Debt-To-Income Ratio: What Is It and Why Is It Important?

Debt-To-Income Ratio What Is It and Why Is It Important

A recent study found that only approximately 29% of American adults are considered financially healthy. A big part of improving financial health is paying off debt. Some people seem to think that the best way to obtain the little extras they need in life is by taking out loans or using credit cards. Debt-to-income ratio is vital to your financial standing.

While using credit or loans will help you buy something faster, it can also affect your financial health. When applying for any loan, one of the main things a lender will consider is your ratio. Below is information about this term and the importance of a low debt-to-income ratio. 

What is Debt-To-Income Ratio?

The term debt-to-income ratio is used to compare a person’s monthly gross income and their monthly debt expenses. If you want to calculate your own ratio, you will need a few basic pieces of information. 

Making a list of your monthly personal loan, car loan and credit card payments is the first step in this calculation process. Once you have the total amount of payments you are making monthly, you need to figure out your monthly gross income. 

You will then divide the debt payments you have by your income and that percentage is your debt-to-income ratio. Be sure you calculate your monthly income before taxes to ensure you get an accurate ratio. 

The Importance of a Good Debt-To-Income Ratio

When applying for a loan, the lender you use will consider many factors before approving your request. One of the main things a lender wants to know is how much debt you currently have. If your debt-to-income ratio is high, it will be difficult to get a loan for a significant amount of money approved. 

Calculating your ratio before applying for a loan can help you greatly. Most lenders will approve loans for applicants with a ratio of 36% or below. If your current debt-to-income ratio is higher than this, you may need to address this issue before applying for a loan. Avoid making money mistakes by applying with low ratio.

Great Tips For Lowering Your Debt-To-Income Ratio

Is your current ratio high? If so, it is time to do something about it. One of the first things you can do to lower this ratio is to pay off your outstanding debt. Most American consumers have around $3,000 worth of credit card debt

Regardless of how much debt you have, it is crucial to make a comprehensive plan to pay it off quickly. This is a good way to reach financial stability. You also need to avoid taking on any new debt until you get your current debt-to-income ratio down. By recalculating your ratio monthly, you can estimate how much progress you are making. 

Education is Power

The more you know about what lenders look for when inspecting a loan application, the easier it will be to get approved. By following these tips, you can lower your debt-to-income ration and get the funding you need with ease.

3 Outdoor Activities for a Great Labor Day Weekend

3 Outdoor Activities for a Great Labor Day Weekend

Most people view Labor Day weekend as the official end of summer. After this holiday, most children will be back in school. If you are trying to have a great time with your family this Labor Day weekend, now is the time to start planning activities. 

Over 60% of Americans claim they plan on traveling this Labor Day. Whether you plan to travel or stay home to celebrate this holiday without spending much, consider participating in the outdoor activities for Labor Day weekend below. 

1. Explore Nature on a Family Hike

During the summer months, the weather outside is absolutely beautiful. This means it is a great time to take your family on an excursion into nature. One of the best ways to give your children a sense of how enjoyable the outdoors can be this Labor Day is by taking them on a hike. 

Luckily, there are around 6,000 state parks in the United States. These parks have a combined total of 14 million acres of land. Many of these parks have great hiking trails that are perfect for individuals and families. 

If you plan to go hiking with your family this holiday weekend, be sure to check the weather in the area you will be traveling to. The heat during this time of year can be brutal. If the temperatures are going to be hot where you are hiking, be sure to bring along plenty of water and sunscreen for the family. 

2. Biking Can Be Lots of Fun

Getting your children off of their electronics and into nature can be difficult. As you start to plan outdoor activities for Labor Day weekend, be sure to poll the family. With the results from this poll, you can start to narrow down the list of outdoor activities at your disposal. 

Taking a family bike ride can be a lot of fun. Most children love riding their bikes. If you plan to travel to an area to take a bike ride, you need to make sure you can safely transport them in your vehicle. 

If some of your children cannot ride a bike due to their age, investing in a rear-mounted seat for them is crucial. With these rear-mounted seats, your baby or toddler will be able to enjoy the bike ride with the rest of the family. This activity is fun without making a money mistake.

3. Plan a Beach Day

A day at the beach is perhaps one of the most popular outdoor activities for Labor Day weekend. If you live relatively close to a beach, now is the time to start booking your accommodations.

The best way to make your day at the beach enjoyable is by planning ahead. Getting to the beach early will help to ensure you and your family get a great spot right on the water. You also need to make sure you have plenty of sunscreen, sandwiches and drinks to go around. 

Making Memories with Your Family 

Now that you know more about great outdoor activities for Labor Day weekend, it is time to start planning. By planning your trip well in advance, you can focus on making memories with your family yet maintaining financial stability.

Can you Make Money Trading Lithium?

make money trading lithium

Lithium is well known for manufacturing rechargeable batteries and other industrial uses. This is mainly because of its excessive low density preferred by electric cars, Smartphones, digital cameras, and laptop production. For this reason, the valuable metal has steadily become popular in the market. 

As trends and environmental standards embrace energy efficiency, there is a great need for safer and cost-effective products. The mounting demand undeniably instigates the use of lithium products because of their higher voltage capacity, energy density, and reduced self-discharge levels. 

In addition, there is the explosion of lithium stocks that engage organizations involved in the processing and mining of the metal. While most people speculate whether the industry is productive enough, investing in the best lithium ETF is not a bad idea at all. This topic will take you through an imperative process on how you can make a kill with Lithium investing.

How to Invest in Lithium

It is the dream of every investor to make an extra coin out of it. Enthusiastic individuals can consider Exchange Traded Funds (ETF) and lithium stocks. An EFT is a security sold on a stock exchange that monitors commodity, index, and sector. Often, they contain several investments like bonds, stocks, and commodities. If you have to choose between stocks and EFTs, it is worth noting that the former has several concentrated risks.

On the other hand, EFTs offers diversification and broad exposure. Nonetheless, for experienced lithium investors, buying lithium stocks act as a valuable alternative venture. All in all, experts advocate that individuals can get better results if they invest in focused ETFs or trade with startup firms using low-cost lithium. Another ideal option is to invest in reputable lithium manufacturers who run low-cost operations. 

Although ETFs behave similarly with stock investments, they gain their value from concentrating in several related companies. In other words, it translates into investing in numerous slices of Lithium through ETF instead of settling with a particular company with stocks. 

However, ETFs can be more susceptible to market downturns popular with batteries and lithium companies. As a result, they may not offer the broad diversification or cynical properties expected. Here are some of the top best Lithium ETFs you should consider.

The Global X Lithium & Battery Tech ETF

This ETF invests in a variety of organizations making lithium batteries or producing Lithium. In the process, they provide much-needed exposure to battery and lithium markets. Most of them have a market value of approximately 50 dollars per share, with the most investment in Asian companies. At the moment, Albemarle stands out among the fund’s best holdings.

Other prominent brands include Tesla, LG Chem, BYD, Samsung SDI, Ganfeng Lithium, Sumwoda Electronic, etc. This option is suitable for individuals eager to achieve intensive exposure in the lithium world compared to other ETFs.

ETFs Battery Tech and Lithium ACDC

In contrast with the previous option, investment here involves companies creating batteries and the mining firms that manufacture commodities needed for the process. Over 50% of the stock in this range is in Asia, while the rest splits between the US and Europe. 

Some of the best holdings include Tesla, LG Chem, Mineral Resources, BYD, Galaxy Resources, Pilbara Minerals, Renault, and Solar Edge Technologies.

 Top Best Lithium Associated Company

Before investing in Lithium, it is crucial to pinpoint prominent lithium companies. Mainly, this involved brands that mine, produce and refine the commodity.

1. Albemarle Corp

Thanks to the company’s capacity to scale, Albemarle is the most favored lithium partner globally. Situated in Charlotte, North Carolina, the geographical location is perfect for the company’s access to the worldwide lithium market. Also, the company operates on a minimal operating resource which makes it stand out amongst others.

2. Galaxy Resources

The Australian-based company produces Lithium from a hard-rock venture known as Mount Cattlin. Currently, the famous brand has two other upcoming projects in Chile (Sal De Vida Catamarca brine) and Canada (James Bay Hard Rock).

3. Livent Corp

Compared to other lithium companies, Livent is more established and likely to earn you some good money. A 2020 report about a long-term coalition with Tesla prompted a 50% growth by the end of the year. As Livent Corp continues to supply Tesla with higher quantities of Lithium, the future looks promising for interested investors.

4. Lithium Americas

Currently, the Canadian-based firm has two developing lithium projects in the US (Thacker Pass hard-rock) and Argentina (Cauchari-Olaroz brine). The firm is listed in New York and Toronto, with the US project taking pride in its capacity of holding the most considerable quantity of Lithium in America.

5. Pilbara Minerals

The Australian-based company also runs the Pilgangoora project, famous for tantalum and Lithium. The hard-rock project hopes to produce over one million pounds of tantalum and 1.2 million tonnes of spodumene if things go as planned. 

Conclusion

A worthwhile investment should fit in your long-term strategies and should not affect your risk lenience. More participants consider the investment worth a trial with a predictable demand for electric vehicles and other lithium uses. Yet, there is much need for extensive analysis for individuals to understand Lithium’s market value and how to trade wisely.

Stock Trading Is One of the Most Lucrative Forms of Investment

stock trading

Stock trading is one of the most lucrative forms of investment. You make passive income by betting on the performance of a company that you are not involved in daily running. However, before you start investing in stocks and shares, you need to learn the basics of stock trading and how you can make money from this form of investment.

Learn About Stocks and Shares

Take your time to learn about stocks and shares and how the stock market works. For starters, it is better to start with stocks because they are less complicated than shares. Stock is a general term for equities sold at a stock market, while shares refers to owning a piece of a particular company.

There is plenty of free educational resources that you can use to learn about stocks and shares. What’s more, the best brokers offer free education to investors and have knowledgeable and experienced staff who will advise you on the best stocks. You can also practice virtual trading before investing real money into stocks.

Find A Reliable Online Broker

To trade in stocks, you need to open a stock account with an online brokerage firm. Brokerage firms range from small upstarts to established brokers with a large portfolio of investment options.

Take your time to research the best trading platforms in terms of customer experience and commission fees by reading online reviews and consulting experienced investors. Compare the fees charged by different brokers. Check whether they provide investor training, ease of using their website or app, and the investment options they offer.  

Buy Your First Stocks

After finding a suitable brokerage firm, open an account and transfer money from your bank account. Most online brokers have very low minimum deposit requirements, so you can start by investing as little as $200.

Only invest money from your savings because stock trading is a long-term investment that you can’t recoup in a few months. Don’t use funds that are budgeted for near-term expenses such as electricity bills or rent.

It takes time for the funds to transfer and become available for trading. However, some brokers allow you to trade while the transfer is being processed while others require you to wait for a few days. Once the money is available, select the stock or share you want to buy and place an order.

Market and Limit Orders

Typically, the brokerage firms give you several investment options, but there two common types of orders you can use to buy or sell stocks.

Market order: instructs the broker to buy or sell the stock at the best price available on the market.

Limit order: requires the broker to buy or sell stocks at prices better than the specific price you set.

Bundled Stocks

If you are not sure which stocks to buy, you can invest in Exchange Traded Funds (ETFs). ETFs are bundled stocks that allow investors to buy stocks of different companies. The large portfolio protects investors from exposure to wild fluctuations in share prices.

Risk Tolerance

Stock trading comes with risk because you can make or lose money on the stock markets. You need to have some level of risk tolerance because sometimes a stock may plummet to unprecedented levels due to some odd events. If you panic and sell the stock, you might lose money only for the stock to rebound in a few months’ time.

You can start by selecting safe stocks whose prices have been stable for the past five years. Later on, when you start making profits, you can try the riskier stocks, such as promising startups or undervalued stocks.

Learn to Analyze Stocks

If you are to engage in stock trading on the long term, you need to learn more about the dynamics that determine stock prices. Your first stock buys may be informed by advice from your broker, but you should be more proactive about future buys.

Learn about stock valuations by analyzing the performance of different stocks. Use publicly available information such as earnings reports, financial reports, and analysis by reputable financial analysts to gauge the performance of different stocks.

Your broker may chip in with information about the major performance indicators and risk ratings of different companies, so you don’t have to do the calculations. However, you should understand the meanings of different ratios and other metrics used in analyzing stocks. Further, take time to learn the core business of different companies so that you can determine if their model is sustainable.

Tax Implications of Stock Trading

Income from stocks attracts capital gain taxes. Typically, the amount of tax levied reduces if you hold a stock for more than a year. You can also invest some of your salary in stocks as a part of the retirement savings. The benefit of salary-based investments is that they are deducted from income before tax, reducing the tax burden.

4 Budgeting Tips for the Sandwich Generation

Budgeting Tips for the Sandwich Generation

Everyone wants the freedom to live their own life. But for the sandwich generation, this is easier said than done. Having a family can put a serious dent in your budget. Add taking care of elderly parents to the mix and you find that balancing your family and financial obligations is ten times harder. These budgeting tips for the sandwich generation will help you get through this.

As someone in the sandwich generation, you know just how hard it is to raise children while also taking care of your aging parents.

One of the best ways to manage and come out on top is through effective budgeting. Keep reading to learn money tips for the sandwich generation.

1. Be Open & Set Boundaries with Your Parents

Though it can be hard to have tough conversations with those you love, these talks are a must. While you want to support your parents in any way possible, it’s important to balance your own health, happiness, and finances while doing so.

Talk to your parents about what makes the most financial sense and help them plan their budget. If one of their wants simple isn’t feasible for you, such as moving into your home, it’s okay to say no.

Discuss the financial impact and discuss other housing options that are affordable and safe.

2. Boost Your Emergency Fund

Planning for the unexpected is a must. From unforeseen medical expenses to car or home repairs, it’s best to be ready for the worst to happen just in case it does.

Being sandwiched requires financial preparation. The best way to plan and prepare is by having a healthy emergency fund.

Make sure that you have at least 6-9 months’ worth of expenses saved. This way you can cover any unexpected expenses while also having peace of mind if you lose your job.

If feasible, encourage your parents to start aggressively saving as well.

3. Set Up a College Savings Plan

Odds are that you want your children to go to college. And while there are scholarships and grants to help offset the cost, it never hurts to set up a college savings plan as soon as possible.

By saving when your child is still young, you have years to plan, which means years of compound interest and growth. There are many ways to save for college, including:

  • 529 Plan
  • U.S. Savings Bonds
  • Coverdell ESA
  • Roth IRA
  • UGMA/UTMA custodial accounts

Start saving now, and by the time your child is 18, you’ll have a lot less stress.

4. Keep Saving for Retirement

Dealing with financial obligations and responsibilities from all sides makes it all too easy to put yourself on the backburner. While you want to take care of your family and your parents, don’t forget about your own needs. Check retirement account options as early as you can.

At this stage of life, you’re likely planning for your own retirement and thinking of how you want to live out your golden years. To give yourself some financial stability, continue to contribute to your retirement savings.

Maximize your earnings by contributing as much as possible, diversifying your portfolio, and taking advantage of any employer matching.

Final Thoughts

Taking care of your own family while taking care of your parents is no easy feat. However, with these budgeting tips, you’ll find that you can lead the life you want without feeling overly burdened or pressured.

No Guarantor Loans in Australia – What You Need to Know

financial situation

When applying for a loan, it is important to make sure that you are aware of the current state of your finances. Not only can your credit score greatly impact your chances of being approved, but it can also limit the amount that you are able to borrow. In this article, we will be providing you with insight into how you can apply for no guarantor loans with ease. 

What Is A No-Guarantor Loan?

A no guarantor loan is a loan that you can apply for without the need for security or a guarantor for your loan to be accepted. A non-guarantor loan is a loan type that allows you as a borrower access to the funds in a financial emergency without the need for an additional person to co-sign on the loan, even if you have a poorer credit score.

Is A Loan Without A Guarantor Expensive?

No, a loan without a guarantor is not more expensive as the APR and interest rates completely depend on the state of your credit score as well as your monthly income at the time of the application. Though a guarantor loan does offer that additional layer of security to the lender, it is important to note that any loans such as this should only be used in a financial emergency. Regardless of whether this is a Payday Loan or a no credit check loan , there are several ways that you can use this loan type when struggling in a financial emergency.

What Can A Non-Guarantor Loan Be Used For? 

Though applying for a loan type such as this should be saved for financial emergencies only, many are still unsure what the loan can be used for. Though it may seem tempting to use a loan such as this for a holiday or for a new television to replace the old model current sat in your living room, it is important to make sure that you are using non-guarantor loans to cover emergencies such as emergency car breakdowns or home and boiler repairs that you may not have the money left in your budget to cover.

How to Apply for This Loan Type

Should you find that the loan type is the right one for you it then comes time to apply. With several lenders allowing for a quick application process through their online platform, applying for a loan type such as this could not be any easier. With a simple form to fill out at the time of application providing them with information that they need on their monthly income as well as the current state of your credit score. From there, the lender will check your credit score and eligibility to determine if you can afford repayments, with the money being paid into your account if you have been successful in your application.

Though this application process may take time, it is important to make sure that you are considering the current state of your finances before applying as this will aid in ensuring a successful application.

Recommended Reading: 3 Steps To Clean Up Your Credit Report

Don’t Make These Top 5 Money Mistakes

money mistakes

We all make mistakes with our finances from time to time – we’re only human after all! While we may have the odd slip from time to time, there are a few major money mistakes that you need to avoid to prevent yourself from falling too deep. By slightly changing your money habits, you can avoid these mistakes and save yourself some serious cash.

1. Making Too Many Minimum Repayments

When it comes to hefty debts, it can feel impossible to shift. It may be tempting to pay off just the minimum amount each month, but this head-in-the-sand strategy will mean that you are left paying interest for much longer, resulting in a higher overall bill. While it is acceptable to pay the minimum when necessary, you should try to pay more than the minimum on the majority of occasions to save you more money in the long run.

2. Not Checking Your Bank Statements

Checking your statements has become a lot easier in recent years, thanks to the introduction of online banking and banking apps, which means there is no excuse for not keeping track. Despite how easy it is to check your statements, many people just look at the big number to see how much cash they have left. It’s a good idea to look through and see where your money is going and spot any mistakes.

3. Not Checking Your Credit File

Not only is it easy to check your bank statements, but you can also check your credit file for free through Experian, Equifax, or TransUnion. It’s essential to keep an eye on your rating and spot any areas for improvements or mistakes, as they could affect your credit applications in the future. While it’s best to have a good credit score that is well maintained, there are credit options available for poor credit, such as no credit check loans or guarantor loans.

4. Not Having an Emergency Fund

Life can be unpredictable when you least expect it, so even if you feel like you are living within your means, this could be dashed at any time. It’s worth putting money aside when possible to help cover any unexpected costs, like a broken boiler or emergency car repairs. In theory, you should aim to have a few months of living expenses in an accessible account, but anything you can put aside may help. Without an emergency fund, you may need to borrow money, but it’s always best to use your own cash where possible.

5. Not Switching Providers

From banking to utilities, there is something to be said for switching providers. In days gone by, there may have been some benefit in being a long-term customer, but these days, new customers tend to get the best deals and options. You should use price comparison sites to work out whether it would be beneficial for you to switch bill or banking providers to get more affordable prices. You can even call your current providers and explain why you are thinking about leaving, as many may miraculously drop the prices for you.

For more support and information on money mistakes, please visit the Money Advice Service.