Living a Debt-Free Life

save more cashIt is an amazing experience to live a debt-free life, and it will help you in moving around without stress and getting the experience you deserve. Many people think that they can take loans and since it is not difficult to get a loan, this should keep getting loans one after another. Yes, this is the mentality you’re following, let me tell you that you’re actually falling into a big trap and it will not be easy for you to get out of it. Many people think that loans can have a considerable impact on the life and the impact will be positive. However, this is not true since you’re not making constant efforts to live your life to the fullest.

In this post, let us look at some of the reasons because of which living without loans will help you in living a satisfied life.

 1. There is no stress about anything

With loans, there are many things to be kept in mind, and we do not focus on the important ones while living a stressful life. Stress is one of your biggest enemies, and you should make it a point to get yourself out of the stress shown as soon as possible. One of the best ways in which you can get rid of stress is by simply looking at the possibilities you have and find the possible solutions at the earliest.

2. Getting rid of unnecessary responsibilities and assets

Let’s assume that you have an additional house that is not really used by you at regular intervals. On the other hand, you might have loans to your name. And this case, you can consider the option to sell house fast and get rid of unnecessary responsibilities at the earliest. This is important because the asset is not really contributing to your daily routine and you can always consider using it to get tired of unnecessary responsibilities that are making your life miserable.

3. It helps you do what you want to do

With so many things to do in this world, we stick to the basics because we do not have any other option. However, there are right things that can be done in this life, and we shouldn’t be wasting it by thinking of loans all the time. It will not help us in any way, and so we should consider the option of satisfying ourselves with things we should be doing instead of things you’ll be forced to do. With loans, you’ll be forced to do things, and without loans, you’ll be in a position to do what you want to do.

Get Pre-qualified for a Small Business Credit Card

wallet-2125548_640Are you staying away from credit cards because you fear rejection? You can check whether you qualify for a credit card without further affecting your credit score. Some banks allow you to check whether you pre-qualify for credit cards before you decide to apply.

The information you need to fill in includes your name and address, as well as the last four digits of your social security number. Your credit score will not be affected by using this service which is great if it is already bad.

What Does Pre-qualification Mean?

This service utilizes a soft credit check, meaning that it will not be recorded in your report. A bank can also create a pre-qualified list by purchasing marketing lists each month from a credit bureau. If you meet its lending criteria, the bank will buy your name.

A soft inquiry will give the bank some basic information about you, including your credit score. Based on the information provided by the credit bureau, the lending institution can determine whether you will pre-qualify for a credit card. Many pre approved credit card offers exist; it is just a matter of finding the right one for your needs.

If you are not pre-qualified, it does not necessarily mean that your credit card application will be rejected. You might get an approval when the bank pulls your full credit report. On the other hand, pre-qualification does not mean that your credit card application will be approved either. It still might get rejected.

Why would you be rejected after being pre-qualified?

–          When your full credit report is pulled, the bank will obtain additional data. This means that the additional data could hurt your chances of getting a credit card.

–          When you complete a credit card application, you have to provide more information, including your salary and employment. If your salary is too low or you are unemployed, your application can be rejected.

–          Your information can change between the soft inquiry and your credit card application. This means that even if you pre-qualified a week ago, missing a payment will change your data.

The bank uses the most recent information to make decisions.

Consider a Personal Loan

When you opt for a personal loan, there will be no hard inquiry and your rates will be lower. A number of internet-based personal loan companies will let you see whether you are approved by doing a soft credit check. Personal loans have a lower interest rate than a business credit card.

To check whether you qualify for a loan, you can use several online tools.

Applying Without a Pre-qualification

One hard credit inquiry will take at least 5-10 points off your credit. You should pay your bills on time and keep your debts at a manageable level if you want to have a hard credit score conducted. The only way to know whether you will be given a credit card is by applying.

Pros of Pre-qualified Credit Cards

When you get pre-qualified for a credit card, the more likely you are to get the best offer. After all, pre-qualification is a marketing tactic that lenders use to get you on board.

As soon as you start the credit card application process, lenders will perform a hard credit check on your report. Although this is ok when done occasionally, it will negatively affect your score when frequently done. However, with a pre-qualified credit card, the lender has already done a soft credit check, which does not affect your credit score at all.

Without Profit or With Profit

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Whole life insurance is a permanent and cash value policy that allows for gaining a return with your investment. A permanent policy or whole allows the insured to provide benefits upon dying and a cash value policy simply allows to build profit with your investments. Depending on what type of whole life policy the person receives, that policy will decide whether the insured has investment options or simply that the rates and monetary outcomes will be fixed.

Whole life allows for coverage for the insured person their entire life while another type of policy called term insurance is quite the opposite and is a set amount of time such as 10, 20 or 30 years. Whole life is a pretty significant higher payment per year while term is more affordable because of the simplicity and non cash value.

The Simple Man’s Policy

Term life insurance is a great policy for the person that makes less than $250000 a year and is only interested in a simple payment plan to take care of their beneficiaries in a set amount of time. Additionally, the term life is also a good option for someone that wants to keep their investments separate than a life vs death scenario or might have savings already squared away in other investments.

Making Money and Saving for the Inevitable

Whole life can be quite diverse and also more structured. The benefits of whole life are quite straightforward when comparing it to term insurance but the capacity of these benefits can be more complex. While term is simply temporary insurance for a set amount of time and provides only a death benefit; Whole life provides a policy for the life of the insured and cash accrual for members of the family. The policy is designed to build tax deferred cash value with dividends or interest over a period of time while making payments.

Annual Price Comparison of Both Term and Whole

The annual cost of whole life insurance and term can obviously vary because of age, health,  and size of investment. When comparing prices of term and whole insurance there is quite a difference because a portion of the whole life payment is going into investments. Here is a small ballpark case study that involves price comparisons of term and whole life:  

Healthy 35 yr old Man Term Insurance Policy

  • $430/ year for $500,000

Healthy 35 yr old Man Universal Whole Life Policy

  • $4,400/yr for $500,000

It is worth noting that the term policy can be changed later into a whole plan but there will be a fee involved that most likely will not benefit the insured. When looking at the study above and the annual payment differences; A person would understand if the lesser payment is better in the long run for them based on current finances and occupation.

Participating and NonParticipating Policies

So let us look at the definition of participation; Participate is to take or have a part or share. So simply the insured has the ability to take part or not take part in the profits earned by the company which is part of your investment and is usually given in bonuses or dividends. These profits are earned from a group of policyholders that are all participating and the company uses this money to invest. Nonparticipating policies are paid a guaranteed sum from which both parties agreed upon at the maturity of the policy such as the death benefit and usually have a lower payment..  

Both of these policies are used with term and whole plans but cash value policies such as whole life are more common because it is simply another option to gain a return. It is also good to understand that these 2 different participation types are among a number of other different whole policies. Participation loans are being used more often with term policies because of the obvious advantages of gaining a return of your investment.