Electronic Payments

Why the Germans Do Not Prefer Electronic Payments

The world of payments is rapidly moving towards the digital options. However, still several customers use cash and they finalized their transactions by using actual cash.

Industry experts are predicting that cash will be obsolete in a few coming years. However, there is a European country which is following a totally opposite trend. In Germany, the use of physical cash is more than any other country in the world. According to a research conducted by Federal Reserve, the people of Germany use cash in 82 percent of their financial transactions. 13 percent of these transactions are executed by using debt cards while only 2 percent of the transactions are carried out using credit cards. Germans keep more cash in their wallets as compared to the amount carried by people in other countries. On average, each German keeps $123 in his wallet. As per the research, the average amount kept in the wallet by Germans is almost double as compared to the quantity of cash kept by people in other countries. Americans keep $74 in their wallets, on average, while the people of Netherland carries $51.

The people of Germany not only like to pay in cash but also, they want complete freedom to do so. A recommendation to limit the use of cash faced extreme opposition from consumers and political experts. According to Guardian’s report, there was a ban imposed in Germany on making any payment via cash which has worth more than 5 thousand pounds. The purpose of this ban was aimed at stopping money laundering and the use of cash to support terrorist activities. Such bans are commonly imposed in other countries of European Union but in Germany, this suggestion faced strong criticism by the majority of the political groups.

According to Guardian, the head of Germany’s Central Bank, Jens Weidmann said while talking to the journalist of Germany’s newspaper named “The Bild” that if Germans get the impression that the use of cash is going to be gradually restricted in the country, it can prove to be actually fatal.

Even the newspaper was also against this suggestion. In February 2016, the newspaper published an open letter and urged the readers to sign it and send it to the finance minister.

The commitment of German people with the use of actual cash is so strong that most of the people are storing the cash in their houses. As per Wall Street Journal, the majority of Germans are withdrawing their money from banks and storing it in the safes inside their houses. This trend is so intense that a vault making company reported 25 percent increase sales increase in the first half of the year 2016. Several other such companies are delivering their maximum production in order to meet the increased demand of vaults.

Why do Germans Prefer Cash?

Despite the fact that electronic payments have made the things extremely easy for the people, why Germans still prefer physical cash over electronic payment? One reason for this is the security. Germans believe that payments via physical cash are more safe and reliable as compared to electronic payments.

To cater these issues, it is recommended that such a payment partner should be chosen which is compliant with the standards of data security. Moreover, the payment processor chosen by German people should accept several payment options. Online traders can only accept electronic modes of payment, but if Germans are provided with multiple payment options, they can easily choose the one which is best suited to their needs and expectations.

According to the Wall Street Journal, another reason behind German’s hesitation regarding the electronic payment is inflation. Because of the negative interest rate implemented by the European Central Bank, the Germans have to pay for making the deposit into the bank. Furthermore, the history of hyperinflation also made the people of Germany reluctant towards the use of online payments.

Because of the fact that the payment systems continue to get more and more advanced, it is expected that with the passage of time, the Germans will also move towards electronic payments, especially, when they have to make international payments. Business companies have to work hard in order to reach German people, but these companies shouldn’t give up.

Stay Healthy

Stay Healthy and Wealthy in 2017

When you make those New Year’s resolutions, you’re thinking about fresh starts and the year ahead. What you might not realize is that some resolutions also could save money. Here are some popular resolutions that could help get you and your finances in shape in 2017.

Quit smoking: You can save money by stopping a pack-a-day habit, which can cost between $1,825 and $3,650 per year, depending on the cost of cigarettes in your area. Nationally, a pack-a-day smoker is going to spend an average of $2,000 annually on cigarette costs.

Set up and stick to a realistic budget: If you want to resolve to stick to a budget in 2017, you must start with a realistic plan. People tend to make financial resolutions the same way they do a weight loss plan. If you start with lofty goals they will be unachievable within a month. List your priorities for spending rather than restricting your spending. Focus on necessary expenses then include a certain amount for retirement savings. Then with the remaining money you have each month, set aside a little for enjoyment. It’s critical you have rewards in your budget.

Exercise regularly: You’ll save money in several ways with regular exercise. On average, Americans are spending $7,800 annually on health care, according to the National Association of Health Underwriters. But exercise brings real savings. “If people are eating right and exercising three times a week for 20 minutes a day, they see prescription costs decrease by 70 percent and medical costs decrease by 30 percent,” says Ric Edelman of Edelman Financial Services.

Stop spending money recklessly: One of the best ways to stop spending your money recklessly is to track where it is going each month. Check with your credit union and download their free mobile budgeting app that shows expenditures by category so you can monitor your spending. A great way to get your spending under control is quit trying to “keep up with the Joneses”. If you want to fix your bad spending habits in 2017 start hanging out with other spendthrifts because you will likely become one yourself.

Eat healthier: A healthy eating plan can be as — or more — economical than fast food. It’s a total myth that eating healthy is expensive. Buy smaller but leaner cuts of meat, eat protein-rich beans and buy produce in season when it’s freshest and least expensive. A smaller amount of a leaner cut can slice your food bill and your bad cholesterol.

Build an emergency fund: Nothing takes the stress out of financial situation like spare cash. If you are among the millions of Americans that don’t have enough money set aside to cover unexpected expenses or emergencies, then you should resolve to build one in 2017. Experts recommend putting enough money in a savings account to cover six months’ worth of expenses in case of unexpected emergencies like job loss, maternity leave or medical issues. You can always apply a small amount of your paycheck towards this account, so you make sure it is hidden from you.

Pay off high-interest debt: Paying down credit card debt is one of the most popular short-term goals in 2017. Try focusing on paying off your high-interest credit card debt before other debts because it is more expensive. And, it you are motivated by seeing those results first hand, start by paying off your card with the lowest balance first so you can feel that sense of accomplishment.

Create your estate plan: An important 2017 resolution would be to tie up any financial loose ends for your loved ones so they aren’t left trying to pick up the pieces. Make sure you have a will or trust that designates who’s in control of your assets. You certainly don’t want the state court system to make that decision for you. Don’t forget to designate a guardian for your children, and someone who will make financial and healthcare decisions for you if you are unable to do so.

Develop common financial goals with your partner: Many times finances are the biggest source of conflict between couples. It’s important that couples sit down and create a financial plan. It doesn’t usually work to try and manage their finances separately.

Any of these resolutions can help improve your financial security in 2017. I suggest tackling one financial tip each month so you don’t get overwhelmed. Then as you get accustomed to the new approach to spending and saving, add another. By the time 2017 starts dwindling toward 2018, you will find you’ve made progress on achieving your financial goals.

Planning Considerations

Planning Considerations for Those Close to Retirement

For those that are a few years away from retirement, the planning objectives start to shift away from accumulation and growth to income planning and capital preservation. There is simply not a “one size fits all” approach mainly because each set of facts and circumstances is different. For example – those that are bringing debt into retirement must consider ways to pay down that debt prior to retirement. Those that are planning to work part-time must consider the tax implications of their earnings and strategize the most efficient way to take social security benefits One thing is for certain – in almost every case the need to have steady and predictable income throughout retirement is a key to success. Budgeting is always an important factor in planning throughout one’s life and during retirement that does not change. Most retirees use this process to budget for their fixed and variable expenses and use that data to plan for travel and other retirement activities. Planning for a realistic lifestyle is a key element to better assuring that retirement dollars are not exhausted before life is.

Capital preservation is a key element for those in their 60’s and on through their retirement years. As Mark Twain once said, “Folks are more concerned about the return of their money than the return on their money”. Although each retiree must make the asset allocation decision on their own depending on the risk level that they are willing to accept – an industry rule of thumb has always been that you can determine the maximum exposure to the equity markets by subtracting one’s age from 100. For example – a 60-year-old should have no more than 40% (100-60) of their investable assets exposed to the equities market.

Growth investing has always been the place to better assure that one’s assets outpace inflation. With inflation being relatively low for many years and interest rates being even lower – the stock market has done well for patient investors who have weathered out the storms that occurred on Wall Street in the 2008-2009 timeframe. Those investors – who are now 8 years older are now deciding whether to stay the course or take their earnings and reduce risk. With all the economic, political, international, and emotional turmoil that is present today – these decisions can be gut-wrenching.

There continues to be more mentions about alternative investing today than at any time I can recall over my almost 30-year career. As these products become more mainstream retirees will look to compliment a growing portion of their portfolios to try and produce safer and more sustainable income streams – as well as to have assets that are not correlated to traditional investing models. By placing alternatives into one’s portfolio an investor can reduce the beta (measures risk) of their investments while producing predictable and steady returns in positions that have reduced risk than other traditional Wall Street choices.

In closing – while getting “one’s ducks in a line” in the preparation for an impending retirement – it is also important to confirm that all estate planning documents are up to date. These will include wills, POAs, living wills, health care directives, trust (if warranted), etc. A solid review of all insurances is also in order paying close attention to planning for the growing possibility of long-term health care expenses.

Money Or Your Life

Your Money Or Your Life

Have you stopped to realize that although you go to school to learn about important subjects, no one teaches you how to manage your money?

Money is an essential part of life in our pursuit of happiness, yet very rarely will a parent sit down and tech their child how to handle money.

This is true in grade school, high school and worst college. So what happens? Many of us end up in an extremely large amount of debt. We can’t seem to get it together even if we make more money.

I found myself in this trap about 13 years ago. I had an “okay” job, a car, and an apartment. Nice I thought soon I would buy a house and live the “American dream”. Wrong! I could never save enough to buy a house. I had plenty of credit cards, so many that I never had enough money to put aside for my dream home. This was because I was to busy making numerous monthly debt payments.

What was happening to my paychecks? Well, I was over extended in credit card debt for one. The buy now pay later syndrome was well embedded in my mindset. That mentality had to stop! Since, I wasn’t terribly behind in my payments I was able to get some help from my creditors. I simply asked for a lower interest rate and/or the ability to defer a payment or two. After those much-needed calls, I had to cut up and dispose of my credit cards. No! I didn’t cancel my cards but I got rid of them just the same.

Next I bought a tablet just for my budget information and bills. I also purchased a software program to keep track of all my expenses. I think it is important to keep something manual that you can carry as well as having the use of a computer software tool.

Next, as bills came in, I wrote down the name, address, phone number of the creditor, my total balance, interest rate, and minimum payment due, the due date, and if there were any annual fees acquired with the card. This helped me bring my debt picture to a reality. It also helped me figure out a strategy for repayment.

Tackle the card with the highest interest rate and pay more then the minimum due. Always ask if they can reduce your rate or seek the possibility of debt consolidation buy applying for a lower interest rate loan or credit card. If you haven’t cut up your credit cards do not get a consolidation loan. Because most likely once your payments are manageable you’ll start using your cards again.

Minimizing your spending is the key to financial freedom. Make sure to start a savings plan after you’ve gotten your debt under control.

Know Thy Finances

Know Thy Finances

The first step to financial success lies in knowing your financial situation at any given time. There is an anecdote attributed to John D. Rockefeller–that as a child he was given a monthly allowance from his parents, but upon stipulation that he had to save 10% of it, give away 10% to charity, and account for the rest of it. While his parents required that he record down to the penny where he spent it–you can be a bit more lenient on yourself!

Track your spending for 1-2 full months

Use a program like Quicken to keep track of all your personal finances. I recommend the latest version of Quicken or a similar financial program if you already own one. You should start out by entering in your present-day personal checking account, savings, investments, and cash situation.

To complete this step, you will also need a cheap plastic filing container or something similar. You can purchase these for about $15 at Office Depot, etc. As you make payments, keep track of all the receipts you receive, the checks you write, and any other monetary transactions you make. Like I mentioned earlier, you don’t need to be exact when it comes to cash–just try to be, as much as you can tolerate.

At some later time, at your leisure, enter all this transaction data into Quicken. As you do so, put the purchasing receipts into the file folder under the appropriate Category. Make separate labels for each of the file folders– I suggest some of the following:

Personal
Household
Charitable
Books & Education
Dining Out
Business Expenses
Taxes
Misc.

You can also add your own categories or remove some as appropriate. At this point, you may be wondering why you have to do all this. For the moment, just trust me that it will be beneficial to you (I will explain it later on). Also, it takes a grand total of about 10-15 minutes per week to do what I just described. The next section, Budgeting, will take a little longer. But budgeting also requires that you need to at least perform the first step mentioned above, that is, keeping track of what you currently spend.

Planning your Budget

I can already hear what you are going to say–oh no, not a budget! I don’t like them either, because they tend to reign in my emotional spending or “I gotta have it” mentality. The truth is, you are the master of your financial destiny (not to sound corny, but its true for the most part). If you want to buy that fancy knickknack with the wireless PDA attachment downloader, then by all means, get it. But if it doesn’t serve your needs in the long run, then you will have wasted $X dollars to serve your fleeting emotional desires. Besides, you will notice after tracking your budget for several months where the real money is flowing. You might buy a fancy computer toy only occasionally, at $200+ dollars, but eating out at lunch everyday + dinner with the girlfriend at fancy restaurants all the time is leaving you broke. How about going to bars? I like to drink, but a beer at a bar or nightclub can range from $4-$10. It’s probably even more if you live in areas like San Francisco or New York.

Financial Situation

10 Steps To Improve Your Financial Situation

Here are ten steps you can follow to help improve your personal financial situation and inevitably save more money:

1. Pay Yourself Weekly

This may seem a bit odd, but this is an excellent way to start building a substantial savings. On a weekly basis, pay yourself $25-$50 and immediately put it in a safe place. You can even open a special savings account where this weekly “payday” can by placed to help minimize or eliminate impulsive spending. Think about it this way, if you paid yourself $25 a week, in two years you’ll have accumulated $2600 (not including interest)!!! That’s almost $3000 from just putting $25 aside every week! Take advantage of this money-saving opportunity. Simple, yet very effective.

2. Don’t Shop

For those of you that love to shop, you may find that this is one tip that could save you hundreds, maybe even thousands every year. Start using the “Need or Want” strategy. Before you spend a single dollar on anything, ask yourself, “Do I really NEED this item, or do I just WANT it??” You may find that many of the items we purchase, we do so just because it “caught our eye” or it was “an impulse buy” or “my friend bought the same thing”. All these excuses just add up to wasteful spending. You can probably get by without another sweater, or a new pair of jeans, so just buy what you absolutely need, and pass on those items that aren’t necessities.

3. Use Your Bank’s Own ATMs

Some banks will charge you money for using other ATM machines. Even though you will be able to withdraw money using your ATM/debit card from literally any machine, banks will charge you $2 (generally) for using a machine other than theirs, in addition to a standard $1.50 charge the machine charges for its use. In other words, if you use the ATM at your local 7-11 to take out $20, you’ll most likely end up paying $3.50 in additional charges! If you do that 5 times a month, you’ll lose $17.50 for that month, or $210 per year! What a waste! Try and stick with your own bank’s ATMs whenever possible.

4. Track Your Spending

Take the time to track your spending habits for one week. Take note of every single dollar you spend, even those sodas and candy bars purchased here and there. This will give you a “birds-eye” view of exactly where your money is being spent, thus allowing you to refine your spending habits to essentially save more money.

5. Lower Credit Card Balances

Another very important tip that many often overlook. Pay off those pesky credit cards as soon as possible because you are losing up to 19% of the total. What a waste of your hard earned money! Keep chopping away at the balances until you get to an amount that is reasonable $100-$500 dollars.

6. Use Your Debit Card Instead of Credit Cards

Get in the habit of using your debit card instead of your credit cards. For the most part, debit cards are accepted anywhere a credit card is accepted, however as you know, with a debit card the amount is taken directly from your checking account whereas credit card usage is billed at a later date (along with a hefty interest rate).

7. Changing Jobs? Roll-Over that 401(k)

When people change jobs/careers they will be faced with a decision to either “rollover” their 401k (retirement plan) or to withdraw it. It will be ever so tempting to withdraw the money since it will be a substantial amount, but don’t! You will be charged fines and penalties for an early withdrawal that will cut YOUR total by 40%-60%! That’s like giving half of your earned retirement savings away to a stranger. Why would you do that? Even though you may want the money now, resist the temptation and roll it over. It will be well worth it in the long run.

8. Avoid Getting Too Many Credit Cards

Why have eight credit cards? That’s just going to provide you with more opportunities to go further into debt. It’s fine to keep 1-3 cards to build credit, establish yourself, and for emergencies, but credit cards are double-edged swords. They can help or hurt you depending on your self-control.

9. Check Your Credit Score/Report

It’s important to know where you currently stand as a consumer and since your credit report is the most important historical list of your financial past and present, it’s a very good idea to check it from time to time. There are a number of places where you can get your credit report, however the most detailed compares information from the top three national credit bureaus: Experian, Equifax, and TransUnion. Once you get your report, look through it carefully to see if all the information is accurate. If there are any discrepancies, get those solved as quickly as possible to improve your credit rating – a score of up to 800. Often times, consumers are unaware of unsettled accounts, or accounts that are still open/active when they should be closed. Pay close attention to this when inspecting your report.

10. Finally: Review – Revise – Retry

Once you start implementing these tips and bec