Benefits Of Managing Financial Funds - Have A Glimpse!

Financial planning is the best thing to do in the current situation, when the world is facing inflation at the extreme rate. If you are not serious towards financial management, least chances are there to enjoy a secure and stable life. Balance is required to keep things flowing without any obstacles. Financial management is very necessary for your own benefit, if management is at personal level. Management of financial funds accounts for the benefit of a financial institution and investors. It is a big thing which you need to understand before you seek for its benefits. Financial funds management is the management of cash flow of any business firm dealing in financial services. This task is accomplished by the fund managers who look at various aspects of deposits and loan demand.

Scroll down to know more and get a detailed account of the benefits of managing financial funds.
A fund manager is highly responsible for managing risk and cost so as to increase the cash flow feasibility. Any financial institution maintains its name and fame in the market by offering considerable amount of credit to its clients. Fund manager try hard to ensure maximum liquidity of funds. There are various benefits of this management which is enjoyed by the investors and of course the financial institution.

• It benefits the newly formed firms to recognize the exact inflow and outflow of cash. This in turn helps in combating cash shortage.
• People are very fond of investing in financial assets and therefore, it is very essential for the firm to present a complete cash flow statement to the general public. Through management of financial funds, investors get an idea whether it is safe to tie-up with the company or not.
• Cash flow statement is presented to the people after analyzing all the aspects over a period of time.
• Investors can acquire these cash flow statements on monthly, weekly, quarterly and yearly basis.
• With the help of cash flow statement, financial institutions also get an idea whether it will be able to pay the instant expenses presented by its customers or not.
• For future commitments, these statements are highly advantageous.

Management of financial funds is nothing but an attempt to realize the current and future compatibilities in terms of expenses. As a financial firm, it is mandatory for the owner or any other employee to keep a track of all the inflows and outflows of cash. Any investor looks up to its company for acquiring instant cash in need. If the financial status of the institution is not up to the mark then, there are least chances of progress. So, in order to retain a good position in the market, it is obligatory for the firms to present cash flow statements frequently. The benefits of managing financial funds are described in the above section. Read them attentively to make out its prominence.

As final words, it's not easy for any financial firm to maintain plenty of cash in repository. Financial planning and management is required to keep the cash flowing in and out.

Your Financial Life for 2013

More of the same equals more of the same. You want a different financial life for 2013? Shake it up a bit.

Shake that booty. Stir the pot. Seriously, let's get this pahtay started right now, Pirate's Booty style. Check that. Gangnam style.

Different actions could yield different results... Think how much better you could feel if you actually had a financial plan for your life...

Here's my list of actions to shake ya booty for a different financial life:

1. Systems for saving. Yes automation, every month. Money going from your business account to your personal account automatically. More saving = more money potentially for your financial life down the road.

2. Your pricing in your business. When was the last time you raised prices? 1982? I had a Members Only jacket back then. Are you charging what you are really worth? What are your costs? Are you covering your costs? Are you even still reading this? Shake it up a bit and... shocker... raise your prices so they can cover your costs.

3. Getcha significant other involved in your personal finances and on the dance floor. The dance floor of money. Use a 3rd party professional like a coach, CPA, or financial planner to facilitate this.

4. Your biz - make your craft a work of art. Yep. Make your service or product even better. Invest back into your business and upgrade your client deliverable. Stir up your business financial life and pick a % that you will spend on this... a % of your expected business revenue for 2013.

5. Stop doing all the booty shaking yourself. You need more free time to live. Get a personal assistant - to do some booty shaking. Send them to the grocery store and the dry cleaners. That will give you more free time to think and strategize and stir the pot in your business. Or more time to just take a walk and decompress.

6. Create a 2013 vacation budget right now. Let's say you are going to take a big trip next December, and it will cost 6 gees. Expand your financial life and save $500 a month to fund this. Get psyched to travel and see the world. Today! Not in 20 years when you retire.

Think different. What would it mean to you if you did some of this stuff? It would be a different financial life and you could be on cloud nine, shakin' your booty.

Loan Originator Compensation January 2013

The Consumer Financial Protection Bureau released its final rules regarding Loan Originator Compensation Requirements under the Truth in Lending Act (Regulation Z), on January 20, 2013. The final rule implements requirements and restrictions imposed by the Dodd-Frank Act concerning loan originator compensation; qualifications of, and registration or licensing of loan originators; compliance procedures for depository institutions; mandatory arbitration; and the financing of single-premium credit insurance. I am going to focus on how the new amendments will affect mortgage brokers and correspondent lenders.

There are only a few real changes, but you can tell our policy makers valued the input of our industry this time. The most dramatic change is the ability for mortgage brokers to do borrower paid loans AND be able to compensate their loan officers. The ban on dual compensation is still in effect for brokers, making them less competitive against their correspondent peers. It was an uninformed decision by our policy makers to let this happen to begin with, and they have corrected it. Only problem, it doesn't go into effect until January of 2013.

Clarification on retirement plans has been included. It was unclear whether the contribution to employee retirement plans was allowed or not. It is clear now. Yes, mortgage loan originators can now have a retirement program without the worry of violating federal law. Employers are now able to contribute to a designated tax-advantaged plan for their employees, as defined by the IRS.

Also included with a few stipulations, is a profit based non-deferred compensation allowance. It basically allows a bonus up to 10% of a loan officer's total compensation.

Here is a breakdown of all the changes:

Note: Originator is defined as a loan officer ( a person who takes applications and negotiates terms) and a mortgage broker ( an entity that does not fund loans from its own funds or warehouse line), not a depository bank employee or a correspondent lender.

Record Retention

Correspondent: Requires the retention of records regarding all compensation paid to your loan officers, the loan officer compensation agreements, for a period of three years from the date of the transaction.

Broker: Requires the retention of records regarding all compensation paid to your loan officers, the loan officer compensation agreements, compensation received from your Investors, your agreements with them, compensation received from a consumer or other person (borrower paid transactions), for a period of three years from the date of the transaction.

Payments based on terms of a transaction.(Broker/Correspondent)

You cannot compensate your loan officers based on any term (rate, profit, YSP, etc.) on a single transaction, multiple transactions, or a "pool" of transactions. You cannot pay them based on a "proxy" for a term either. A factor, although not an obvious loan term, is considered a "proxy" for a term of the transaction if the factor consistently varies with that term over a significant number of transactions, and the loan originator has the ability, directly or indirectly, to add, drop, or change the factor in originating the transaction. It is allowable to pay your loan officers a "fixed percentage of the loan amount", and if needed, setting a minimum and maximum commission amount.

You are allowed to make contributions to a "designated tax-advantaged plan" as compensation. A designated tax-advantaged plan means any plan that meets the requirements of Internal Revenue Code section 401(a), 26 U.S.C. 401(a); employee annuity plan described in Internal Revenue Code section 403(a), 26 U.S.C. 403(a); simple retirement account, as defined in Internal Revenue Code section 408(p), 26 U.S.C. 408(p); simplified employee pension described in Internal Revenue Code section 408(k), 26 U.S.C. 408(k); annuity contract described in Internal Revenue Code section 403(b), 26 U.S.C. 403(b); or eligible deferred compensation plan, as defined in Internal Revenue Code section 457(b), 26 U.S.C. 457(b). The contribution cannot be directly or indirectly based on the terms of that individual loan originator's transactions.

A bonus can be paid under a non-deferred profits-based compensation plan based on the profits earned by the loan officer if the non-deferred compensation is not based on a loan term or condition and at least one of the following conditions is satisfied:

The compensation paid to an individual loan originator does not, exceed 10 percent of the individual loan originator's total compensation corresponding to the time period for which the compensation under the non-deferred profits-based compensation plan is paid; or

The individual loan originator was a loan originator for ten or fewer transactions during the 12-month period preceding the date of the compensation determination.

Dual Compensation (Brokers)

Dual Compensation (receiving funds from the borrower and creditor) is still not allowed for mortgage brokers.Originators who are employed by a Mortgage Broker have been unable to receive compensation when the borrower paid origination fees and discount points (Borrower Paid). Beginning January 20th, 2014, a mortgage broker will be able to compensate their loan officers on these transactions, as long as the compensation is not based on terms or conditions of the loan.

Safe Harbor (Brokers)

When meeting the Safe Harbor requirement, some verbiage has changed as far as the options you must present to the customer:

The option that stated "The loan with the lowest total dollar amount for origination points or fees and discount points." Has been changed to:

"The loan with the lowest total dollar amount of discount points, origination points or origination fees (or, if two or more loans have the same total dollar amount of discount points, origination points or origination fees, the loan with the lowest interest rate that has the lowest total dollar amount of discount points, origination points or origination fees)."

Loan officer requirements and hiring standards.(Correspondent/Broker)

All of the new requirements are already covered by the SAFE Act and applied when a loan officer registers for NMLS and State licensing.

Name and NMLSR ID on loan documents.(Correspondent/Broker)

This requires the originators name and NMLS number on the credit application, the note or loan contract, and the security instrument.

Effective June 1, 2013

Mandatory Arbitration.(Broker/Correspondent)

Eliminates the use of mandatory arbitration clauses, waivers of Federal statutory causes of action, and waivers of consumer rights. Arbitration can be used, but not required in a contract.

Prohibition on financing single-premium credit insurance.(Broker/ Correspondent)

Credit insurance can be paid monthly, but cannot be financed as a "single premium".

Read the final rule here: http://www.consumerfinance.gov/regulations/loan-originator-compensation-requirements-under-the-truth-in-lending-act-regulation-z/

In my humble opinion, the amendments released on January 20, 2013 are well thought out and take a step forward this time in accomplishing regulation that will curtail the bad actors in our industry. Although, I think 99% of them left 4 years ago! Regulation can be costly and a burden, but it does go a long way in preventing the problems we have experienced in past years. I encourage everyone in our industry to be involved in the law making procedures through public comment, contact with The Consumer Financial Protection Bureau, and your local politicians. It does make a difference as these new regulations suggest.

A Profound Law Cloaked in a Cloak

Why is the banking system of the United States (and the whole world) on the verge of complete collapse? I heard one expert claim that it was a competency problem and if they diffused the centrality of banking away from New York City and spread it around the country and placed it into the hands of 'competent' people in all corners of the country, things would be better. Others claim it is a problem of corruption due to centralization and not competency that is the problem. Still others argue that it is an issue of intrinsic value and that we must return to a gold standard. While all of these explanations may play a role to varying degrees, none of them even come close to the core origin of the problem.

If we work our way backwards into the history of banking just in the United States, we can see where we once were on a gold standard in America and it served us somewhat well for about 100 years but eventually failed. If we go back further, we find that the nation once had a decentralized banking system where states often had their own banks and their own currencies and their own exchange rates for goods and services. This also was not functional. The problem goes back much further and is far more fundamental because it is rooted in ethics. Because economics is a human function, it cannot be conducted in a lawless vacuum but must be defined and regulated by the word of God. Economics and morality are inseparable and subject to the law of cause-and-effect when held up to the light of Truth.

Let us expose the core of the problem cloaked in a law in Exodus 22:26-27.

"If you ever take your neighbor's cloak as a pledge, you shall return it to him before the sun goes down. For that is his only covering, it is his cloak for his skin. What will he sleep in? And it will be that when he cries to Me, I will hear for I am gracious."

The protection for the poor in this law is obvious. It is not what I want to focus on. Instead, consider the fact that the poor man must put up his cloak as collateral. Why? The creditor surely doesn't need it and God doesn't allow the creditor to use it in the evening when it would be useful so it would seem it is useless to the lender. Or is it?

Actually, the cloak is a very valuable asset to the lender. Yes, it is one thing that the borrower must return every evening to get his cloak and then return it in the morning. This is a constant reminder and nuisance for the borrower and an incentive to pay the debt. But imagine this. What if the borrower were allowed to possess the collateral? And what if he then went around to twelve creditors, collecting twelve debts on one cloak? And suppose he took the money from twelve creditors and his cloak... and skipped town, never to be seen again. Or suppose he is captured after spending all the money. Which of the twelve creditors gets the cloak? Suppose they sell the cloak and each creditor gets 8.5% on his loan back. Is that fair?

The borrower committed fraud. Stealing, lying and coveting are all violations of God's Law. The purpose of collateral is to uphold the understood law that you cannot secure multiple loans with the same collateral. This is violating the law of unjust weights and measures (Leviticus 19: 35-36).

Believe it or not, this is a law that every bank in the world violates every day and has for a very long time. The banking system of this fallen world operates under what is called fractional reserve banking. This is how it works. A customer deposits $100 in the bank. The bank puts $10 of it in reserve (in the vault-in theory). The bank then loans out the other $90. Now in this small scale, one can plainly see that if the customer returns the next day and wants to withdraw his $100 (a run on the bank) the money is not there. The bank is essentially bankrupt and must close its doors. The customer has been robbed of his $100. The bank essentially did the very same thing that the borrower with the cloak did if the cloak was not taken as collateral. The bank secured multiple loans with the same collateral.

If this isn't bad enough, there is something far more insidious that occurs when this is done. Consider the fact that the $90 goes back out in loans and then returns as a deposit. $9 is put in reserve while $81 is put back into the money supply. Imagine this money goes back out three more times with 10% put in reserve each time. After just five transactions, the $100 has become $468.50 in deposits! It has become $368.50 in loans! Money has been created. Counterfeit money!

But you can't get something for nothing. A bogus increase in the money supply is called inflation. As people see their dollars becoming worth less and less, confidence is lost and fear increases. Suppose there is a run on this bank. Five people show up at the door with receipts for $468.50, not just $100. And guess how much is in reserve to pay off the customers... $41.00.

Now imagine this on a national scale. How many millions of transactions occur every day, counterfeiting more money on a multiplying scale? How many millions of bogus dollars are injected into the system every week?

Now imagine it on a global scale.

There have been brilliant economists who have warned against using fractional reserve banking for decades but they have been largely ignored. The moneychangers that run this world have essentially said, "liquidity should have no bearing on progress." This is what they believe... but I'm telling anyone with ears to hear, there are no free lunches.

Eric Daniel Brown

Credit Cards - 5 Tips To Keep Them Safe

Credit cards are very useful things to have and they have done away with the need to carry around huge wads of cash. The average person has 2 or 3 cards in order to get a large amount of credit and also to benefit from the various facilities offered by each card. If you have a card as well then you should be aware that there is a possibility of you losing money on account of it. If a person gets hold of your card physically or even just its important information then he or she can rack up a lot of charges that you will be held responsible for. You therefore need to keep it absolutely safe whenever possible.

The following tips will enable you to ensure that your credit card is absolutely safe:

1. Try to keep your card within sight when it is being swiped for a charge. Make sure that the person swiping it uses an authentic looking machine.

2. Do not allow anyone to know your passwords and CVV number (this is the number printed at the back of the card)

3. Try to keep multiple cards with low credit limit on each. This will reduce your risk in case any one card does get misused.

4. Always use your cards at secure locations, both online and offline. If you are not discriminating in how you use your card then there is a chance that it can be used badly. Be extra careful when dealing with online vendors; only ones who have secure websites should be patronized.

5. Avoid using your card from cyber cafes where there is a possibility that your data will get stolen. Be aware that cyber criminals use these places to get data from a large number of credit card users.

6. Do not respond to phishing mails that ask for personal and financial data because they can help thieves rain your account.

The use of credit cards will save you a great deal of time and effort especially since you need them to access the internet. You can use them to buy products at any time of the day or night. You will have nothing to complain about as long as you use your cards in the correct manner. Further, be sure to make your payments in tine so that you do not end up spending a lot of money on fee and charges which are very high in the case of cards.

Small Business Accounting: Raising Funds and Getting Started

As we begin to pull out of the recession entrepreneurs are starting and expanding businesses at an accelerated pace. Unfortunately they are finding that traditional sources for raising capital are increasingly difficult to come by. Banks have tightened their lending policies. At the same time many seeking funds are suffering from poor credit ratings resulting from difficulties experienced during the recession. The convergence of these factors is a perfect storm that is creating opportunities for alternative lending and funding providers.

Crowdfunding poised to lead

The list of alternative methods for raising capital includes Crowdfunding, Peer to Peer Lending, Online Pawn shops, Micro-lending, Revenue Based Financing and more. While each of these can be a promising source of capital for small business owners, Crowdfunding seems to have generated the most buzz. A recent Google search on Crowdfunding turned up over 9 million results. Crowdfunding is not only generating some real buzz but also spurning a lot of questions and some confusion. Our goal here is to answer some of the key questions and help clear up confusion and misconceptions surrounding Crowdfunding.

How it works

The CROWDFUND Act allows companies to raise up to $1 million a year from individual investors. Investors and those seeking funding will be brought together by a middleman, either a broker or an Internet website. The brokers and websites will have to register with the SEC. It aims to protect investors by requiring brokers to register with the SEC and by limiting how much individuals can invest. For example, investors who have an annual income or net worth under $100,000 can invest no more than the greater of $2,000 or 5% of their annual income or net worth.

How it is different

Crowdfunding allows you to retain creative and operational control of your business while still raising significant equity capital. In contrast, traditional equity funding is severely tipped in the investors' favor, giving them the bargaining power in early stage ventures. This means they give you less money and take more of your company because you are the one in need, not them.

Another point of differentiation and side benefit of Crowdfunding is that it provides a new way to connect with fans and supporters like never before. This engagement leads to increased dialogue which in turn leads to better feedback, additional distribution channels and happier customers, making crowdfunding the gift that keeps on giving.

The two types of Crowdfunding

Probably the biggest area of confusion revolves around the type of funds being raised. Today crowdfunding for donations is legal and a growing means for funding projects, causes and charities. Post a creative project, favorite cause or charity and people make donations towards your endeavor. The key here is that donors don't receive any equity. As such it is not regulated by the SEC. There are a host of companies facilitating donation based crowdfunding including KickStarter (creative projects), CharityKick (fundraising based on social networking and a "Dare") and Razoo (fundraising platform for nonprofits).

In contrast, equity based Crowdfunding means each investor receives a piece of your business. This form of Crowdfunding is regulated by the SEC and will not be legal until the rules are put into place by the end of 2012. Expect a proliferation of companies coming online to help businesses manage the equity Crowdfunding process. Here are two sites to find more information: http://www.startupexemption.com or http://www.cfira.org

What is required

If you think equity based Crowdfunding, or any of the alternative methods for raising capital or debt financing is right for you, now is a great time to make sure your financial statements are in order. While the requirements will vary with the funding source and amount, small businesses seeking to raise money via Crowdfunding will be required to disclose certain legal and financial information. Disclosure requirements increase with the amount of capital raised starting with basic financial statements and tax returns and increasing to include audited financial statements.

What you can do now

You can't raise capital through Crowdfunding until the SEC puts into place the rules, regulations and restrictions that will govern the Act. These rules and regulations should be in place by early 2013. While the SEC is busy with their work, there are a number of actions you can take if you are thinking seriously about Crowdfunding for your business. Assemble your information package, build your potential investor list, develop your sales pitch and talk to your legal and accounting advisors.

Dave Heistein, founder of Profitwise Accounting says, "As a CPA specializing in the small business sector, I see some interesting opportunities in Crowdfunding for certain clients looking to raise capital. Like many things, the devil is in the detail and I would encourage anyone considering Crowdfunding to seek out expert advice and spend time making sure your financial statements are in good order."

Disclaim Your Spouse's IRA In Favor Of His Or Her Secondary Beneficiary

If your husband has a large IRA and you're well off, consider disclaiming part or all of his IRA at his death. Doing so can leave more for your children. This is an estate tax avoidance strategy to be aware of.

All IRAs are subject to estate taxes when you die. That's because you can take money out of them and re-designate beneficiaries at anytime - i.e. you own and control them which puts them in you estate at your death. If you don't assign a beneficiary for your IRA (on the IRA form), your IRA will revert to your estate and will also be probated when you die to determine who gets it. So, be sure to assign a beneficiary so it won't need to be probated.

Often a couple is well-off and has a sizable about of money in the husband's IRA. Normally, he'd designate his wife as his IRA beneficiary. At his death, his wife has the option of becoming the owner of his IRA or, alternatively, keeping herself as the beneficiary of that IRA. Either way, she can use the IRA money for herself.

The value of his IRA would be in the husband's estate. But by using the unlimited marital deduction, all his IRA money would be excluded - as a deduction - from his estate tax.

That may be fine; but if she's pretty well set for money already, his IRA - and its continued growth - would wind up in her estate when she dies. That's when having a lot of money means paying a lot of estate taxes - and leaving that much less for the kids. Of course, all this depends upon just how much wealth you have and the current Estate Tax law thresholds or exemptions.

One option that husband and wife might consider is designating the wife as primary beneficiary and their children as a secondary beneficiary. With this beneficiary arrangement, the wife has the option of disclaiming some or all of the husband's IRA when he dies. She could do this if she feels that she won't need his IRA money and wants to pass it free of estate tax to their children.

Disclaiming any part of his IRA makes the children the primary beneficiaries and keeps the IRA in his estate, subject to estate tax at his death. But if his disclaimed IRA value - and any other property not transferred to his wife - is less than the estate tax exemption (for 2013, the first $5,250,000 per person or $10,500,000 per couple of your estate is exempt from federal estate tax. These amounts are annually indexed for inflation. Anything above that is taxed at a top estate tax rate of 40%), it'll pass estate-tax free to the children.

The children will inherit their father's IRA as beneficiaries. They'll name the account in 'the name of their father as deceased for the benefit of the children (named)'. Then they can spread their IRA distributions from this over the IRS life expectancy of the eldest child - and that can be many years.

Of course, they'll have to pay income tax on those distributions but the stretched distribution time should allow much more to be distributed due to the IRA's continued tax-deferred growth.