Today, every resident of Nigeria can access the global currency exchange. This is the vastest market in the world as close to 6 trillion US dollars circulate there daily. Currency trading is booming: now, you can monetize knowledge and earn money without leaving your home. Everything is done remotely, which is another attractive benefit. ECN brokers are professional intermediaries that provide you with access, guidance, and tools.
Most Important Financial Statements
When you’re looking for a company to invest in, you’ll want to do some research. Typically, you’ll have two options, technical analysis or fundamental analysis. Personally, I use fundamental analysis, so today we’re going to go over the most important financial statements you need to look at when conducting your research.
There are three financial statements you need to pay attention to, income statement, balance sheet, and the statement of cash flow.
Income statement
The income statement is also known as the profit and loss statement. It shows the revenues and expenses for a given time period, typically on a per quarter basis.
You’ll gain some unique insights from an income statement, including an overview of operations, management efficiency, comparison to peers, and net income. Net income = (revenue + gains) – (expenses + losses).
There are two types of income statements. Single-Step and Multiple-Step. Single-step is one simple calculation ((revenue + gains) – (expenses + losses)). Multiple-step separates operating “net income” from non-operating “net income”.
Balance sheet
The balance sheet is just as straight-forward as the income statement, except it shows assets and liabilities instead of revenues and expenses.
That means a balance sheet displays what a company owns and owes. It also shows how much is invested by the shareholders.
Statement of cash flow
The cash flow statement provides data that shows a company’s operations, where the money is being spent, and how that money is being spent.
This data is broken down into three categories: operating activities, investing activities, and financing activities.
Operating activities will show the following information:
- Accounts receivable
- Accounts payable
- Depreciation
- Inventory
- Wages
- Income tax
- Rent
- Cash receipts
Investing activities are any money spent on the future of the company, which could include equipment, R+D, property, and other assets.
Financing activities include debt issuance, stock issuance, dividends, interest payments, and stock buybacks.
Analysis
As I mentioned in the beginning, when doing research, you’ll fall into two camps. Technical analysis or fundamental analysis.
Technical analysis views everything as a security. A technical analyst will use charts and trading information to identify investment opportunities.
Fundamental analysis views everything as a business. A fundamental analyst will use the above financial statements to pass judgment on companies.
What to look for
If you are doing fundamental analysis and you are looking at these financial statements, there are certain things you want to see.
- Balance sheet, income statement, and cash flows should be positive – Negative numbers either means they’re making less than they spend or they owe more than they own (in the case of the balance sheet).
- Efficient operations – theoretically, you could see this on all three statements, but it will be most prevalent on the statement of cash flows. The operating revenues should be significantly higher than operating expenses (at least that’s preferable). However, this should be cross-referenced with the company’s peers (certain industries have higher margins than others).
- Low outstanding liabilities – Less future earnings going towards interest and paying off debt, and more going to investing activities. This is especially favorable near the end of the business cycle, as revenues typically drop. Fewer liabilities could mean healthy margins even when revenues dip.
You’re investing in a business. You want to see that management is using capital effectively, and they’re not biting off more than they can chew. Positive financial statements and healthy margins.
Related reading:
What Can You Learn From Different Market Environments
Cash Flow Analysis and Budgeting
My name is Jacob Sensiba and I am a Financial Advisor. My areas of expertise include, but are not limited to, retirement planning, budgets, and wealth management. Please feel free to contact me at: jacob@crgfinancialservices.com
Here’s How to Redeem Your Old Saving Bonds
Today, a surprising number of people may have old savings bonds lying around. Many Millennials received them as gifts when they were children. Many often tucking them away and forgetting about them until digging into a file much later. Luckily, forgetting about these savings bonds wasn’t a bad thing. As there’s a good chance they are now mature. If so, redeeming that old savings bond becomes an option. If you’re trying to figure out how to cash savings bonds that you’ve found. Here’s what you need to know.
Tamila McDonald is a U.S. Army veteran with 20 years of service, including five years as a military financial advisor. After retiring from the Army, she spent eight years as an AFCPE-certified personal financial advisor for wounded warriors and their families. Now she writes about personal finance and benefits programs for numerous financial websites.
Money Anxiety
Money anxiety is not an official mental disorder but is often treated. It manifests itself in a variety of ways, but I want to explain how anxiety and money affect my own life.
As I’ve mentioned here before, I have been diagnosed with anxiety so my feelings and experiences may be amplified to what you feel.
When it comes to money anxiety, I experience it in a few different scenarios.
Pleasing people
Your willingness or ability to spend money in a relationship should not determine the strength of that relationship. If that’s the case, is that a relationship really worth having?
In my case, it’s directly correlated with my former spouse. She got dealt a few bad hands in life, so I was willing to spend beyond my means to make her happy. Not that the spending inherently would make her happy, it was more of a reluctance to say no due to financial constraints.
That inability to say no stuck me with debt that set me back on my personal finance journey. Obviously, there are other personal factors that resulted in these circumstances, but that’s the gist.
Fitting in
I’ll echo what I said in the first section, your willingness or ability to spend money in a relationship should not determine the strength or quality of that relationship.
Thankfully, I’ve learned from/outgrown this, but it used to be a real challenge for me. Growing up, I never really felt like I fit into a particular friend group. So I developed relationships that I’m thankful for now but otherwise appeared destructive.
Destructive from a personal and financial perspective. As I said, I’ve since outgrown that tendency, but it’s something to be aware of for yourself.
Long-term thinking
This section will specifically talk about my house. The one I’m currently renting. Before we bought that one, we were two years into a mortgage in a different city. The plan was to live there until my son was school-age, and then we’d move to a city with better schools.
The house we ended up buying, I found on a whim. We looked at it, loved it, and put in an offer. It stretched us SUPER thin from a financial perspective. I mean, exhausted all of our savings (including retirement), and we were incredibly close to being negative on our budget.
I knew in my heart that it was the right long-term decision, and I was willing to go through the pain/struggle in the short term for it.
Little did I know that circumstances would change dramatically in the next year or two. Plan for the long term, but also plan for short-term variances (even the dramatic ones).
What I know
Because of my profession, my training, and what I’ve read, I’ve seen what happens when you make poor decisions.
That said, many (if not all) of my financial choices are heavily scrutinized. When I say “financial choices” I mean the larger ones. Day-to-day spending and bills are factored into my budget, though I do a review (as you should) regularly to see where I can trim excess spending.
When I make a financial decision, my money anxiety kicks into gear, as I always second guess myself. I run through the possible scenarios that could play out.
Tim Ferriss calls it fear-setting. The Stoics call it premeditatio morum. It’s a practice of expecting the worst and planning for them as they will happen. Expect the worst, hope for the best. Not a bad thing to do, in money and in life.
My Last Reflection
Related reading:
My House and What Brought Me Here
Living with Anxiety and Depression
My name is Jacob Sensiba and I am a Financial Advisor. My areas of expertise include, but are not limited to, retirement planning, budgets, and wealth management. Please feel free to contact me at: jacob@crgfinancialservices.com
Why Copyright and Intellectual Property Matter as a Small Business
The term intellectual property (IP) often comes up, especially in terms of well-known brands and products, but what exactly is it? Intellectual property covers ideas, innovations, and inventions created by a person or a group of people (can also be anything from a company to small business). [Read more…]
How Long Does Bankruptcy Stay on Credit Report?
Filing for bankruptcy is a tough decision to make. It can provide relief when you’re drowning in debt, but it does have consequences when it comes to your credit. How long does bankruptcy stay on your credit report?
We’re going to explore the answer to that question, as well as a few other items, in this article.
What is bankruptcy?
It’s a legal proceeding when an individual or an entity is relieved from some or all of their debts. Whether it’s all or some, and how that process takes place depends on the type of bankruptcy that’s filed.
- Chapter 7 – Liquidable assets are sold in order to pay off debts. When those assets are exhausted, the remaining debt is discharged.
- Chapter 11 – The most expensive option, which is usually used by companies (General Motors and J.C. Penny, for example). This is a reorganization plan that enables companies to remain open while getting their financial obligations situated.
- Chapter 13 – Only available to individuals. The person filing implements a payment plan and is typically able to keep their assets (house, car, etc.). The debt must be paid off in 3 to 5 years.
Federal student loans are often excluded from being discharged, so you’ll be on the hook for that.
Let’s take a look at how bankruptcy affects your credit report.
How it affects credit
I’ll state the obvious by telling you that bankruptcy negatively affects your credit. Typically, you can expect your score to drop by 20-25%. This also depends on your current credit score and credit strength.
Discharges on more accounts and/or accounts with higher balances will affect your score more than discharges on a small number of accounts and/or low balances.
Delinquency usually proceeds bankruptcy and those stay on your report for 7 years. Chapter 7 bankruptcy stays on your credit report for 10 years, while chapter 13 stays on for 7 years.
What to do after
Inspect your credit report with a fine-toothed comb. Make sure that the debts discharged were actually discharged. If you find errors, go through the proper channels to get those corrected.
Once you’ve filed, you can immediately start building your credit back up. The first step is to ALWAYS pay your bills on time. I’ve stated before that on-time payment history is the number one factor when calculating your credit score.
The next step is to open a credit account. This should be something small and manageable. I often suggest a secured credit card. With this type of account, you make a deposit and that deposit acts as your credit limit.
Establish a positive payment history and keep your utilization well below 30%.
Bankruptcy on your report
You don’t have to do anything to remove the bankruptcy from your credit report. It will fall off on its own.
Review your credit report once the 7 or 10 year period ends. At that point, depending which type you filed, the bankruptcy should come off.
Give it a few months as your credit report often lags a little after the activity actually took place.
Stay diligent. Bankruptcy is not a death sentence, it’s a fresh start. Pay on time, keep your utilization low, and keep your spending in check.
Related reading:
How to Answer a Civil Summons for a Credit Card
What You Need to Know About Bankruptcy
What Affects Your Credit Score
My name is Jacob Sensiba and I am a Financial Advisor. My areas of expertise include, but are not limited to, retirement planning, budgets, and wealth management. Please feel free to contact me at: jacob@crgfinancialservices.com
The Importance of Being Handy
Perhaps it is just within my circle, but it seems that the character trait or the skill of being handy has lost its value.
People seem unable to fix simple things. Around their house, their car, what have you.
I’m curious if the majority of people know the difference between a Phillips head screwdriver and a flathead screwdriver.
At no time was the importance of being handy more clear than during the last few months, when the entire country went into lockdown. You never know when that service you rely on will be unable to help you.
My Experience
My dad taught me from an early age the importance of being able to fix things yourself and the value of a strong work ethic. Those may seem unrelated, but I believe they are directly correlated.
I watched him and helped him with all of his projects. Plumbing, changing the oil on his car, renovations, replacing his brakes, you name it.
Not only did it save him and us, as a family, money, but it was quality time I got to spend with him. There were valuable lessons taught in those experiences.
Now, I can fix almost anything. It gives me a sense of pride, it saves me money, and now, it’s making me money.
At my last apartment, I was the go-to handyman for our complex. They took a small chunk off my rent and paid me by the hour when I was on a job. Saving and earning at the same time.
Now that I’ve moved, I no longer am the go-to for that complex. Instead, I’m the go-to for all rental units owned by that investor in my city. That’s an incredible opportunity for me to make money outside of my normal 9-5.
Growing up, did I think this kind of circumstance would come upon me? Of course not. But that’s the thing. No matter how you think your life will turn out, it hardly goes that way.
You have to vary your knowledge and competencies across a range of industries. You truly never know what will fall into your lap.
From there, we’re going to take a hard right turn into a different topic
Consumer Math
This is something that should have been on my radar, but it wasn’t. Until this morning. My cousin is taking a consumer math course, and after learning about what it was, I have to promote it.
You can find a consumer math course anywhere, and they all teach the same thing.
Math for real-world situations.
It’s basically a personal finance course. It teaches things like budgeting, taxes, loans, buying a car, wages, deductions, spending, and transportation.
These are topics that everyone should be knowledgeable about, as they lay the foundation for your financial life. Ace these, and you’re steadfastly in the driver’s seat of your finances.
Quick Wrap-Up
Above, we covered two things. Being handy and having a wide range of knowledge can help you later in life, and how having a foundational understanding of consumer math puts you in control of your finances.
Both of these are vitally important but dramatically undervalued by the masses.
Related Reading:
My Life and How I Manage Stress
How to Teach Your Kids About Money
Why Financial Literacy is Important
My name is Jacob Sensiba and I am a Financial Advisor. My areas of expertise include, but are not limited to, retirement planning, budgets, and wealth management. Please feel free to contact me at: jacob@crgfinancialservices.com
5 Surprising Things Not Covered By Homeowners Insurance
Overall, homeowner’s insurance is fairly comprehensive. It financially protects you from the burden associated with a variety of potential events. This ensures that you can move forward with repairs or replace stolen or damaged belongings. However, homeowners insurance doesn’t cover everything. In fact, there are some gaps that many don’t expect. These gaps can lead to a rude awakening if certain kinds of events occur. If you are wondering what is not covered by homeowners insurance. Here are five things that usually aren’t.
Tamila McDonald is a U.S. Army veteran with 20 years of service, including five years as a military financial advisor. After retiring from the Army, she spent eight years as an AFCPE-certified personal financial advisor for wounded warriors and their families. Now she writes about personal finance and benefits programs for numerous financial websites.
How to Answer a Civil Summons for Credit Card Debt
You do what you can, but sometimes debt gets out of control. If you get far enough behind on your credit card payments, eventually, the lender or a debt collector will file a suit against you to get what they’re owed. In this article, we’ll explore what a civil summons is and what to do when you’re faced with one.
What is a civil summons?
Generally speaking, a civil summons is when a governing body, individual, or organization files a lawsuit or judgment against another individual or organization.
The document indicates the reason for the suit or administrative action. It also listed pertinent information, such as the time and date of the first hearing, details about the plaintiff and defendant, and the amount of time the defendant has to respond.
A civil summons with regard to credit card debt usually occurs when the account reaches “charge off” status. Charge-off status usually happens between 120 and 180 days.
With that said, here are the steps you need to take.
Don’t ignore it
This is the worst thing you can do. The suit will continue, whether or not you respond. If you don’t respond, the court will issue a ruling in favor of the lender.
That means you will be forced to pay what’s owed. They may also tack on attorney fees, court fees, and interest to your balance.
Negotiate
Get in touch with the lender/collector that filed the suit, and see if they will accept a lower amount.
The filer may ask for a lump sum or a series of payments. The negotiated amount can range from 40% to 80% of the original balance.
Who filed the suit also makes a difference in negotiation. If the lender is after you, they will be less willing to negotiate a lower amount than a debt collector that bought the debt at a discount.
Research
If negotiation doesn’t work, it’s time to build your defense. Get a hold of the lender or collector again and gather information.
- Check through your records to confirm if the debt owed belongs to you – do the amount and the original lender match up? Is it yours?
- Get a chain of custody records – does the filer have the legal right to do so?
- How long have you owed the debt – the statute of limitations could forbid the suit based on how long you’ve owed it
- Get proof from the filer – are their records accurate? Is the information listed correctly? If the filer has missing or incorrect information, this can work in your favor.
- Get copies of everything – accurate and complete documentation is very important
Talk with a professional
Get a consultation. Often, these are free. At the very least, it’ll help get a better understanding of what you’re up against and what you should do.
If money is tight, there are organizations, like lawhelp.org, that will provide an attorney that volunteers their time.
If money isn’t as tight, vet and hire an attorney to help your cause.
Go to court
If negotiation and settling outside of court don’t work, then it’s time to go to court. Here’s what you have to do.
- Formally answer the summons with the court. This has to be in writing and generally, you have to answer within 20 to 30 days of receiving the summons.
- In your reply, you have three answer options: admit, deny, or lack of knowledge. Admit it’s your debt, deny it’s your debt (only if you’re 100% sure), or attest that you don’t have enough information to say otherwise.
Options after court
If the ruling goes your way, there’s not much else to do. However, there may be terms you need to settle on, depending on what the judgment was, so you may not be completely out of the woods yet.
If the ruling doesn’t go your way, you have a few options.
- Try negotiating with the lender/collector again.
- Pay the amount mandated by the court
- Argue the ruling by filing an appeal
- File for bankruptcy
- This is the last resort and should only be used if there’s no way to pay back what you owe.
Credit score
Your credit score will take a big hit throughout this process.
- Prior to 30 days late, it won’t affect your credit score, but you will be charged late fees (most likely).
- After 30 days, a late payment will show on your report. On-time payment is the number 1 factor when calculating your score, so expect a significant drop.
- The impact late payment has on your credit gets worse as you pass 60 and 90 days.
- As stated, a suit normally isn’t brought against you until 180 days late. At that point, the account is listed in “charge off” status and that will really hurt your score.
Obviously, you want to do everything possible to prevent being served a summons for your being behind on your credit card bills, but if you get there, these are the steps you need to take.
Related reading:
What Happens When You Fall Behind On a Mortgage?
What You Need To Know About Bankruptcy
What Affects Your Credit Score
How To Pay Off Credit Card Debt
My name is Jacob Sensiba and I am a Financial Advisor. My areas of expertise include, but are not limited to, retirement planning, budgets, and wealth management. Please feel free to contact me at: jacob@crgfinancialservices.com
Here’s Why Refinancing Your Car Is A Bad Idea
If your budget is tight and you are struggling to keep up with your monthly obligations, finding a way to lower your auto loan payment might seem like a smart move. Usually, car payments are one of the largest expenses in a household for those with an auto loan. The average new vehicle loan payment comes in at $554, while the average for used cars sits at $391. If refinancing lets you lower that amount, going through with it may be enticing. But refinancing a car isn’t always the best way to go. In fact, it can get you into some financial trouble if you aren’t careful. If you are considering an auto loan refinance, here’s why refinancing is a bad idea.
Tamila McDonald is a U.S. Army veteran with 20 years of service, including five years as a military financial advisor. After retiring from the Army, she spent eight years as an AFCPE-certified personal financial advisor for wounded warriors and their families. Now she writes about personal finance and benefits programs for numerous financial websites.
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