Debt Management - Increase Your Available Income

Therefore, for those who want to pursue the above tasks, the following tips will be of great help as they explain different ways of increasing income and reducing outstanding debt.

Your available income is the money you have after taxes and expenses. This variable is of significant importance when it comes to keeping a healthy financial situation. Your available income should let you build saving for whatever projects you have and also keep a well funded emergency savings account so you can face whatever predicament you may run into without being forced to resort to financing through credit cards or loans.

Increasing your Income

As stated above, a simple way of increasing your available income is to increase your income regardless of your expenses. This can be done by getting promoted or obtaining a raise, getting a second job or switching jobs and investing your income or your savings to generate revenues.

All these ways of improving your income work whether you reduce your expense or not as long as you don't increase them in the same rate. Therefore, you need to make sure that whatever decision you make doesn't increase your expenses too unless the income surpasses that spending increment.

Sometimes, in order to get promoted or obtaining a raise you just need to show interest or ask for it. Talk regularly with your bosses if possible to know what they expect and want. That way you will be able to act according to their expectations and desires boosting your chances of getting a raise. If you think that at a particular company there are no prospects of improvement, don't hesitate to switch jobs whenever possible.

Remember however, to let your bosses know if you have received an offer, they may be willing to improve it. Getting a second job may sound dramatic but there are many people that do that in order to obtain more income. It doesn't have to be definite but it should provide with more income for a short period of time and if you use the money wisely you can start reducing the amount of hours you work within a short time frame too.

Investing your income and savings is an excellent idea. There are many investments that pay interests periodically thus providing you with more income each month. For instance, if you are conservative, there are certificate of deposits that can last a year or two but pay interests every month. If you like to take higher risks and expect higher returns, there are investment funds that can provide you with the same benefits and higher rates of return.

Reducing Expenses

The counterpart of increasing your income to increase your available income is the reduction of your expenses. The best way to address this issue is to budget all your expenses and get rid of unnecessary ones. Keep a list of your expenses and do some research as to whether there are cheaper options for the same goods or services. A good example of this is telephone communications.

There are always new promotions providing cheaper communication solutions you can take advantage of thus reducing your spending. By reducing the amount of money you spend each month, you will be able to increase your available income significantly.

Kate Ross has a Master in Finance and has been associated with Poor Credit Loans for many years. She specializes in helping people to get approved for personal loans, debt consolidation programs, home loans, unsecured personal loans, bad credit auto loans, guarantee credit cards among many other financial products. For further information, please visit http://www.speedybadcreditloans.com

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How Do the Investment in Company Deposits Compare With Other Fixed Income Instruments?

A large chunk of Indian investors look out for fixed income saving instruments, which comprise of several products ranging from bank fixed deposits, postal savings, government bonds and public provident fund and income funds or liquid funds schemes of mutual funds, to name the few. Of all the fixed income instruments, bank fixed deposits perhaps account for more than 50% of Indian Savings. During the past one and half year, interest rates on bank fixed deposits (also called as term deposits) have come down drastically. Nowadays, the interest rates on bank term deposits of nationalized banks and major scheduled banks are in the range of 6 to 8% depending upon the tenure and the popular postal savings such as NSC, KVP and PPF offer 8%. It is obvious that the Investors would look out for better alternatives in the Fixed Income Products.

If you are seeking higher returns than bank deposits and postal savings and if you do not want to lock in your funds for longer durations, you might consider investments in company deposits, which offer returns in the range of 9% to 12%. Although the returns on company deposits are much better than any other fixed income instruments but you must understand various aspects such as risk, liquidity, taxation and returns before you make up your mind to invest in company deposits. Here are few salient features of investments in company deposits.

Risk: Company deposit is an unsecured loan for the company, that is, as an investor you do not have any lien on the assets of the company. In case the company is facing financial difficulties or it is likely to become bankrupt, lenders of secured assets would get the first priority and your turn comes only after all the secured loans have been repaid by the company. As compared to company deposit, bank deposit is much safer because the repayment of the deposit up to rs. 100,000 is guaranteed by DICGC (Deposit Insurance and Credit Guarantee Corporation of India). Safety of your deposit depends upon the overall financial health of the company.

Liquidity: Although the Company Deposits are issued for the tenure ranging from 1 to 5 years but the Company Deposits are neither Listed on the Stock Exchanges nor Transferable. Generally, the conditions for premature withdrawal are not favorable and therefore, Company Deposits may be termed as more illiquid as compared to Mutual Funds and Bank Deposits.

Taxability: Interest Income from Company Fixed Deposits is taxable in the hands of the Investor and the issuing companies are supposed to deduct tax before paying interest to the investors. The interest income has to be shown under the heading "Income from Other Sources" in your Income Tax Return. You must take the decision to invest in the Company Deposits based on the Tax Bracket applicable to you.

Return: Rate of Interest varies with the companies. Many companies offer the deposits with cumulative interest option with monthly, quarterly or yearly cumulative interest in which case the interest earned gets reinvested at the same interest rate and thus resulting in better yields. Options with monthly cumulative interest provide the highest effective yield. At present, the effective yields on deposits of various companies are in the range from 9% to 14%.

How to Invest: Nowadays, many Online Stock Trading Companies and Brokerage Houses such as HDFC Securities, and ICICI Direct offer online and offline investment facility in Company Deposit.

Factors to be kept in mind while investing in Company Deposits

· Know about the financial position of the company:

· Know the Promoters and their track-record.

· Look out for the profit making companies and the ones that regularly pay dividends.

· Check out the ratings given by Credit Rating Agencies such as CRISIL and CARE.

· Keep a watch about any adverse reports or news about the company.

· Ascertain about the servicing standards such as Mode of Interest Payment and Repayment of Principal Amount, and promptness in the issuance of TDS certificates.

· Learn about the penalties and other terms and conditions for premature withdrawal

· Don't park your funds with one Company. Spread the funds and invest in the Companies engaged in different sectors.

· Risk involved in investing with smaller companies is definitely more than the risk of investing with large corporates of the likes Tata Motors, HDFC etc.

The Author is a Techno-Commercial Consultant and Freelance Content Writer.

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