The Advantages of Saving Money

The ability to save for all the things you need will put you in a much better financial situation in the long-term. It will mean you pay less for whatever you are buying and places you in a less stressful situation. Mind you some borrowers just don’t care that they are in debt as long as they are able to pay it back.

The crunch comes when there is a job loss or some health issue arises and there is no money in the kitty to pay the bills.

A person who has set up their finances properly will factor in these types of emergencies in making their financial plan.

Saving money is a no-brainer; here are the five main reasons for not borrowing.

1 NO DEBT

Borrowing money for the things you need or want puts you in debt. It means that you are indebted to someone else. Sooner or later it all has to be paid back along with the interest. The debt is not going away until it is paid off so there is no point in burying your head in the sand if you are indebted to your creditors. Creditors have every right to expect repayment of their money whether they are the bank or other lending institution or a family member.

2 COST OF BORROWING

There is a cost attached to borrowing money and that cost is interest which is sometimes referred to as “Dead Money.” Paying interest on the stuff you buy on credit adds to the cost of the item. The habit of purchasing goods on credit adds up to a massive amount over the course of your lifetime. That interest money could have been used to build a nest egg. Commercial debt is the worst type of credit spending because the item which has been bought on credit loses its value as time goes by. Another name for commercial debt is dumb debt.

3 READY MONEY FOR EMERGENCIES

Emergencies crop up from time to time. The car breaks down, the washing machine needs repairing, you suffer a tooth ache and need to go to the dentist, you need a new pair of spectacles. There could be anyone for a number of reasons for financial emergency. If you have money set aside for these then you can tend to these emergencies without worrying about whether you have the money to pay for them. Every responsible person has an emergency fund on hand to cushion them against financial shocks which can occur from time to time.

4 A NEST EGG FOR THE FUTURE

Saving money means you are able to build up a nest egg for the future. If you are a responsible person you will have a retirement scheme of some kind where a portion of your pay goes into the fund. In New Zealand it is called Kiwisaver. I can not stress enough how important it is to be enrolled in Kiwisaver if you are from New Zealand. The government incentives make this scheme a no-brainer. Your country will have its own scheme with it’s benefits.

5 TAKE ADVANTAGE OF SPECIALS

If you have no money then you will not be able to take advantage of specials. That does not mean you should spend money on something for no other reason than it is special. Your own common sense and self-control should be employed here.

6 A DOLLAR SAVED IS A DOLLAR MADE

There is a saying that a dollar saved is a dollar made. The truth is a dollar saved is better than a dollar made because you do not pay tax on a dollar saved which is not the case when you make a dollar. Every dollar which you save can be working hard for you in whatever investment you place it in.

A competent money manager will not have any room in their vocabulary for such words as debt, credit, credit card, loan, lay-by, or hire purchase. In fact these are all dirty words to the person who wants to get financially ahead.

Having said all of this, there can be times when borrowing money can be worthwhile.

But…

And it is very big but.

You have to be absolutely sure that the payoff is worth your while.

Take a student loan for example; You need to be absolutely sure that the type of job which the course qualifications assist you with is something that you really want to do, otherwise the whole course will be a waste of time and money.

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Offshore Banking – Fiction Vs Fact

FICTION: Offshore banking can’t be that good because they can’t really pay the high interest rates they offer. If they could really pay those rates then U.S. banks would try to be competitive and have the same interest rates.

FACT: Examine closely the financial statements of any U.S. Bank. You will see that their “gross” profits against customer deposits can range from 25% to 40% — but — they have laws written in stone to limit the interest amount they can pay customers on their deposits. The U.S. banks place their earnings into unnecessary frills and non-productive expenditures like fancy buildings etc., while offshore banking facilities don’t do this and share their profits with their customers.

FICTION: Offshore banking isn’t regulated, so you are at risk of losing all money deposited with them.

FACT: The truth is that every country in the free world has regulations, rules and laws governing financial institutions and banks. Those regulations, rules, and laws, however, are much less restrictive than the “protectionist” U.S. banking regulations, rules, and laws and allow the offshore banking industry better opportunity to earn much greater profits for their investors and depositors.

FICTION: Offshore banking facilities are not insured by the F.D.I.C.

FACT: Some of the banks are but not that many. If they are, they must comply with the same protectionist banking regulations and rules as all the other F.D.I.C. insured banks. But, the majority of offshore banking facilities are insured; one way or another.

Depositor insurance programs similar to the F.D.I.C. program have been established in some countries, so that the banks in those countries have their deposits insured. Independent insurance companies insure the deposits of offshore banking facilities in other countries AND unlike the F.D.I.C., insure 100% of the banks deposits; not just those under $100,000. (By the way, some of the banks in the U.S. insure their deposits with independent insurance companies and many banks in the U.S. are not F.D.I.C. insured)

Offshore banking is “self-insured” for the most part which means those banks have a liquidity factor equal to 100% (or more) of the deposits on the books. Those banks have $1 (or more) in liquid assets for every $1 held on deposit. Therefore, there is no bank run because they can cover any depositor demand.

Self-insured offshore banking is actually more secure than F.D.I.C. insured U.S. banking. Why? Because the F.D.I.C. insured U.S. banks are permitted to maintain a liquidity factor equivalent to approximately 10 percent of their public deposits. (Is it any wonder why more U.S. banks fail each year than in any other country?)

Which kind of bank would you feel more safe having your money in? An offshore banking institution which as one dollar in cash for every dollar on deposit, or a U.S. bank which as ten cents in cash for every dollar that shows up on the deposit statement they give their clients?

FICTION: Offshore banking isn’t as big or strong as U.S. banking.

FACT: Of the strongest and largest big banks in the world (in assets), one bank ONLY is located in the United States:

Here are the safest offshore banks in the world, according to a ranking done in 2007 after examining their total assets in US dollars. This ranking is compiled from balance sheet information included on AllBanks.org

1 UBS AG Switzerland 2 Barclays UK 3 The Royal Bank of Scotland Group UK 4 Deutsche Bank AG Germany 5 BNP Paribas SA France 6 The Bank of Tokyo-Mitsubishi UFJ Ltd Japan 7 ABN AMRO Holding NV Netherlands 8 Societe Generale France 9 Credit Agricole SA France 10 Bank of America NA USA

2008/2009 UPDATE AFTER THE FINANCIAL COLLAPSE OF 2008

Germany’s largest bank, Deutsche Bank AG, reported a fourth quarter loss of about $6.3 billion. A year earlier, the bank posted a profit of about $1.3 billion (1 billion euros), Bloomberg reported.

Royal Bank of Scotland is expected to post losses of as high as £1.7 billion.

Bucking the trend is a bank not even on the list above and that bank is Standard Chartered bank which is expecting to post profits of 1.3 billion pounds. I have a contact who can help you open an account at this bank for your company if you desire to do so. The account would be in Hong Kong.

Another bank I know about is rated AAA by an independent rating service and if you are not from the U.S. or if you are from the U.S. and have a foreign LLC or IBC to open the account with then you can deposit $15,000 and get involved in their borrow low and deposit high program which has earned depositors as much as 100% per year on their deposit. It is easy to open an account there.

FICTION: Offshore banking must not be very good, or more facilities would advertise their services in newspapers and magazines in the U.S.

FACT: Offshore banking in general is restricted by law from advertising in magazines, newspapers, radio and on T.V. unless they come under the same protectionist rules and regulations that are placed upon U.S. banks. Knowing that, you should be cautious about doing business with any offshore banking facility that publicly advertises in the U.S. media. Because you can be very sure that they have sold-out to the U.S. banking establishment and that establishment will end up selling you out to those who make the rules.

FICTION: Offshore banking is only for the wealthy.

FACT: About 25 years ago, that may have been true. But I know of about three offshore banking facilities that will allow you to open an account for as little as $500. One of these is in the Asia, another in Europe, and another in Latin America.

FICTION: Opening an account at an offshore banking facility is too difficult, and it is very difficult to get a withdrawal when you need it.

FACT: Opening an account at an offshore banking facility is easy because you just follow the instructions they give to you. Getting your money out only requires a request that you fax or email with an attachment included.

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