The one thing that will reveal to you the gaps in your current financial situation is capital projects. A capital project is any project that is beyond your current and future financial capacity to execute. For most people, capital projects lead them into debt. Debt and Capital projects go hand in hand because the income of most people is still struggling to meet basic bills. And in instances where income is high, expenses overwhelm income. So whether you are a high-income earner or a low-income earner, the chances are high that you will struggle to fund certain capital projects in your life.
To fund capital projects, you need four things to be working simultaneously in your life. The First thing is your ability to earn high incomes. The second thing is your ability to keep a major part of that income. The third thing is your ability to grow that income without losing it. And the fourth thing is your ability to build solid Passive Income that exceeds your current Active Income. These are the four things you need to fund capital projects debt-free. Unfortunately, only a few people know how to do all four things correctly. Certain people hardly thrive in one area. But, if funding capital projects debt free is important to you. You must know how to do all four things well or surround yourself with people who can help you.
Funding a capital project debt-free is a difficult task to achieve if all you have is a modest income and meager savings. The lower your income the more things become capital projects to you. This means that what is a capital project for you may not be capital projects for another person. To help us unify our definition of capital projects. Let us use an example of capital projects that we all agree is the most difficult to fund debt-free. This example is Homeownership.
Homeownership is a type of capital project and one of the most popular capital projects because many people want to achieve it. By the time you are an independent adult, the desire for homeownership is already burning inside of you. This desire comes from parent influences, external pressure, and the frustration of paying rent to a homeowner. Owning a home is thus one of the most universally accepted capital projects with a global desire. It is also the most expensive capital project to fund. Yet despite its expansiveness, most people want to achieve it. Every year millions of people attempt to climb the homeownership ladder. A few of them make it. Many of them are buried in debt. And many more fail to achieve it. This is because the desire for homeownership does not automatically translate to owning a home. And here is why.
Many people are trying to own a home on the fragile back of a low income and low savings. The truth is one income, and low savings cannot fund the homeownership project. To fund your dream home you need multiple streams of income and big portion savings. Second, you need to overcome the temptation of owning a home too soon. Many people rush to own a remote and low budget home. A home where people struggle to come to due to its distance and neighborhood. Owning a home is not about being the first to own a crappy home. It is about being the first to own the dream home in a dream location and to do it debt-free. Attempting to own a home too soon is the reason most people end up with crappy homes that are way below their league. Homeownership is best achieved at a time when you are most financially capable to fund it. This is not to say you just sit and do nothing before then. But to say that you use that time to build the solid cash reserves you need to fund your dream home.
So how then do you fund your dream home?
To fund your dream home there are three paths you can take.
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The first path is the Loan path. This is where you borrow money and end up in debt. The second path is the bootstrap savings path. This is where you painstakingly save your way to homeownership. Only a few people ever achieve this. The third and most effective path is to create your own interest-free solid cash reserves and then use them to fund your dream home. This is the Path we will be dwelling on in this article.
So how then do you create your own interest-free cash reserves?
To create your own interest-free cash reserves there are four things you must do.
The First is to develop Income security skills. The second thing is to leverage a complementary Side Hustle. The third thing is to establish a Financial defense System. And the fourth thing is to use a multipurpose, high interest yielding investment vehicle to build your cash reserves. Below I explain each of these points in detail.
Develop Income Security Skills
There is only one way to secure your income in the world. This way is not to secure your job. But to develop high-income skills that preserve your ability to earn high incomes. The truth is there is no job security out there and since homeownership is a long-term process. You need certain skills to guarantee a continuous flow of cash. There are three income security skills that can help you achieve this. The first is problem-solving or creativity skill. The second is Relationship building or Networking skills. And the third is marketing and sales skills. These are the three skills you need to secure your homeownership income. And ensure you are never recycled back into the pool of broke people. Developing income security skills is thus critical for funding your dream home. The key to success here is to invest in developing and refining these skills. And to put them to practice and perfect them. If you need help developing these skills or practicing and perfecting them send an email to [email protected]
Get a Complimentary High Income Side Hustles
No homeownership project can be funded debt-free from a single meager source of income. Thus to fund your dream home you have to grow your main income and add another source of income to it. To grow your main income you need to rise to positions that have a direct impact on profit and revenue. Then you need to find a side hustle that complements your main income.
The problem is most people do not know the side hustles that complements their main income. They are also concerned about whether or not they will like this side hustle or make the desired income out of it.
The key to identifying the side hustle that is right for you is to consider these three things. The first is your interest. Can you do and promote this side hustle easily? The second is the income speed. How soon before this side hustle produces the kind of income that you desire. And the third is the workload and time requirement. How much time do you have to invest to generate the kind of income that you desire? Adding a side hustle that increases workload. Consumes time. Reduces job efficiency and drains current income is a mistake. The key here is to identify side hustles that complements your main income. And ensure that your side hustle has the high-income capacity and is aligned with your area of interests
To find this kind of side hustle you need to identify your current area of interest. So if you are reading this article right now. Chances are high that you are interested in making more money and funding capital projects debt-free. If you can find other people within your circle who are also interested in making more money. And funding capital projects. And if you and these people are willing to invest in products and services that can help you. You can make a high-income side hustle from it. Granted that the product or service you promote solves a high-income problem. Thus to earn high incomes you need to choose side hustles that can pay you high income. Getting rich through a side hustle is thus about first solving your own problems. And then showing other people how you can help them solve the same problem. This is the fastest way to get on the High-income side hustle ladder. Every other way takes time, produce low income, and increases your workload. To fund your dream home debt-free. You must choose side hustles that require you to work less earn more and produce income in less time. This is the fastest way to fund your dream home.
Build Your Own Personal Financial Defense System
The worse way to try and fund a capital project such as homeownership is to do it without a financial defense system in place. A financial defense system is a system that can provide you income in the presence or absence of a Job. This is important because homeownership is a long-term project. And you need the continuous flow of income to survive.
So how do you build a solid financial defense system that protects you throughout the homeownership process?
To build a solid financial defense system there are four things you must do. The first is to hit a big portion savings target. The second is to make your savings failure-proof. The third thing is to shield your savings from financial distractions. And the fourth is to spend in the direction of Freedom.
- Achieve a Big Portion Savings Target
Saving is a critical part of every investing activity. So if funding your dream home is important to you. You must save a significant part of your income. To save 50% of your income for example there are two things you can do. The first is to increase your income, to the point where it overwhelms your expenses. To do this you need high-income skills and high-income side hustles. The second thing is to reduce your expenses to the point it becomes lower than your savings. The fastest and most effective way to do this is to focus on increasing savings and not reducing expenses. And there are two ways to increase savings. The first is to increase savings by 1% every month until you hit a big portion savings target. Your expenses will adjust accordingly. The second way is to deduct a big portion of your income as savings from the source. And figure out how to live on what is left. If you survive after a month it means you can live on what is left. These are the two smart ways to increase your savings and invariably adjust your expenses.
- Make savings Failure Proof
One of the abilities you must have if you want to fund your dream home debt-free is the ability to consistently save without skipping it. Skipping savings is postponing your financial freedom and homeownership dream. Thus if you want to save without fail, you must make your savings failure-proof. To make savings failure proof you need to deduct savings from the source. Use compulsory savings vehicles such as group contributions or standing orders. And be accountable to someone you trust and respect.
- Shield savings from Financial Distractions
The biggest killer of all the savings in the world is financial distractions. The inability to stop unplanned events and people from stealing your savings. Financial distraction derails your saving from its original purpose. And this elongates your ability to own your own home. To own your own home you must shield your savings from financial distractions. To shield savings from distractions you need certain protective investment vehicles. You also need to assign a purpose to every idle fund. And to work with a mentor to keep idle funds tied up for the right purpose. This is the only way to fund your dream home in record time and without delays.
- Spend in the direction of Freedom
There are two ways to spend money. The first is to spend in the direction of freedom and the second is to spend in the direction of poverty. To Fund a dream home debt-free you must spend in the direction of freedom. When you spend in ways that use up big portions of your income. You are facing the direction of poverty. And when you spend in ways that save up bigger portions of your income You are facing the direction of freedom. The key here is to save more than you spend and spend in the direction of where you want to go.
These are the four things to do. To build a solid Financial defense system that supports you throughout the homeownership process.
Choose a Multi-Purpose High-Interest Yielding Investment Vehicle
There are many investment vehicles in the world. But the most suited and effective investment vehicle. For funding capital projects is the multi-purpose high-interest yielding long-term investment vehicle. This is a special purpose vehicle that has been designed to fund capital projects. It is a multi-purpose vehicle because it can fund many capital projects within the same time frame. It is also safe and high interest yielding because it is a long-term investment vehicle. So if you are considering owning a home debt-free at some time in the future. This is the best investment vehicle for you. The key to investing is to never lose money, especially when building towards a capital project.. Once you choose the right investment vehicles that preserve your investment. You will fund your dream home in no time.
The truth is you will remain the same person year after year except for your ability to make more money. Your ability to keep more money. And your ability to grow that money without losing it. The more you master these three abilities the richer you become. And the easier it will be to fund your dream home. There is nothing as powerful as having zero cash worries when you want to fund your dream home.
If you want to own your own home, make extra income, or fund capital projects debt free we can help you. Send an email to [email protected]
Grace Agada is The Senior Financial Happiness Director @ Create Solid Wealth. She is an author, and column contributor in six national newspapers. She is a contributor at BellaNaija, Nairametrics and Proshare and she is on a mission to help working-class professionals and CEOs become more financially successful. To learn more about Grace and how she can help you send an email to [email protected]
5C’s of creditworthiness: What lenders, Investors look for in a business plan
Business owners need to be aware of the criteria lenders and investors use when evaluating the creditworthiness of entrepreneurs seeking financing.
Banks usually are not a new venture’s sole source of capital because a bank’s return is limited by the interest rate it negotiates, but its risk could be the entire amount of the loan if the new business fails. Once a business is operational and has an established financial track record, banks become a regular source of financing.
For this reason, the small business owner needs to be aware of the criteria lenders and investors use when evaluating the creditworthiness of entrepreneurs seeking financing.
Will the business that an entrepreneur actually creates look exactly like the company described in the business plan? Of course, not.
The real value in preparing a business plan is not so much in the finished document itself but in the process it goes through – a process in which the entrepreneur learns how to compete successfully in the marketplace. In addition, a solid plan is essential to raising the capital needed to start a business; lenders and investors demand it.
Lenders and investors refer to these criteria as the five C’s of credit.
1. Capital: A small business must have a stable income base before any lender is willing to grant a loan. Otherwise, the lender would not be making, in effect, a capital investment in the business. Most banks refuse to make loans that are capital investment because the potential for return on the investment is limited strictly on the interest on the loan, and the potential loss would probably exceed the reward. In addition, the most common reasons that banks give for rejecting small business loan applications are undercapitalization or too much debt. Banks expect a small company to have an equity base investment by the owner(s) that will help support the venture during times of financial strain, which are common during the start-up and growth phases of a business. Lenders and investors see capital as a risk-sharing strategy with entrepreneurs.
2. Capacity: A synonym for capital is cash flow. Lenders and investors must be convinced of the firm’s ability to meet its regular financial obligation and to repay loans, and that takes cash. More small businesses fail from lack of cash than from lack of profit. It is possible for a company to be showing a profit and still have no cash – that is, to be bankrupt. Lenders expect small businesses to pass the test of liquidity, especially for short term loans. Potential lenders and investors examine closely a small company’s cash flow position to decide whether it has the capacity necessary to survive until it can sustain itself.
3. Collateral: Collateral includes any asset an entrepreneur pledges to a lender as security for repayment of a loan. If the company defaults on a loan, the lender has the right to sell the collateral and use the proceeds to satisfy the loan. Typically, banks make much unsecured loans (those not backed up by collateral) to business start-ups. Bankers view the entrepreneurs’ willingness to pledge collateral (personal or business assets) as an indication of their dedication to making the venture a success. A sound business plan can improve a banker’s attitude towards venture.
4. Character: Before extending a loan or making an investment in a small business, lenders and investors must be satisfied with an entrepreneur’s character. The evaluation of character frequently is based on intangible factors such as honesty, integrity, competence, polish, determination, intelligence, and ability. Although the qualities judged are abstract, this evaluation plays a critical role in the decision to put money into a business or not.
5. Conditions: The conditions surrounding a funding request also affects an entrepreneur’s chances of receiving financing. Lenders and investors consider factors relating to a business’ operation such as potential growth in the market, competition, location, strength, weakness, opportunities and threats. Another important condition influencing the banks is the shape of the overall economy, including interest rate levels, inflation rate, and demand for money. Although these factors are beyond an entrepreneur’s control, they still are an important component in a banker’s decision.
The higher a smaller business scores on the five C’s, the greater its chances of receiving a loan.
Written by Chukwuma Aguwa
Don’t be fooled by COVID-related scams
Always consult the institution in charge of health-related matters to confirm any fishy information you come across.
The nature of and the manifestation of the Covid-19 disease is such that there’s only a little time available to remedy the situation before it gets chronic. Although the infection begins by exhibiting mild symptoms, if you do nothing in a short time, it could lead to death in a matter of days.
This whole picture has caused many to become desperate about Covid-related issues, launching into panic mode at the sight of any information. As a result, such people are not far away from falling for fraudsters.
With the different kinds of news flying around, you mustn’t be fooled by Covid-related scams.
The Coronavirus threatens the health of millions of people around the world daily, also killing thousands along the way. To curb the spread and remedy the situation, bodies like the CDC, WHO, and every country’s local health organisation like the NCDC, frequently circulate information around communities. However, it has also led to fraudsters taking advantage to provide fake news, and even asking for donations.
Each day, there seems to be a new account or NGO asking for donations into the health sector, and though some are legit, many are just fraudsters posing to take advantage of innocent citizens. So far, numerous complaints about scams have been recorded, especially with people who are looking to support the health cause in any way they can.
Channels used for COVID-related scams
There are three major ways scammers take advantage of the haziness of the situation to dupe people. To start with, they appeal to the emotions of humans, who see the high death toll and suffering. As a result of what is happening, people have been willing to donate funds for medical supplies, isolation centres, and financial compensation for medical workers.
Scammers take advantage of this by posing as charity organisations and solicit for funds. Most times, as soon as their target is met, they clear their footprint without leaving a trace behind.
Another way they scam people is by manufacturing and selling fake or low-quality health products. Everyone wants to get their hands on a cure, or something that can at least protect them from the virus, and scammers are meeting their needs by providing just that.
The World Health Organization currently approves only one vaccine, and any other thing outside it is outrightly fake or just a supplement that will help your body. Currently, only the Pfizer vaccine is clinically tested and approved to work. Be sure to not throw your money in the wind by purchasing some of these fake drugs around.
Lastly, scammers create systems to extract a patient’s personal information, thereby having access to the person’s true identity. It could be in the simple form of opening a registration portal where you supply all your details.
Therefore, only give information to approved bodies and not any random online site that appears legit. These fraudulent individuals can do a lot of damage to your identity. Stay vigilant, only communicate with approved bodies, and always ask questions if you are not sure or suspect foul play.
The place of electronics in COVID-related scams
These fraudsters usually reach out to you through the digital sphere. Hence, watch out for cold calls, text messages, or emails requesting donations to certain bodies. The best way to confirm the legitimacy of such a message is to visit the organisation’s official website in a different browser. Never follow the link in the mail or text directly, as it can be easily embedded with spyware. Therefore, a single click could see them extract all your personal information, including bank details.
Also, please stay away from those who claim to have a cure, and accompany it with testimonies of people who have used it. They are low graders desperate for your money. Vet them by searching online and see what people are saying. In all, always look out for suspicious messages, and opt out if you are sceptical.
In a nutshell, you should not believe any cure, vaccine or supplement that the World Health Organization does not approve of.
The government or legit health institutions do not cold call citizens to request donations or coerce them into making one. If you receive a call out of the blues, chances are it’s a scam, which is why they mostly try to hurry you to donate before you realise it. Always consult the institution in charge of health-related matters to confirm any fishy information you come across.
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