercial loan application package are the financial items - business financial statements and business tax returns (three years for both). These items are always required, so it is in your best interest to have them complete, current and ready. You also need to provide interim financial statements current to within 90 days - income statement and balance sheet, because the lender will require it.

To a Lender, Cash Is King

You are familiar with the old saying that "cash is king." In our context, that is, to a mortgage lender, it means the amount of cash generated from a business that can be used to pay a mortgage. Many people mistakenly think that net income is cash flow, but it is not. Net income does not tell you how much cash is generated by the business. It is the net operating income, or NOI. This is simply the gross income minus all operating expenses - the cash flow.

Generally there are three items on business tax returns that a lender uses to determine the cash flow available to pay the mortgage. They are net income, interest and depreciation. The cash generated by a business is the only number that can be used to determine how much mortgage a business will support. Lenders want a certain amount of cushion when looking at how much cash there is available for loan payments, on the assumption that if there is a temporary slowdown in business, the cash flow will not be so tight that there is not any cushion to still make the loan payments. Usually this is expressed by the term debt coverage ratio. That means that if, for example, the mortgage payment is $1, a lender may want to see $1.25 in cash flow available to make the $1 payment. This is not an automatic rule. Different types of lenders may have slightly different requirements and often the higher the risk perceived by the lender, the higher the required debt coverage ratio.

This does not mean that other things are not important, such as revenue and income trends, collateral value, borrower's credit history, etc. But if there is not sufficient cash flow to support a mortgage, the rest usually doesn't matter.

How Is Value Determined?

Now let's go back to the NOI and its relationship to value. In commercial appraising, value is established using a combination of three approaches - the income capitalization approach, the cost approach and the sales comparison approach. In the income capitalization approach, the NOI is converted into a value by means of the capitalization process. To illustrate the in the simplest possible way, suppose you are going to buy an investment and you want to earn at least 10% on your invested capital. That 10% is your capitalization rate, which you will use as a means of determining value. If you are offered an investment that has an income to you of $1,000, you would be willing to pay $10,000 for that investment because it would give you a 10% return, or $1,000 a year. Your capitalization rate has set the value. It is the same with an inn.

The cost approach is the least accurate way to establish a value. For existing inns, the cost approach is almost meaningless. For example, to apply the cost approach in an appraisal of a 1790 brick Federal-style inn would be a waste of time because it would cost a fortune to reproduce faithfully, and would be highly unlikely to be sold as a business at that price.

The sales comparison approach can be more useful, but it has its own built-in set of limitations. The farther apart geographically the sales comparables are that an appraiser can find, the less relevant they become. It's one thing to compare a 56-room Sleep Inn in one state with a 56-room Sleep Inn in an adjacent state because the physical facilities are identical and the room rates are similar because it is a franchise. But to compare a nine-room inn in the mountains with a nine-room inn near the sea coast is not truly accurate.

This leads us to the final question. If your buyer cannot borrow enough that combined with their down payment meets the asking price, then what? The only way to make your sale is that you may have to hold a second mortgage. Hardly anyone ever wants to do that, but in today's financing environment, and probably into 2009 or 2010, that may be your only choice. And if the borrower can get an SBA loan, that second will have to be on full stand by, which means that the borrower cannot make payments (interest can accumulate) until the loan is paid off.

In conclusion, if you plan to put your inn on the market in the next two or three years, don't expect it to be easy. Most of the residential lenders who have provided a lot of financing have "left the building." Only the strongest deals are going to get serious consideration including in most cases, a buyer with some kind of lodging industry experience.

Improving Your Profitability Via Financial Management System

A good part of the success or the failure of a business has to do directly with how much profit the organization realizes from the sale of the products or services that the company provides to its customers. In order to maximize a company's profitability, it is very important to have a good and complete financial management system to handle the important aspects of money management.

One of the keys to a good business financial management structure is controlling the daily, weekly, monthly and yearly expenses of the operation. This comes down to simple math and cash management principles. Companies will not be profitable, and therefore won't stay in business long, if they spend more than is required to produce and deliver their product, and end up trimming their profit margin so that it is just too thin to make the business viable.

Keeping overhead expenses in check and making sure that the cash in the business is managed effectively through a financial management system will help make a company better able to compete in the marketplace. When expenses get too high, it is hard to compete effectively and a competing company can easily start luring away customers based on price.

One of the most important people involved in good business financial management is the treasurer of the board. He or she is typically charged with the responsibility to oversee the money management for a corporation. The person in this role should come to the job with a wealth of business cash management experience, a strong level of wisdom and a firm understanding of corporate financial management. With the treasurer strongly armed with these money management skills, the corporation stands a much better chance of being strong financially and being able to ride out the storms of business and economic challenges.

Another key person on the team that oversees the entire business financial management practices for a corporation is, of course, the accountant. It is the corporate accountant and his team, depending on the size of the company, that will deal with the minute and detailed money management for the company on a daily or sometimes hourly basis.

The accounting department of a company will keep the books for the organization, will generate the various financial statements that are required both by government agencies and by the board of directors, and will conduct the financial analysis of the financial reports. This is the department that is entrusted with managing and enforcing departmental budgets, which is such an essential part of financial management systems, and essentially handles and accounts for every penny that flows in and out of the business coffers.

Nowadays, with the ubiquitousness of computers at every level of business and commerce, there is no doubt that any company that takes advantage of a complete financial management system for their operation will also be using sophisticated money management software as well. Even though the people in the organization bring the expertise and knowledge to the task of business financial management, the software chosen to help them do their jobs is critically important and much be chosen only after careful research and comparisons, with regard to the options available.

Bail Out Or Depression

The $700 billion dollar bail-out needs to pass quickly. We need to remove the weight of all the bad loans sitting on the balance sheets of banks from the American economy. If we do not free up the banks to make loans the American economy will spiral to depths unseen since the Great Depression. To avoid a Depression like scenario the bail out must pass quickly otherwise the downward spiral we are already on will continue.

The bail-out provides a buyer for all these bad loans on the balance sheets of banks who otherwise no buyer exists for. The reason there's not a buyer besides the government is because there's no one big enough to buy all these loans and hold them. As a buyer, even if the loans represent a good deal right now, you can't buy only a small portion of the loans because it leaves a huge supply outstanding that puts downward pressure on the price of the loans you just bought. It would be like having an entire block of houses for sale and only being able to buy one. Because all the other houses are still for sale, the house you bought is subject to the downside price pressure created by the oversupply of houses on the block. However, if you could buy all of the houses on the block and hold them until buyers emerged offering reasonable prices you would create price stability. Unfortunately, not many entities exist that can afford to buy a whole block of these loans and the government can fill that void. If the government doesn't fill the void, banks will continue to fail due to the shrinking value of the loans on their balance sheets.

The intrinsic value of the loans equals the total value of the real estate underlying them. Right now, this value is not recognized in the market because no one can afford the risk of buying the loans, even at prices much less then the underlying real estate. The oversupply of loans in comparison to the small piece any buyer can afford creates too much risk of losing money for the buyer. If the bail out doesn't go through the real estate market will start to collapse because the loans will be worth less and less. The downward spiral we are already experiencing will continue to descend at a faster and faster rate.

The rate of descent accelerates because as banks can loan less there is less money available to buy houses. If banks don't have any cash they can't lend money to people to buy houses and before long we will be in a situation where nobody can get a loan to buy a house. If there are no loans available to buyers then they can only pay prices equal to the cash they hold. This is a dramatic reduction in prices from the price a buyer could have paid previously with a conservative 20% down and 80% loan. Prices must fall to an equilibrium level between buyers and sellers, and without the bail out, the equilibrium price equals the cash available to purchase homes without the additional buying power of mortgage loans.

If the prices of real estate begins to spiral down towards "cash only " prices the values of the loans on that real estate will follow suit. This series of events is the reason no one is willing to buy a small piece of the outstanding loans. Any buyer faces a serious risk of further collapse in the value of the loans. Only a buyer with a huge balance sheet and access to a lot of cash can buy a majority of these loans. Buying a majority of the loans infuses banks with cash which they can then lend to people to buy houses. This supports real estate prices and the values of the loans. The government is one of the few buyers remaining with a big enough balance sheet and access to enough cash to buy a majority of the outstanding loans. The bail out transfers these loans to a buyer who can afford to hold them and provides cash to banks allowing them to make loans to the rest of the American economy. The loans will stabilize prices in the housing market and stabilize the prices of the loans the government would own. Without the bail out, prices will continue to fall until we reach a "cash only" level and the American economy faces another Depression.

Starving For Leadership - 4 Strategies to Fix U.S. Financial Collapse and Save Home Owners

There is a winning strategy for this mess. It's one we know works, its one we lived. I was CEO of an FCS during the 1980's farm crisis. We secured social and political support, in the end helping the most farmers. Here's what we should consider.

Today, the problem is perceived as bailing out fat, arrogant and greedy Wall Street types. While this may be true, the current solution fails to put a personal face on it. The personal face has got to be the troubled homeowner and their home mortgage....and the worried/non delinquent homeowner. The right solution should address the needs of current and non delinquent mortgagees.

We have a crisis of confidence because of arrogance and greed. The first Congressional solution doesn't feel like individuals are protected. Right or wrong...that's how people feel. Unsung heroes which can be part of the solution are the thousands of community based lenders in the United States and the millions of homeowners who simply want to stay and pay.

Here's what we learned from the debt crisis of the 1980's. Farmers had too much debt; regulators stepped in and said fix it. The regulator / treasury provided a 4 billion dollar line of credit...the fix was left to the local institutions. I believe the principles learned provide a "Home Run" solution now.

Framework for solving the current financial crisis.

Principle ...Put a face to the problem. Everyone must be incented for personal accountability which means loan restructures make perfect sense. Help everyone become winners. Define the problem in real terms for the family with a mortgage underwater. Help them. Help those who have paid on time. Here's how.

Any homeowner with Fannie or Freddie with loan under appraised value can be restructured to appraised value. Interest rate may be adjusted modestly upward, e.g. ½ % as a premium for the restructure. It is better to have the existing owner on the property {same as farmers} When the loan is restructured, home owner waives normal foreclosure forbearance period and could provide lender a deed in lieu of foreclosure. In addition, the homeowner agrees to a shared appreciation mortgage in the event property is sold...agreeing to share 75% of the gain back to Treasury, or perhaps the community based lenders who helped service the loans.

Benefit to homeowner...the homeowner stays in their home; they get reduced payments, and are accountable for their role in decision to borrow.

Any homeowner NOT delinquent should be treated fairly. Perhaps, offer all current borrowers an incentive of ½% decrease from existing Fannie or Freddie fixed rate. Critically important is to offer all current 30 yr fixed at ½% below those who have restructured loans.

Benefits to homeowner... individuals are rewarded for paying their mortgages; individuals stay in their home and get reduced payments for their personal accountability. Result of these two strategies has most, if not all of the Fannie and Freddie borrowers engaged as part of the solution. The problem's solution is now owned by all the citizens.

Principle...let government provide the backstop which it does best. Managing the millions of loans is not done best from D.C.

Change Treasury's role to a line of credit ...don't buy the loans...guarantee them so that the losses are covered. This prevents the mark to market write-down which overstates the losses. In about one day, the institution which I was CEO lost virtually all of its net worth because the regulators wrote assets down with a stroke of the pen. In the end, FCS only used about $1billion of the $4 billion Farm Credit bailout. Fear drove farmers, lenders and regulator overstating losses by 75%. Ten years passed before financial recovery occurred for the lender....and nearly 20 years passed before hope was renewed with farmers.

Benefit...Government is limited to oversight, new regulations, and avoids the excessive and illogical write-down.

Principle...put a face to the solution locally. Offer all Fannie Mae and Freddie Mac loan servicing to community based Credit Unions or Community banks less than $500 million in volume. Servicing now has a face...a local face to restructure, collect or service the loans. Keep the loans off balance sheet for the credit unions or community banks. Let community based lenders bid on servicing rights...75 to 200 basis points for servicing the adverse assets. This part of the strategy takes the problem to the folks who know the people and adds a new sense of accountability while using existing lenders as part of the solution. Community based lenders have a choice to participate and strengthen their personal connection in communities.

Benefit...Government sets the rules; problem is decentralized to lenders in the thousands of communities. This instantly includes an existing infrastructure of nearly 15,000 community banks and credit unions to solve the servicing part of the strategy.

Principle...limit excess new bureaucracy. Use existing Office of the Comptroller of the Currency, FDIC and National Credit Union Administration to supervise respective institutions on the managing the Fannie and Freddie loans. These regulators are largely doing a good job.

Benefit...Government uses existing well managed regulators...of course; Treasury with Congress should establish additional regulations...this solution uses all existing resources, personalizes the problem and solution; is simple and could be very efficient and effective. The plan saves Main Street, i.e. individual homeowners in a way which focuses on personal accountability of homeowners and lenders. This is simple...clear...and engages all of our citizens...and has worked before.

The country is starving for ethical and courageous leadership...perhaps "Elegant Courage."