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savings money - Complete Controller

Are you struggling with whether to pay off your debt or to save for a retirement plan? Logical reasoning is provided in this article while supporting both thoughts. Now, it’s up to your financial condition to pay off your debt or save money.

In most cases, the money you make through interest by saving money in the bank is lower than the rate of interest you pay on the debt, and thus, you lose your wealth this way. If you want to expand your financial plans, you need to make attempts to make more money. Not repaying debt has many drawbacks and can have severe consequences in the future. Saving extra will help you turn your goals into a reality where you can live a debt-free life. If you are struggling to find the answer to whether you need to pay off debts or increase savings, the solution is simple. Before you plan to save, pay the debts off, including your mortgage. Many people have more debt than the amounts of their savings. Even if they spend all their savings to pay off the outstanding debts, they will still be left behind with remaining debt. So, it would be best if you got rid of the most expensive debts first. Here are some guidelines that will help you decide whether you should pay your debts or save your money. Check out America's Best Bookkeepers

When to pay the debt?

If you have a high-interest rate of consumer debt, then you need to pay it down first as it will solve many of your ongoing financial problems. After cutting down all your interest payments, you will get a guaranteed “return.” Identify your resilient income and create a budget as per your income; mark a significant portion of your income you will pay against debt. Paying traditional loans such as student loan or mortgage it only reduces your associated interest costs. Check out America's Best Bookkeepers

Save before paying the debt?

Several reasons support the concept of “to save first and pay later,” but the top-most reason is to re-generate your emergency fund. For instance, your debt has a low-interest rate, making sense to save first instead of paying debt first. But if you do not have any savings, then you need to focus on paying debt first and putting off on savings until, and unless you become debt-free, it will provide a precious advantage and peace of mind. Financial stress develops when you have mounting debt. If you have no savings and no debt, you are still far better off than most. Saving for your retirement is essential. Making small contributions towards your retirement plan while having compounding interest can make your savings grow more significantly without impacting your ability to pay back the debt. Check out America's Best Bookkeepers

Many of us have more financial goals rather than having the cash to spend. So it becomes difficult to choose whether to pay off debts or to save that particular amount. If you have insufficient savings, it will put you in a position of getting more debt. If you decide to save the money instead, you will only end up paying more in the long run due to interest rates. The trick is to ensure that you save a proportion of excess income and use the rest to pay off accumulated debt.  So, the best possible solution is to maintain a balance between paying off debt and saving. Also, having enough savings amounts provides peace of mind. Many people adopt this strategy, no matter how complicated the financial situation is. They make sure that they have maintained a proper balance between savings and paying off debts. 

Having a balance between debt repayment and savings is the ideal way to grow your wealth and better manage finances. If your financial condition isn’t allowing you to save, make sure that whatever extra cash you get, you pay off debt with it. Eventually, your debt will diminish to a point where you can save and improve your financial situation. 

Check out America's Best Bookkeepers About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity. Check out America's Best Bookkeepers
cut expenses - Complete Controller

Confronting debt can be unpleasant and uncontrollable. However, it is essential to recall that regardless of the amount, you may feel stuck between a rock and a hard place, you can get yourself out of debt. You can completely do this. Here are the initial steps you could take to reduce debt.

Step 1: Start listing your debts

The first thing you have to do is list your debts.  You already know the existence of your debts, but it is essential to see it in more detail. You can be sure that the bookkeeping method will suffice for this, do not have to sketch pages. Bookkeeping will also allow to accumulate total debts, pay monthly installments and interest rates, and make more accurate decisions at the same time. List where to whom, how many pounds you owe. Make a note of it all, and a few titles will work for you. Check out America's Best Bookkeepers

Step 2: Keep an eye on monthly spending

Start analyzing all monthly expenses, that is, all costs with no exceptions. There may be unnecessary expenditures you make, try to end these expenses. Try not to postpone some non-emergency spending for a while. One of the best ways to consider spending and discover unnecessary expenses is to make a comprehensive budget. With a detailed budget, you can see your costs, find your unnecessary expenses, and have an idea about your income-expenses. At the same time, you can track your monthly expenses and reduce your costs by learning the crucial areas where you can create more savings.

Step 3: Give priority to your debts

Begin analyzing your spreadsheet to build the best strategy that will help you escape debt.  Those debts that have the highest interest are the priority. Next, it is best to pay down your smallest debts and use the surplus once paid to tackle more substantial debts. Higher financing costs prompt rapid accumulations of debts and result in paying a higher sum through the span of your debt reimbursement. The speedier you can dispose of high-interest and smaller debts, the better. Check out America's Best Bookkeepers

Step 4: Think about ways you can earn more income

It can be difficult, but you must think of ways to get more income. For example, in some jobs, more work may lead to more, and relatively less expensive, benefits. You may be reluctant to do additional work. The extra income you will earn will allow you to reduce your debts more quickly and finish your payments.

Step 5: Create your debt payment strategy

It’s almost over. Now you need to create a strategy to start finishing your debt payments. When creating a debt settlement strategy, you must first consider your interest and your due preferences. Your priority is always to close off the high-interest debt. When you try to close your debts, be sure of the steps. Learn to save money and control your expenses by considering your budget and focusing on your debts.

Step 6: Do not try to finish without setting a goal Check out America's Best Bookkeepers

Set goals for finishing debts. If you put the target, everything will be easier. For example, at the end of the full maturity of your high-interest loan debt, set the payout goal without delay. You can do this for every debt and total debt.

Step 7: Protect your financial future

The last thing you want is to hit the hole after you’ve done all that. The final step in debt repayment planning should include a comprehensive plan to stay out of debt. This planning implies making a strong commitment to changing spending patterns and entire financial habits. Similarly, as racking up a heap of debt doesn’t occur instantaneously, debt reimbursement would not come rapidly. In any case, with commitment, want, and a well-ordered debt reimbursement design, you can free yourself of debts and remain that way for a long time.

Check out America's Best Bookkeepers About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity. Check out America's Best Bookkeepers

A lot of people get into massive debt each year. Whether they are dealing with increasing bills, insufficient income, an unforeseen challenge, or lost their job, it can be frustrating to watch interest grow. Some options available to people who are struggling with debt include debt merging loans, refinancing loans, debt credit counseling, and debt settlement services.

Debt management plans, Main credit counseling services

A lot of organizations offer these credit counseling facilities, also known as DMP. Though not all these organizations have a nonprofit or public state, some self-governing agencies offer credit services as well, such as credit unions, military bases, and universities. Some for-profit banks also offer such credit counseling options. Check out America's Best Bookkeepers

A lot of people turn to credit counseling to get a debt management plan (DMP), so they can pay off their unmanageable debt.

A debt management plan is a contract between a person and their credit counselor that binds them to pay all the debts within a specific time frame.

Your DMP payments can have a dramatic effect on your credit score.

Determine if a debt management plan is right for you

DMP is not for everyone. But the budget advice provided by reputable credit counseling agencies is widely applicable, even if you do not have serious debts. Sitting and talking with someone who understands personal finances can be useful if you live from check to check but have not fallen into a vicious circle of unpaid obligations. Check out America's Best Bookkeepers

  1. Can’t commit long term?

To be effective, a DMP requires a person to maintain discipline. When their counselor presents them with a modified budget to pay their debt off and start to save for their future, a person cannot follow this plan for a couple of weeks and later get back to their old habits.

Getting out of the debt takes a lot of time and requires some sacrifices, like the following:

  • Reduce non-essential expenditures, like restaurant meals
  • Reduce or eliminate costly habits like smoking/ drinking
  • Eliminating needless shopping purchases online
  • Exchanging newer and expensive vehicles for one with a lower payment (or reducing the number of vehicles in your home from two to one)
  • Save cash on groceries, like as when buying generic foods
  • Taking fewer pleasure trips

With the help of proper discipline, such changes do not have to be permanent. However, they can be essential to solving your immediate debt problems. Check out America's Best Bookkeepers

  1. Would a substitute be better?

If you have uncontrollable debts, a DMP may not be the smartest solution. If the main problem is a crippling mortgage, a car loan, or other protected obligation, speak directly with your lender regarding refinancing choices that could reduce your monthly expenditures without forcing you to default.

As an alternative, just take benefit of the planning and budget services of your credit counselor. They cannot pay their debts for you, but they could give you a new look at personal finances.

However, it is crucial to know when a DMP is one of the best options. If you are behind credit card payments or you cannot find more money to reduce debt, the temporary blow to your current credit rating, as well as the monthly payments of the plan, might be worth it.

Check out America's Best Bookkeepers About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity. Check out America's Best Bookkeepers

Debt is a common word in the lives of individuals and corporations. Debt is defined as the exchange of money between the borrower and the lender, with an interest rate charged on the borrowed amount. Individuals and organizations take debt for several reasons. For example, if a student wants to pursue an education in another country but is unable to pay for the expenses, then he may take a loan from the bank or any other lender. Similarly, organizations take out loans to expand their businesses. The debt must be returned on a later date, as decided at the time of the borrowing. The amount borrowed minus the payments is called the principal.

Along with the principal, the borrower has to pay interest monthly or annually. Debt may be good or bad. This article discusses the types of good and bad debt and helps readers in making smart debt choices. Check out America's Best Bookkeepers

Good Debt:

Good debt is a debt that helps increase the net worth of the borrower and generates income and helps achieve a sustainable future. One of the most common good debts is an education loan. Getting a good education from a reputable institute means that one has learned from a seasoned faculty and studied in a competitive environment. Quality education is also associated with well-payed jobs and more employment opportunities. A college degree will soon pay for itself, so the loan is worthy. Such debt is good debt. A mortgage is another good debt used to finance a house. The value of real estate grows exponentially, and having a shelter is one of the basic needs of life. A mortgage is good debt because of its increase in value in the future. One must look for investment opportunities such as buying shares or property that will increase the net worth of an individual and finance them through debt if required. Check out America's Best Bookkeepers

Bad Debt:

Debts that are used to buy depreciating assets are bad debts. The value of such assets does not grow in the future. Instead, it depreciates. These assets do not contribute towards earning income for the borrower. One of the common bad debts is an auto loan. Buying a vehicle is expensive and costs a lot of money. Although people have become accustomed to traveling in their cars and consider it a necessity in today’s world, paying interest on a vehicle does not add to the value of the borrower does not help generate income. Also, the car depreciates over time, and it’s valued for less when resold. Auto loans fall under the category of bad debt. Another common bad debt is credit cards. The interest rate charged on credit cards is high and higher than that of consumer loans. The customers have to pay a lot of extra money along with the borrowed amount. The balance on a card is bad debt. Check out America's Best Bookkeepers

Differentiating Good Debt and Bad Debt:

Borrowing money is a difficult decision to make because the borrower is always worried about the ways of paying back the loan as soon as possible. A loan is not always a good or a bad idea. If an individual or a company is taking out a loan for investing in an asset that will earn profits, then borrowing is a good choice. Such loans, called good debt, add to the assets of the borrower. But some loans are used when buying luxuries that may add to the comfort but do not add to the assets of the borrower. Such loans, called bad debt, become a liability for the borrower. One must avoid taking bad debt as it adds to the financial burden and does not contribute towards the net worth and income of the borrower. The interest paid on bad debt is not worth spending because it gets no returns to the investment.

Check out America's Best Bookkeepers About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity. Check out America's Best Bookkeepers

A person should be willing to do everything it takes to get out of debt. Whether it be spending less money, having less entertainment, or cutting out entertainment altogether, a person should have an optimistic approach. The most important thing for someone to get out of debt is to think about their expenses differently and to change their outlook about spending money. A changing mindset means spending money on needs instead of wants.  Mentality plays a significant role when it comes to spending less and saving more.

 

Along with the mindset, a person needs a proper plan and full motivation. A proper plan means to have a reasonable and necessary schedule where every time an individual spends his or her money, they keep track of it. A lot of people decide to get out of debt but fail to achieve it as they don’t change their habits or mindset. Debt is a stressful thing that needs to be changed or recovered. Why not do something before it hurts to be in debt anymore? Check out America's Best Bookkeepers

 

If a person doesn’t have a strong mindset that they need to get out of debt, they will keep failing as they will not make plans and strategies and will not get serious about it. The worries and stress of debt will keep hurting them. A lot of times, people say words that are so demotivating for themselves that they don’t even realize.

 

We came up with some phrases that people in debt say that will keep them in debt. If you find yourself saying any of it, then you need to stop to change your mindset:

 

  1. Those Who Live for Luck:

People who say that they will pay their debt when they get a promotion are probably unaware of the fact that life is unpredictable. A lot of people live their lives, hoping someday, luck will be in their favor. Using this mindset to get out of debt will lead to failure and continued debt. Check out America's Best Bookkeepers

 

  1. Those Who Think Paying Interest Will Help:

People who say that paying interest means paying the debt are incorrect. Paying interest only increases debt. If an individual is not paying the whole amount on time, then it only means that the amount of interest is being compounded along with the debt.

 

  1. Those Who Think They Are Not Making Enough Money:

People who say that their salary is the problem need to change this mindset. It’s not the salary that’s the problem but their behavior. They are the ones that are spending outside their means. Setting up a budget is the way to change this way of thinking and get out of debt. Check out America's Best Bookkeepers

 

  1. Those Who Are Not Willing to Sacrifice:

Individuals who are not willing to sacrifice will stay in debt. A lot of people who have a habit of eating out or going to the movies every week are the ones that are not motivated enough to start saving. They are not willing to sacrifice their fun and entertainment. They need to reset their mentality and set goals and make proper plans.

 

  1. They Don’t Make It A Priority:

People who say that there are more important things than paying debt do not understand the impact and longevity of debt. Making debt a priority takes a change of habits. Individuals that keep saying that they will start budgeting next month need to make it a top priority. This will be the path to get out of debt and become stress-free.

 

Those in debt often don’t realize that debt is as mental as financial. If the mindset about debt is changed, battling debt will be easier and become a feasible goal.

Check out America's Best Bookkeepers About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity. Check out America's Best Bookkeepers

KEY 1: Make a Budget

Like everything in life, the first thing is to make a plan. In this case, the plan is called a budget and consists of making two lists. In the first list, you put all the income you have each month, and in the other all the expenses.

Spend less: If you have to reduce expenses, the leisure section is usually the first injured, but there are more options. For example, perhaps you can find cheaper accommodations. Did someone say shared apartment?

Enter more: To supplement the money your parents give you, one option is to take a part-time job. See also all scholarship and study aid options.

 

KEY 2: Meet your Budget

Making a budget is easy, but respecting it is something else. You will have to resist the temptation to spend money on things that go beyond your budget however much you want.

At the beginning it is likely that the forecasts – especially the expenses – vary from what was expected. The important thing is to be aware of how much money you are spending each day, and to ensure that you do not exceed your income. It’s better to prevent than to cure!

 

KEY 3: Protect your Money

You will need somewhere to keep the money you receive until you spend it. The best place is the bank. The ideal is to have branches both where your parents live and where you are going to study.

When you open an account, the most convenient way to access your money is to get a debit card. It is possible that you can also ask for a credit card. It is important to understand the difference between the two.

Debit card:  When you pay with a debit card, or when you use it to withdraw money from an ATM, the amount is deducted immediately from your account. When your account is at zero, you cannot use the debit card.

Credit card: Credit cards allow you to continue buying even if you do not have money. When you buy, your account balance does not change because it is the bank that pays for you. This generates a debt with your bank that is usually settled at the end of each month. If there is not enough money in your account, you will pay high interest on that debt as long as it exists.

 

KEY 4: Organize!

Especially when you go out to study abroad, you will have periodic payments that you will have to remember: rent, electricity, telephone, etc. Some, like the telephone, you can auto-pay. That is, they will be deducted automatically from your bank account without you having to do anything. Others you will have to pay for ordering a bank transfer or paying the receipt at a bank branch.

It is very important to always pay on time. If you pay late or if you do not pay, it can damage your credit and make it harder for you to obtain credit cards, loans or mortgages in the future.

Enter the due dates of the different invoices in your calendar. Put the bills to pay in a folder in your file cabinet, and mark the due dates in your calendar so you do not forget.

 

 

KEY 5: Minimize your Expenses When you Can

 

  1. See all the free activities offered by your city for young people (concerts at parties, visits to museums …) and organize your leisure time around them. Leisure activities is where you usually spend much of the budget.

 

  1. Take advantage of all the discounts offered by the Youth Card for students and all offers for leisure. For example, go to the cinema on “Spectator’s Day”.

 

  1. Buy at the cheapest supermarkets. Identical products usually have a very different price depending on the store where you buy it.

 

  1. Second hand things. Think about what you need and you could buy secondhand. Many times you can get a textbook that costs you $54, for only $11 if you buy it used. It’s the same book, but it’s not new. For the money you save, it’s worth it!

 

  1. Save on transportation. Spending on transportation is very important for students. One way to reduce it is to use the monthly subscription for students. You can also go buy a car and share your gas expenses with other students and many places walking or cycling!

 

  1. Pay cash. You can better control what you spend if you take out money once a week and pay for everything in cash. So you can see exactly how much money you have left each week, and if you spend and spend everything, you just have to put up a few days before taking it out again.

 

  1. Before buying something, ask yourself if you really need it. Many of the purchases we make are made on impulse. You see some super-cute glasses and they are at a 50% discount, they are a bargain! But you already have 5 sunglasses, do you really need them?

 

  1. Make a list of what money you spend and on what. This way you will know where you put each penny and where to reduce expenses if you need it.
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About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file, critical financial documents and back office tools in an efficient and secure environment. Complete Controller’s team of US based accounting professionals are certified QuickBooks™️ ProAdvisor’s providing bookkeeping, record storage, performance reporting and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay services. With flat rate service plans, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

Get Out of Debt sign
Being in debt is one of the most stressful situations that anyone can face at any point in their life. Once someone takes a loan, it is mandatory and obligatory for them to repay the loan, sometimes with interest, despite any life changing situation you could face during the loan repayment time. Repaying the loan is a must, even if you lose your job, get into a terrible accident, or experience a major increase in your expenses due to being a new parent.

Reasons for Being in Debt

When you are in debt, there could be several reasons for it. It could be that you spent more than you intended on a birthday party or a wedding. Another reason could be purchasing a car that was costly and you had to take a loan to cover the payments. Some people spend a lot more than they are intended on a lavish holiday.

Getting out of debt is not impossible. All you need to do is plan out your income, expenditure, and debt payments. Many people can get out debt by curbing their spending and looking for ways to have some extra income come in every week. With careful planning, it’s possible to get out of debt quickly. Here are 5 simple steps to help you get out of debt.

1. Don’t Borrow More Money

The best way to get out of debt is to stop borrowing money repeatedly. After some time, it may become habitual to borrow money to make ends meet in the short term. Over time, the amount of debt keeps increasing and, before you know it, you could be under a mountain of debt. To reduce debt and make your way out of it, it’s important to refrain from financing extra expenses, stop signing up for credit cards, and spending any extra money on things you do not need. Avoiding these activities will help you to keep the focus on the debt that you want to repay.

2. Have an Emergency Fund

Another way to get out of debt is to have an emergency fund ready at all times. The reason for having an emergency fund is to keep some money in the bank for serious, unavoidable emergencies. Avoid using a credit card for emergencies if you can. They will just add to the massive pile of debt you already owe to creditors. Having an emergency fund can act as the main buffer between your ever creasing debt and your expenses.

3. Make a Budget and Stick to It

To reduce debt and manage your expenses, it is a good idea to have a budget that includes all inevitable expenses. Having a budget will allow you to prioritize your expenses and avoid taking on more debt. Another benefit of having a budget is to save up your money and collect enough to repay your loans.

4. Trim Your Expenses

Another way to help in loan repayment is to reduce your expenses. Do not buy any more luxury items if you don’t have the money left for it. It’s easy to use a credit card to buy yourself that shirt you’ve been eyeing, but, by doing so, you are only adding up more debt. Another money saving tip is to unsubscribe from your Netflix subscription (or other similar types of subscriptions) until you have your finances straightened out. Avoid eating out at fancy restaurants more frequently if you are in debt. It’s important to stay committed to the goal of trimming your expenses to save up for that long due loan repayment. The more committed you are to reducing your expenses, the better your chances are for getting out of debt easily. It’s useful to get rid of the extra amenities you use in your life to get out of debt.

5. Proper Organization of your Debts

Properly organizing your debt repayment is an important step in repaying loans. It’s possible to organize your debt by two different methods. In the first method, make a list of all of the debt that you owe. Start from the smallest debt first and include each debt that needs to be paid according to its respective amount. With this method, people are successful in loan repayment of almost $60,000 in a short amount of time.

The second method for debt repayment is called laddering. This method is the most effective method for saving money for repaying your debts. The method works by allowing you to make a list of all debts and begin by the one with the highest interest rate. Now that you have a list, add the money you save to the debt with the largest interest rate. Once that is paid off, move ahead and similarly pay each debt until all the pending debts are cleared away and you are debt free.

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About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

Bankrupt written on blackboard in businessman hands, loss of money and property
Filing for bankruptcy is probably the last resort that people and businesses want to be reduced to. There are a number of reasons for it. On the other hand, some view this as a way out of a sticky situation. We will discuss the debate on whether bankruptcy is an instrument for liberty or not. The answer to this can vary widely based on the situation you are in. So, let’s look at both sides before coming to any conclusions. However, first, let’s understand what bankruptcy actually is.

What is Bankruptcy?

In the eyes of the law, bankruptcy is a legal process in which the liabilities and assets of an individual or firm are weighed to decide whether the individual can still pay off their debt or if they should be legally exempt from this. However, an individual or business must first file for bankruptcy before the court will actually consider their plea. This can be done in two ways. A person can file for bankruptcy on their own or they can hire an attorney to do it. If the court does declare you bankrupt, they will take control of all or most of your assets to pay off your creditors. Not only will your creditors not be able to contact you asking for what you owe them, but you will also be declared debt free. The only dues not cleared on your behalf are the loans that you co-signed with someone, student loans, alimony, child support, or money that you owe to the government such as unpaid taxes, penalties, and fines. You will further have to pay for the case of bankruptcy to be filed in court.

Pros of Filing for Bankruptcy

In some cases, it is actually a good idea to file for bankruptcy due to the following reasons:

  • You will legally become debt free
  • You will no longer be pestered by lenders
  • You will get a fresh start

Cons of Filing for Bankruptcy

Filing for bankruptcy has a lot of disadvantages as well that need to be taken into consideration, such as:

  • Your property, bank accounts, and other assets might be sold off or seized to pay off your debts
  • Your bankruptcy will become public domain that can be easily accessed through the court records
  • It will become harder to secure a mortgage

Is Bankruptcy an Instrument for Liberty?

In our opinion, bankruptcy can be an instrument for liberty in some cases. If you are under a ton of debt, your assets aren’t sufficient to pay them off, and you are constantly being pestered by lenders, filing for bankruptcy is the right option. However, even after declaring bankruptcy, it is not a guarantee that your creditors will stop pestering you. Secondly, after filing for bankruptcy, you will have no assets to fall back on. You will have to rebuild your life from scratch. Unless it is in the case of huge multinationals that will just need some restructuring, cost-cutting, bookkeeping scrutiny, and a few tough decisions made in the ownership.

On top of this, your bankruptcy will become a matter of public record that can easily be accessed by potential lenders, landlords, and employers. You might have a harder time renting or getting a loan. Landlords and banks may assume that you are a liability and will have a hard time paying your dues. Yet, are these issues really a problem compared to your mounting debt? If you have nothing left to lose and no way out, the only option to free yourself may be declaring bankruptcy.

Will You be Free after Filing for Bankruptcy?

Filing for bankruptcy is just the tip of the iceberg. Not only will you have to pay for filing the case, but if you aren’t filing the case yourself, you will also have to hire and bear the fees of an attorney that will cost you a decent amount of money. Going to court and simply stating that you’re broke isn’t enough. As ironic as it sounds, you will have to pay money to declare that you don’t have money.

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About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

A 3D render of a scattered stack of regular envelopes with delivery stamps and a clear window and the top one saying payment due symbolizing bills and debt on an isolated white background
Keeping an enterprise running lucratively can be challenging, specifically in today’s competitive and high-paced economy. Whether you own a start-up or a well-established business, it is easy to unpredictably find yourself in trouble with bookkeeping. When this occurs and you are no longer able to keep up with your corporate debts, you may be speculating what you can do to take care of your financial responsibilities while still protecting your business in the long run. Businesses, like entities, sometimes suffer from too much debt. Taking on the right amount of liability – and at the right time – can mean the difference between a business that scuffles and one that prospers. According to the U.S. Small Business Administration (SBA), roughly 50% of small businesses are unsuccessful within their first five years, largely because of inadequate capital, poor credit activities, and too much debt. Gratefully, we have come up with a periodical order for you to follow when paying your priority debts.

1.    Taxes

The money that you accumulate for federal payroll taxes and state sales and income taxes does not belong to you; it goes to the government. And if you don’t pay these tariffs at the correct time, you will face stiff charges and penalties. The Internal Revenue Service (IRS) has broad authorities to garnish incomes, take control of business gear and property, and even get a  hold of funds from an Individual Retirement Account (IRA). It can also charge you with corruption for failing to deposit your payroll taxes applicable.

2.    Payroll

Not only do some national laws impose fines for not paying your employees’ salaries on time, if you don’t take care of the individuals who labor for you, you risk losing them and your industry. You may like to think of your workers as a family, but missing payroll may vigor them to look for other prospects.

3.    Aged Payables

An aged payable is a bill that is past due for 60 days or more. These bills put your corporate credit score at threat, making it more problematic to secure future bankrolling.

4.    Utilities and Rent

You can’t run a company without power and a phone line. Lights, internet service, heating, and air conditioning, etc. are necessities. If you are overdue on your utility bills, your facilities can be cut off and leave you in the dark. Try to look at your bookkeeping records and exchange a payment plan with your service suppliers. And, don’t assume they won’t pull the plug if bills are left due.

5.    Key Retailers and Purveyors

You depend on your key vendors and suppliers for your company to function. Obviously, they also depend on you for their establishments to prosper, so it is everyone’s concern to keep these relationships healthy.

6.    Secured Debts and Dues You Have Assured

If your business is a sole proprietorship or partnership, you are individually accountable for all of your business debts. If your business is a corporation or LLC (Limited Liability Company), you are only legally responsible for debts that you personally guaranteed. In either circumstance, you need to pay these compulsions before any unsecured debts or loans get reimbursed.

7.    Insurance Payments

You don’t want to function without liability insurance for any prolonged length of time, but if you need to eradicate a specific expense, you might have to take the risk. Before letting insurance lapse, though, try to lessen premiums by down-scaling coverage or increasing deductibles.

8.    Large Bills vs. Small Bills

Keeping your business credit score high is an imperative contemplation when you are enforced to order your payments. Missing large bills will have a superior negative impact on your credit score because they carry more mass. Also, big companies are expected to report a delinquency to the credit agencies. Conversely, occasionally you might need to pay smaller bills to smaller companies that depend on your business for their subsistence.

Final Note

Preparing for a cash flow problem whilst bookkeeping in advance, by putting aside sufficient funds to pay your bills and creditors during sluggish economic times, is your best defense against financial trouble down the road.

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About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

 

saving or paying off debt - Complete Controller

The vicious debt trap is something that almost all individuals in debt hope to escape. However, each faces the dilemma of deciding whether saving money is a more viable option than paying off debt. The decision to prioritize between these two has remained an immensely debated topic in the financial market’s bookkeeping umbrella. It is essential to be mindful of the various factors that will influence whether either one is a more feasible option – optimizing savings or paying off debt obligations. These factors are in detail in the paragraphs that follow. Check out America's Best Bookkeepers

When is Saving a Better Option?

It is usually a better idea to emphasize more on savings to prepare for unforeseen circumstances. This emphasis is a general belief that leads to individuals deciding to save when they have outstanding debt in their portfolio. However, these vary from person to person. Situations when keeping, instead of paying off debt, is a better option comprise of the following:

  • If the interest rate on loan is low, there is no point in paying off the debt before saving money. The amount that you will use to pay off the debt may instead be saved for use in the future. Lower interest rates may be an excellent indicator to save money now, to be used later, by the principle that dictates that saving is a better option as long as interest earned is higher than the interest paid. Check out America's Best Bookkeepers
  • Another situation when saving for an ’emergency fund’ is a top priority is when you are close to your retirement age. At this particular point in time, saving up for unexpected costs and emergency expenses is appropriate to safeguard for future years. The ongoing source of income is about to end. To ensure a stable life during retirement, saving is a likely option.
  • Another situation that calls for saving rather than paying off debt is when your job allows you to access a retirement savings plan. This plan will automatically boost the savings made to retirement savings account if the employer is likely to match the 401(k) contributions. This contribution is essentially free money.
  • In case of a small amount of outstanding debt, savings may be prioritized. Out of which, a small amount you can dedicate to paying off debt using minimum payments. This minimum is likely to ensure that the small loan amount is paid off and sufficient savings.

When is Paying Off Debt a Better Option?

Despite the need to save enough money to have backup cash available as and when needed, sometimes it is better to pay off debt rather than accentuating on creating savings. The following situations will require prioritizing paying off debt:

  • To improve one’s credit score, paying off debt is a more feasible option. Acquiring a higher credit score is essential to have sufficient credit for use in the future. As a result of a better score, lower interest and insurance rates can be better negotiated for future loans. Check out America's Best Bookkeepers
  • Another reason to pay off debt is the higher than 6% interest rate on loans. With this kind of borrowing cost, it is less risky to settle the debt immediately. No one likes to end up in a situation where the interest paid exceeds the interest earned on savings. Higher interest rates are, thus, an indicator that debt must be paid off, effective immediately.
  • To attract lower interest rates in the future, it is essential to lower the balance owed to any loan amount. Making higher payments initially will result in a lower balance and, thus, a lower interest rate can be obtained in the long run, consequently.

Depending on the situation and one’s objectives, either one of the two options may be a priority. A few can successfully maintain a healthy balance between savings and paying off small amounts of their debt. This debt relief allows them a good credit score/worthiness and enough cash savings to be used in times of future uncertainties. Whether you save money or settle debt, it is your personal preference based primarily on circumstances.

Check out America's Best Bookkeepers About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity. Check out America's Best Bookkeepers