Neurofinance and the Risk Mindset

Increasingly the findings from neuroscience are being applied to the world of finance. This is not surprising as neuroscience has plenty to contribute to our understanding of the decision-making process and the financial decisions we make are among the most important. Expanding our understanding of financial decision-making and how to develop a ‘risk mindset’ can … Continue reading “Neurofinance and the Risk Mindset”

Increasingly the findings from neuroscience are being applied to the world of finance. This is not surprising as neuroscience has plenty to contribute to our understanding of the decision-making process and the financial decisions we make are among the most important.

Expanding our understanding of financial decision-making and how to develop a ‘risk mindset’ can help protect organisations against the type of market booms and busts that plague economies around the world.

Improving financial decision-making

Poor financial decision-making can be damaging at both a personal and a professional level – creating stress in the home and insecurity at work.

Unsurprisingly, low financial literacy levels are a major contributing factor to this; but our own understanding of how we make decisions also affects our decision-making.

Most of us believe that we are able to keep our emotions in check; that we are able to put feelings, emotions, and memories to one side and just base our financial decisions on the cold hard data – the numbers.

Neuroscience has shown us that the brain doesn’t work like that. In fact, our emotions play an important role in decision-making. Consider an occasion when you have been resolute in a decision, but been persuaded otherwise after a talk with a friend, colleague, or family member; emotional reasons often force this change of mind.

When this tendency to make emotional decisions is combined with an increasingly complex financial landscape, where the number of choices for financial products and services is mind-boggling, we begin to understand the risks involved.

Financial service companies need to improve the literacy of their customers. In the past there has been a sense that financial organisations have a vested interest in keeping everything vague and complex, unintelligible to all but a few. But the winning organisations of the future will be educators that simplify their products and services for customers, and raise financial literacy levels.

Recent insights from behavioural economics and neuroscience can assist with designing financial products and marketing campaigns that promote better understanding for customers and employees, encouraging better financial advice, and improving the likelihood of a good financial decision being made.

Developing a ‘risk mindset’

Ensuring that the right financial products are sold to the right people, for the right reasons, and that customers fully understand what they are purchasing, requires a ‘risk mindset’.

This is becoming more necessary as financial regulations become tighter around the world, and financial organisations start to repair the image problems they have experienced in recent years.

But it takes more than just paying ‘lip service’ to regulations; it is about bringing real value to the customer experience.

With the aid of neuroscience and a better understanding of the decision-making process, organisations can:

Create a culture where the ‘regulator’ mindset is adopted in a constructive way, using principles that underlie the regulation rather than just blindly following the letter of the law.
Re-design incentive schemes less likely to result in mis-selling
Develop structured processes and a common language that all areas of the organisation can use to focus on the customer
Adapt existing products and services to have a positive impact on the customer experience
Foster collaboration and change between and within traditional organisational ‘silos’

The Impact of Bankruptcy on Alimony and Child Support

One common area of concern for individuals filing bankruptcy is that of child support and alimony obligations. This includes for people who owe child support and alimony, as well as those who receive child support or alimony. Here, this guide will explain the impact of bankruptcy on these legal and financial obligations.

These types of payments are considered a priority debt during bankruptcy proceedings. That means that you cannot discharge this debt, and you will need to get caught up on missed payments as well.

However, with a chapter 13 reorganization plan, you will see relief with your overall financial picture, how much you owe, to whom and when, with a payment plan. This payment plan will make it easier to get caught up on the support you still owe. The same goes for filing chapter 7 – you cannot discharge child support, but by eliminating other financial obligations, you should have an easier road to pay your child support moving ahead.

On the other side of things, many people who receive child support are concerned that if they file bankruptcy, they will not be able to protect those payments, which would of course be a major negative to going through with the bankruptcy proceedings. However, if you are receiving child support payments and are filing bankruptcy, the ongoing payments you receive will be protected during the proceedings. Further, if you have leftover money which was provided from child support payments, this can generally be protected as an exempt asset as well.

Moving onto alimony, this is also considered a domestic support obligation, just as support payments also are. Therefore, the same rules generally apply although there are certain exceptions. Typically, if you file bankruptcy and owe alimony, you cannot discharge this debt and must get caught up on missed payments or past obligations, and if you file bankruptcy and are receiving alimony, you should be able to protect this income as well.

Of course, child support and alimony are only one set of concerns for those filing bankruptcy. Further, each person’s case is always different, with a range of circumstances and factors affecting how bankruptcy proceedings play out, what the best options are, what type of bankruptcy to file, and whether you should even file bankruptcy or not.

Always consult with an experienced attorney who can guide you through this complex process. Having legal assistance to fight on your behalf and ensure you take advantage of every opportunity to successfully improve your own circumstances is crucial.

Consolidating Your Debt Is the Best Solution to Your Debt Problem

Are your debts getting out of control? Are you unable to manage your multiple debts? If your debt is giving you sleepless nights, it is important to seek help quickly. Remember, ignoring your debts won’t make them go away. It will only make things worse.

If you are in debt, here is a list of questions you should ask yourself:

Question 1

Are you finding it difficult to meet your monthly repayments?

Answer

Consider rolling all your multiple debts into one monthly repayment. It will:

>> Reduce the amount you pay each month; and

>> Make your debts easier to manage.

Question 2

Do you have multiple debts (i.e. mortgage loan, credit cards and store cards)? Are you having trouble managing these multiple debts?

Answer

Multiple debts means:

>> Paying multiple sets of interest; and

>> Finding it hard to stay on top of your multiple debts.

So, consider consolidating your debt because it will:

>> Enable you to keep track of your debts; and

>> Enable you to pay down your multiple debts.

Question 3

Do you have negative listings and defaults listed in your credit file?

Answer

If you do have a bad credit history, you will find that your loan options may be limited.

Question 4

Do your multiple debts have high interest rates?

Answer

Consolidating your debt should enable you to get a loan with a lower interest rate.

Question 5

Do you have equity in your home?

Answer

If you do have equity in your home, you may be able to use it to pay down all your multiple debts.

Question 6

When is it the best time to consolidate your multiple debts?

Answer

You can consolidate your multiple debts:

>> Whenever you consider you are ready; and

>> When you are unable to manage your multiple debts anymore.

Before you Borrow

If you are thinking of borrowing money, here is a list of steps you should consider and which may help you:

Step 1

Use a budget planner to work out what you are spending now.

Step 2

Use a borrowing power calculator to calculate:

>> How much you can afford to borrow; and

>> If you can afford the repayments.

Step 3

If you decide to borrow, shop around for the best deal and take time to compare:

>> Interest rates;

>> Product features on offer; and

>> Fees and charges.

Step 4

Know who you are dealing with. This means anyone engaging in credit activities (e.g. anyone providing credit or providing credit assistance to you) must give you:

>> A copy of the “Credit Guide”; and

>> A “Credit Proposal Disclosure Document “(CPDD), with the required information listed such as their Australian Credit license (ACL) number, fees and details of your right to complain.

Case Study

Judith is a single mum with two children. She is struggling to pay her multiple debts and her payments are now three weeks in default.

Judith met a professionally qualified finance broker who was able to help her:

>> Negotiate a one loan repayment plan;

>> Reduce her monthly repayments; and

>> Save her money on interest charges.

The benefits available to Judith are best illustrated in the following simple example. The example assumes that Judith has a mortgage loan of $300,000 and a credit card with a credit limit of $12,000:

Current Home Loan Credit Card Total Loans Your New Loan

Loan Amount: $300,000 $12,000 $312,000 $312,000

Interest Rate: 6.25% 18% n/a 4.75%

Loan Term: 25 years n/a n/a 25 years

Monthly Repayment: $1,979.00 $200.00 $2,179.00 $1,778.00

Total Interest Payable: $293,702 $18,931 $312,633 $221,630

From the example above you can clearly see that:

Judith has saved interest of: $91,003.00

Judith’s monthly repayments will be reduced by: $401.00 per month

So, if your debts are getting out of control or you are struggling to make ends meet. It is important that you seek help from someone who can fix your debt problems. This is the time for you to contact a professionally qualified finance broker who will help you to obtain a loan for consolidating debts with:

>> One monthly repayment; and

>> One lower interest rate.

Useful Tip

Avoid seeking help from someone who makes unrealistic promises about getting you out of debts or who advertises that they can help you, no matter how much you owe. Remember to choose a reputed, qualified and experienced finance broker who will go the extra mile in solving your problem.

Fixing Your Credit – The Real Story

Over the years of working in the family law field, I have observed different trends with regards to debt and bankruptcy.

The bankruptcy laws have changed drastically and I tend to steer my clients away from bankruptcy because there is a much easier route to get debt relief and most people are not aware of how easy it really is.

When I use the statement “easy” I do not mean simple. There is work to be done and patience to be had. My approach to credit repair is the same regardless of the number of debts that need to be addressed.

While I will not share trade secrets, I will share some basic information that may help with the decision on what road you should take to get some financial relief.

My approach is not to use bankruptcy as an out. The reason is obvious. With my system, your credit will get better not worse. Not only will your credit rating improve, your debts will disappear at the same time, this is a win win scenario.

With bankruptcy you will go through the hassle of appearing in court, paying an attorney to prepare the bankruptcy documents, and then the 7 to 10 year mark on your credit.

No matter what, this is the ONLY thing that cannot be removed from your credit report. By law it must remain on your report for at least 7 years.

I have had many of my clients try other credit repair companies with little success. Part of the reason we are successful is we understand the laws and we do not quit until all items are removed.

I caution people to stay away from companies that charge by the month because common sense says that there is no incentive to getting the job done in a timely manner.

Keep in mind that there is no set time that this can take. I have had clients who I was able to “get clean” in four weeks and some take four months. There is no method to the madness. The process is the process and there is really no way to take short cuts as there are laws that govern the process.

The reality is sometimes it takes guts to take on some of the debtors and collectors so someone with thin skin may not be as successful. As a former Settlement Administrator for a Public Company I have no problem going up against the best of the best. I have studied the laws regarding debt collection and reporting and am confident in my ability to remove anything.

At the end of the day you have to make the best decision for you and your situation. Getting your credit report clean is a very real thing and you can have clean credit in as little as four weeks.

Effects of Engine Oil on the Fuel Economy of a Car

The type and quality of a car’s engine oil can make a drastic change in the fuel economy of your beloved car.

Here is a brief guide to help you pick the right oil for your car.

There are many ways to improve the fuel economy of your car while driving steadily and no sudden accelerations to inflating your car at the right pressure. You should also know that car engine oil also contributes as a major factor in helping your car reach the extra mile without any extra costs.

There are three kinds of oil available in the market:

a) Mineral oil

b) Semi-synthetic oil

c) Fully-synthetic oil

Normally, mineral oil is the regular oil that lubricates your engine, but requires frequent changing. Semi-synthetic have minute polymers inside them that reduce engine wear and tear and also help protect the engine from cold damage and cold-starts. Fully-synthetic oil enhances performance of the engine by reducing carbon build-up and has excellent, ability to avoid cold-starts.

Which Oil Is Right For Me?

To choose the right oil for yourself, you should always look at the car’s engine manual for recommended oil and make. Apart from that, your car mechanic will also suggest you the best oil based on the car and the conditions you drive in.

For most buyers, the fully-synthetic one is the best since it proves economical in the long run and does not require changing as frequently as the mineral oils do. Since these are manufactured in specialized labs by adding additives to the basic oil, they are able to provide performance, engine longevity and better efficiency.

However, there are more factors you should consider, like:

1) Oil Quality

There are dozens of brands in the market, but the oil rating labelled on the container, like 5W30 tells you that this kind of oil can work in both high and low temperatures. The W tells you the winter rating and the second number tells you the summer rating. Fully synthetic ones are meant for winter conditions mainly.

Similarly, the brand should also be of repute. Do not opt for any unknown brand.

2) Viscosity Level

Thicker or thinner oil is what matters most. The lower viscosity oils work best and should be used in your car. Oils that are thinner work the best in cold conditions and turn thick when conditions become warmer. You can also go for multi-grade oils that have extra polymers in them that activate only when the oil gets heated up, unless they keep the oil thin.

3) Car Servicing Intervals

Always follow the oil change interval diligently! These oils can last only up till the time the manufacturer prescribes for them. After that, they will kill your engine slowly. Do not use oil more than its intended life; your engine may clog beyond repair.

So, always go for oil change when it is due since it increases the life of your engine and helps it perform at an optimum level.