How to Negotiate in Finance

Monthly expenses and recurrent debts – mortgage, car loan, student loans, credit cards, medical bills, among others – can get so out of control that you live paycheck to paycheck without any extra money at the end of the month. In fact, your service provider may be ‘kind’ enough to keep your services turned on even if you are unable to pay. You know the effect? Accumulated debts!

Your debt may be as a result of a job loss, unexpected expenses, dwindling business income, or even overspending. Debt, when not properly managed, can affect not only your financial life but also your overall health. Think of being in debt as navigating a mud-filled field with rain boots on. Can you relate?

Have you ever thought of the possibility of being relieved of your debt burden? In case you don’t know, you can negotiate reduced payments with your creditors. This blog intends to expose you to tips on lowering your monthly expenses and eliminating debts by negotiating interest rates, financial obligations, consolidation loans, among others. 

How easy is it to negotiate a debt settlement? 

Negotiating a debt settlement is not an easy task, especially when you have to consider the best strategy to adopt. Since you are not financially buoyant to settle your bills, it might also be counterintuitive to attempt hiring a debt settlement company. By negotiating directly with your creditors, you not only save time but also money

You need to prove to your creditors that you cannot afford the current payments. They will seek to see your household budget, which should show your monthly income and essential running costs. Through this, they would be able to know how much of your monthly income you can afford to use in settling your debt.

Mistakes Some Individuals Make

Some individuals, probably out of shame or fear, avoid calls and late notices from their debt collectors. This is a great mistake and clearly suggests gross financial irresponsibility. Rather than avoid your collectors, it is important that you reach out to them early, intimating them on the reasons why you are finding it difficult to keep up with your payments. It will surprise you to know how some collectors are lenient and understanding. Remember, they are also humans and have feelings. 

Phases of Negotiation 

Negotiation is a dialogue process between a minimum of two parties, often with the intention of resolving a conflict, in this case, a financial one. The process involves four phases, namely discussion, clarification, negotiating an outcome, and agreement. Prior to the process, you should be able to clarify what you intend to see out of it. 

The first phase, discussion, involves communicating what you seek in the dialogue. At this stage, it is important that you maintain active listening and ask questions where necessary. However, avoid divulging too much information. 

At the clarification phase, you and the other party establish a common ground on which to start the negotiation process. 

The negotiation process is where you seek a win-win outcome. At this stage, alternatives should be provided and considered by both parties. There is the possibility of having to compromise, especially when the process is getting longer than usual. 

It is expected that both parties would have arrived at a mutual ground. The agreement and its terms should, therefore, be devoid of ambiguity. 

What You Need, to Negotiate Your Debts

Negotiating your debts requires that you exhibit certain traits. They include strong communication skills, flexibility, creativity, honesty, self-awareness and awareness of others.

Of all the communication styles, assertive style should be adopted. This is because being assertive makes you appear both confident and thoughtful, thereby decreasing your chances of giving in to demands easily as well as increasing your chances of having a successful outcome.

Forms of Negotiation

In negotiating with your creditors, you can adopt the debt settlement strategy, which involves asking your creditors to accept a one-time or lump-sum payment that is lower than the full balance to fulfill your debt obligations in full. The only downside is the negative impact it may have on your credit score in the future. 

Alternatively, you can speak to your creditor, requesting for a lower interest rate. When you take loans with excessively high interest rates, you are kept in debt for an extended period. This is because, rather than paying the actual balance alone, you’re also paying monthly interest charges. 

The good news is that there is the possibility of negotiating interest rates, especially when you have good payment histories. You can, for instance, talk your credit card issuers into lowering your interest rate. They are more likely to have a negotiating process with you, which may result in reduced rates. 

There is also the place of seeking out promotions. It has been revealed that using a balance transfer to get a lower rate requires that you clear off your debt before the expiration of the promotional period to avoid your balance being subjected to higher interest rates.

Do’s and Don’ts of Negotiation

  • State your position and what you seek clearly
  • Understand the other party’s position too
  • Be calm and professional in your approach 
  • Be reasonable with the position of the other party. There may be a need to compromise. It is not always a sign of weakness. 
  • Whatever your position is, be confident and consistent. Don’t shift position; it shows you are not coordinated. 
  • Seek ways through which you can leverage over the other party 
  • When both parties have reached a compromise, get the terms of the settlement in writing. It is a way of holding both parties accountable. 
  • Avoid being confrontational throughout the negotiation process. Remember it is not a heated debate. 
  • Avoid being emotional. Of course, the other party also wants an outcome that will favor them. 
  • Avoid prolonging the negotiation process. Know when to keep making your position known or compromise your position and walk away.
  • Don’t accept an offer of paying over 50% of your outstanding account balance. If this happens, consider settling with a different creditor. 

Other Helpful Tips

  • In the negotiation process, always maintain silence after asking for a lower rate, as advised by experts. Based on their experience, waiting for the representative to speak next tends to get the seeking party a better offer.
  • Never accept the first offer. Rather, ask for more – incentives and deals that can lower your bill. 
  • Create the impression that you run multiple credit cards and are willing to settle one of your accounts before you divert the money for other purposes. This tends to get you a competitive offer. 

Key Takeaway

To avoid a vicious debt cycle, avoid taking new loans and build an emergency fund to rescue you from emergency situations that can lead you into taking loans while also helping you in clearing your debt. Remember, building a solid financial foundation is critical to attaining your debt payoff goal.

Seek ways to increase your monthly income. Through the process, you get extra money for debt settlement. For instance, think of items of value you own but do not use. You can earn extra money by selling them off. If you are unable to get a side job, ask for a pay raise or negotiate extra working hours for more cash. 

Free Gift

Check out the FREE video series on my 3 Keys to Unlocking Your Financial Freedom! This video series touches on Budgets, Tackling Debt, and Ways to Increase Income TODAY! I created this series for those of you who have been hit hard by COVID-19. I want you to know there is nothing you can’t accomplish and creating a plan of action is always a great starting point.

How to Save for a Goal in 30 Days

For many people, saving money is a great challenge. However, others might be quick to spend whatever money comes their way without a second thought. With that, you could easily get off track in your saving process as soon as the unexpected happens. Don’t worry!  You are not alone.

How do you start saving money? Have you heard about the 30-day saving challenge? It is simply a process of saving that involves setting aside a certain portion of your income for 30 days. The implication of this is that there is no room for making impulse purchases – that is, making purchases based on emotions rather than sticking to a budget. You simply set a goal, get committed to the goal for 30 days, and then make the purchase.

With this saving challenge, you’ll be able to keep your spending under control. Apart from helping you to overcome impulse spending, it also boosts your saving attitude over time. 

The following steps are critical in helping you achieve the goal of money saving for 30 days. 

Step 1: Make a budget 

Creating a budget is the first step towards controlling your income and expenses as well as creating a space for savings. You will not have an idea on the amount that could be put into your savings account when you don’t know how much you spend. By creating your budget, you are able to track your spending.

Not only that but you are also able to know what extra money could be added to your savings account. It is recommended that you automate the process. There are spreadsheet apps that allow you to monitor your finances on a daily, weekly, and monthly basis.

Ideally, your monthly spending should be less than your income while still offering you an opportunity to save at the very least 10% of your income. If unrealistic for you, consider saving less. This, however, depends on your monthly income and financial goals. 

Step 2: Set a realistic goal

With the 30-day saving challenge, you are setting a short-term goal. Decide your saving goal. For instance, this may be $500. Beyond having a target amount, it is important that you create a purpose for the money. In the absence of a purpose, you tend to get distracted, thus lacking the motivation you require to keep going. 

Are you planning to go on a short vacation or a family trip? Do you want to get a new car? What about rewarding yourself with a special treat at a nearby restaurant? Irrespective of the goal, there should be a clarity of purpose. A detailed plan for a family trip, for instance, would look like this:

$150 for travel expenses

$300 for lodging

$150 for food

Remember, your initial goal doesn’t have to be so big that it becomes unrealistic – you may not be able to gain enough motivation to meet your target. Rather, start small. However, be sure that you are consistent and control your money spending habits

Step 3: Cut down on expenses 

With the expenses you incur on a daily basis, you may be inhibited from having enough savings that could help you meet your financial goal. By carefully observing your spending life, you might have developed certain bad spending habits. Identify and get rid of the habits

Can you do without the coffee you often grab every morning as you drive to work? What about the trips you take to the movies every Friday night? How much does dinner-out with friends take away from your income? What if you decide to forgo any of or all these expenses for a period of 30 days, how much will you save to add up to your savings account? 

Notwithstanding, enjoying all these doesn’t amount to careless spending. You may only have to enjoy them less to be able to save more. 

Apart from this, you can also consider trimming down high bills. Think of it, do you utilize all subscriptions you make for phone, internet, and cable? Is it possible to negotiate with your service providers for lower rates and discounts? Of course, you wouldn’t know until you make attempts to reach out to them. Remember, there is no harm in trying. 

Make a list of the bills you pay every month (as stated in your budget), and cancel unnecessary ones or the ones you could no longer sustain. You may be surprised that you can cope without checking in to your Netflix, for instance, for a month. 

Step 4: Start saving 

With knowledge of the financial goal, you have an idea of how much to throw into your savings account each day. For instance, a financial goal of $500 for a 30-day period would amount to saving an average of $17 each day. Remember this is a challenge. The implication is that it is not going to be easy. 

One great mistake you may make is to save into your checking account. You may be tempted to spend it. Rather, invest your money in a high-yield savings account. Through this means, you would be making your money work for you.

Step 5: Earn more to save more

Check your home for items that are lying around – clothing, old bicycles, books, toys, unused appliances, etc. Your kids might have outgrown some clothing items or gifts. You might have received certain gifts that you never used. You don’t have to keep all these. Otherwise, your house becomes cluttered or the items have their values depreciated over time. 

Take stock of the items that could be sold and you might be surprised how much you actually make. This gives you additional cash money. You may want to check out Craigslist or Facebook marketplace to sell your kid stuff. To sell clothes, use ThredUp. It is an online consignment shop. 

Step : Have an accountability partner 

In achieving life goals, there is the need to be accountable for your actions and steps. Otherwise, you may lose motivation along the way. Before going ahead with your saving goal, meet with your accountability partner to share your goal with them. 

Such an accountability partner may be a family member, co-worker, spouse, or even a friend. Usually, they should be people who are committed to helping you accomplish your goal. To sustain their interest, you may also offer to incentivize them.

For instance, if your accountability partner is your wife. You may promise her a night out at her favorite restaurant if she helps you reach your goal within the specified time.

Final thoughts

Saving remains a great challenge that could be overcome. It is possible that you will fail. For instance, you may still go ahead to make impulse purchases despite your decision to avoid it completely. If this happens, don’t have to be hard on yourself. Failure comes with greater lessons than success. With past failures, identify the problem and try as much as possible to avoid it in the future.

Setting goals and achieving them requires great discipline, commitment, and time. The steps provided here will not only help you achieve your short-term goals but will also establish great financial foundational knowledge to prepare you for a better and more secure future.

Free Gift

Check out the FREE video series on my 3 Keys to Unlocking Your Financial Freedom! This video series touches on Budgets, Tackling Debt, and Ways to Increase Income TODAY! I created this series for those of you who have been hit hard by COVID-19. I want you to know there is nothing you can’t accomplish and creating a plan of action is always a great starting point.

How to Be Smart When Starting a Business

The world of business is characterized by a varying degree of highs and lows. Even if you have gathered enough pieces of advice from successful entrepreneurs, carried out in-depth research about your market or industry, or even visited some websites for a checklist of what you require to start a business, your chances of success aren’t guaranteed.

Though it is important that you arm yourself with adequate knowledge before hitting the ground running, it is more important that you get acquainted with tips that can help your business succeed. Remember that you will be investing your energy, time, and money. I have gathered the following tips to help you succeed in your business-starting goal, irrespective of the business type.

Do Your Research Well

It is important that you carry out adequate research before deciding to start a business. One of the most important aspects is market research. It involves identifying your target customer base, that is, those that will be buying your product or service as well as understanding their needs, preferences, and behaviors. In fact, you should already have a brand as well as followers that are ready to patronize you when you eventually start your business.

The research also extends to conducting a competitive analysis. With this, you are able to understand opportunities and limitations that exist within your industry and market while also differentiating your products or services from the competition.

After the market research, you can then consider naming your business. You should also know all relevant rules and regulations to ascertain your responsibilities, which may include getting your business registered, joining related industry or professional associations to get new information within the market, procedures in getting VAT or Professional Indemnity Insurance, if necessary, among others.

8 tips for how to work from home, from NPR’s Life Kit.

Start Your Business While You Are Still Working

One of the most essential resources you need before starting a business is startup capital. Do you plan to borrow some money or do you have other means of getting the required funds? It is common for people to resign from their current nine-to-five job to enable them to focus on their business. This isn’t a good idea. Usually, businesses struggle to make tons of money, especially at the early stage of operation.

This is because the starting stage often gulps a huge amount of money. For example, the cost of setting up a physical shop (or building an online store), getting your business registered, acquisition of necessary legal documents, hiring an accountant or financial advisor, to name a few startup fees. Besides, there could be a time when you will have to invest more money in your business and if you already resigned your job, you may not have the required financial backup for your business while also keeping up with your monthly expenses. You may also not qualify for a loan if you choose to go in that direction.

The best approach to this is to build your business gradually. Once you have built a decent number of clients that are consistent in paying you enough money for your survival and that of your business, you can transition from being an employee to a self-employed individual.

Be Passionate About the Business

It might be difficult to sustain one’s interest on a long term basis, especially if one engages in an activity that one doesn’t love or enjoy doing. The same thing applies to business. If you don’t love the business you are doing, how can you be motivated to continuously commit your entire money, time, and energy into it? Always ask yourself if you feel excited anytime you think of the business. Is it worth every sacrifice you make? If your answer is “no,” then it isn’t the right business for you.

If you identify a need or gap and your product or service successfully fills it, it is expected that it will produce good results, serving as good motivation. Of course, you don’t have to love every aspect of your business as you can always get some of it done by someone else. The goal is to get every necessary work done and keep the business moving. While passion keeps you focused, financial knowledge and good decisions keep your business on track.

Keep Your Idea Simple

Successful entrepreneurs often keep their business idea simple to avoid ending up with an elaborate end-product that prospective consumers may not be able to afford. As a new business starter, narrow your focus by creating a simple good or service without compromising its quality.

What are your customers’ needs and expectations? How can you fulfill the needs and exceed their expectations? If you are able to offer a product or service that does justice to the questions, your business tends to succeed. Get rid of features that cost you money and can make your product or service expensive. You are a small business and not yet a large corporation. You have a better chance to grow as long as your offerings appeal to the masses.

Adopt a Support System

It is almost impossible for businesses to succeed without a support system. You may want to run a business solo to prevent your idea from being stolen. Some may not even try to consider the idea of seeking help at all. When starting a business, you will need the support of a friend or family member, for instance, to help fine-tune your business idea. Their pieces of advice may go a long way in helping you attain speedy growth.

Another support system to consider is an experienced mentor within your industry. Such an individual is usually experienced and has a wealth of wisdom to share. They would know about possible challenges you may face and how to overcome them. They can also provide you with more effective marketing strategies as well as open your eyes to growth opportunities.

Also, professional help from lawyers, financial planners, and accountants could help your business attain long-term success. For instance, you may need to write up a contract and you are not a lawyer. You may also lack the expertise to perform accounting or bookkeeping tasks. If you try to do things and you lack the required expertise, you may end up wasting more time and even money in the long term. By employing their services, you save on time, thus enabling you to concentrate on other significant aspects of your business.

Key Takeaway

According to various research results, including those from the US Bureau of Statistics, an average of 20% of new businesses fail within the first two years of operation. While 25% fail within the first 10 years, only 25% make it to a period of 15 years and above. To fall within the range of those that make it far in business, it is important that you prepare your mind with the helpful tips provided here.

It should be noted that there is no rule of thumb about the right way to start a business; however, there are some tips that can put you on the track to success. These include, among others, conducting adequate (market) research, starting your business while you are still employed, being passionate about your business, keeping your business idea as simple as possible, and adopting a support system.

Free Gift

Check out the FREE video series on my 3 Keys to Unlocking Your Financial Freedom! This video series touches on Budgets, Tackling Debt, and Ways to Increase Income TODAY! I created this series for those of you who have been hit hard by COVID-19. I want you to know there is nothing you can’t accomplish and creating a plan of action is always a great starting point.