November 2011

What is Compound Interest?

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What is Compound Interest?
Getting out of debt relies on many things but most of all it relies on you doing your research and working out how the system works and where you can start saving money. Knowledge is power and the more you know about loans and debt the more money you can save and the better off you will be financially. Learning about compound interest for instance can help you to save money on your loans and can help you to better choose your bank accounts.
Firstly then – what is compound interest? Well essentially the term compound interest means interest that increases exponentially over time – interest that is added to the ‘principle’ amount of money in the pot so that the next year’s interest comes out of the combined amount.
To make it it a little simpler imagine you have a bank account worth $100 and it was in a savings account with 2% interest. After the first year that money in the account would be $102, but after the second year of compound interest it would be $104.04 – because 2.04 is 2% of $102. If the account didn’t have compound insurance then at the end of the …

August 2011

The World Bank

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The World Bank
The World Bank is an international financial institution which lends money to developing countries so that they can carry out capital programmes – building the infrastructure necessary for society, economy or enterprise to operate. This might mean things like cars, roads, homes, council tax,power grids and other physical structures; or it might mean things like organization, financial institutions, law enforcement etc for governmental infrastructure. This then can provide those developing countries with the capital they need to facilitate their growth and organization. The bank itself will oversee many philanthropic strategies – such as poverty reduction strategies and the ‘clean air initiative’ to help improve air quality in cities.
The World Bank is made up of two groups the ‘International Bank for Reconstruction and Development’ and the ‘International Development Association’. The ‘World Bank Group’ is a term used to include these two institutions as well as three others (the International Finance Corporation, Multilateral Investment Guarantee Agency and International Center for Settlement of Investment Disputes).
The World Bank was formed at the Bretton Woods Conference in 1944 and is based in Washington D.C. It is custom for the World Bank to be headed by an American, and the current president is Robert …

June 2011

Debt To Equity Ratio

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Debt To Equity Ratio
The debt to equity ratio is the ratio of shareholders’ equity to debt used to finance the company those shares are for. It’s a relatively complex concept, but it is central to understanding how to value companies and shares and to understanding how businesses are financed. To understand this better though, we need to understand precisely what the term ‘equity’ means.
Essentially equity is the value of a company when put on paper. That is the net money that the company owns made up of things like – how much money the company put in originally, and how much profit it holds currently which it has not yet paid out to the owners as dividends. This does not include assets, and it does not include and various other things are also excluded such as ‘accounts receivable’ (the amount of money customers owe to the company). Essentially this means that the equity is the net value of the company, and it is what you own when you buy a share. One way to calculate the equity of a company then should be the value of the share, times the number of share holders. There are various kinds …

June 2011

Debt Ceiling

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Debt Ceiling
The term debt ceiling refers to the maximum borrowing power of a government i.e. country. For many this is an abstract concept which does not resonate as the serious and pressing matter that it is. Essentially when the Federal Government experience large deficits through spending more than it is taking in (through taxation), then it must be financed by debt. In other words the government, like you or I, needs to borrow money from time to time in order to finance its various projects – cleaning up the schools or the streets, or implementing new programmes meant to raise money. However if the government is unable to issue more debt or to borrow more money then this means that it has hit the debt ceiling, and that in turn means it can’t go ahead with the various expenditures. If the debt ceiling can’t be extended and the government can’t cut spending to lower the deficit, then it will.
 
Of course part of the question here is – where does the government get this money and who is doing the lending? And how high exactly is this debt ceiling?
Well the answer is that there are many lenders and many …

May 2011

The Importance of Calculating Your Debt and Finances

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Calculating Your Debt and Finances
So you’re in debt and you’re having a difficult time keeping up with your repayments. It might feel like you’re ‘in over your head’ and gasping for air, and it may seem as though there’s nothing you can do to get yourself out of that hole. However a lot of the problem here is not getting a perspective on the problem and really quantifying the situation your in. The point then is that many people simply don’t know how much debt they’re in or how much interest they’re going to pay. At the same time they don’t know how much money they need on a day to day basis or what money they have coming in even. This then leaves them unable to come up with an action plan or solution to their debt problems, and means they are more likely to make mistakes that land them in more debt.
Thus it is important to calculate your debt and to make a note of all the other relevant numbers you’re working with. This means making some time to do some basic accounting, but by calculating your debt and keeping track of your income and outgoings it …

April 2011

US Personal Debt Statistics

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Us Personal Debt Statistics
We all know that countries across the world are currently struggling with a lot of debt at the moment. We’re in a time of financial crisis and it’s no surprise that this has also affected the individual and that we are all in a lot of debt personally too. Here we will look at the US personal debt statistics as according to the 2010 census statistics. It is a worrying insight into just how much debt the average American is in, but also perhaps shadenfreude for some who might feel relieved to know that US personal debt statistics suggest that they’re not that much worse off than their neighbours…
The first of our US personal debt statistics related to what’s called ‘consumer debt’. This means consumer credit that does not include real estate. Rather this covers all of the rest of our US personal debt statistics coming from student loans, automobile loans, credit and more. This consumer debt comes to a total of 2.4 trillion dollars across Americans, and according to the census that means roughly $7,800 for every single individual. Of course we have to remember with US personal debt statistics that these are averages effected by …

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