Managing Your Finances After Buying Your First Home

If you are young and buying your first home, it can be a very scary time in your life. However, it’s also very exciting to think that you are going to own your property for the first time ever. This is truly the American Dream at work! Chances are, your mortgage payment will be more expensive than whatever rent you were paying before you were a homeowner. You may be worried about how to budget after you close on the house, but you will catch on quicker than you think. If you couldn’t afford the house, the bank wouldn’t have given you the loan, so get ready to crunch some numbers and enjoy the first year living in your new abode.

Pay Attention to Your Lending Officer

Before your loan is even approved, your lending officer should sit down with you at the bank and give you a quick run down of the numbers. If they don’t, you should ask them to do so, or find a lending officer that will; it’s totally OK to shop around for lenders, especially in this economy. When you meet with your lending officer, don’t be afraid to ask questions and/or take notes. When you lock in your interest rate, they will tell you exactly what your mortgage payment will be, and if you choose to keep your taxes and homeowner’s insurance in escrow, they will calculate that in, as well. Pay attention to that monthly number, and use that to set your new budget.

Set a New Budget

Hopefully, if you’ve bought a house, you have already set some sort of budget for your living expenses pre-homeownership. If you have, it should be relatively easy to set a new budget that accounts for your increased living expenses. Just plug-in the number from the bank for your monthly payments and make adjustments as necessary. You will have to cut some things out; that is almost inevitable. However, make sure it is something you can live with. Spend less money on clothes, for example, rather than cutting your grocery budget in half. You need to eat!

Commercial Financing: Small Business Cash Advances

Commercial financing is a part of small business financing and larger lending industry. The finance is forwarded to entrepreneurs driven by growth and excellence. Every business demands the presence of resources and expertise to thrive and expand. Nothing comes without a price. The same applies to a business too. The entrepreneur has to be enterprising to identify and fulfill every need of the growing industry, to capitalize on the subsequent profit. This is where financing in the form of such small business loans steps in.

What are Small Business Cash Advances

Cash advances for small businesses deliver exactly what they imply. These are regulated and monitored loans extended to businessmen. The amounts are forwarded for the implementation of important, growth-related changes or to meet financial deadlines. These cash advances are calculated on the basis of certain prerequisites that determine eligibility. The businessman's repayment capacity is calculated on the basis of the business credit history and his individual ranking on the fiscal charts.

Eligibility Criteria
There are a number of business lending institutions that offer cash advances. The finance is made available on the basis of evaluation of:

Business and personal credit score
Defined credit worthiness on the basis of current and past transactions
Debt repayment capacity defined by the income-expenditure cash flow
Determined business-focus on the basis of specific-need-analysis
Business history of at least 6 months

Benefits

These cash advances enable the entrepreneur to address the monetary requirements for an additional, complimentary start up or business expansion. The lenders have generated a user-friendly environment to meet business requirements and guide businessmen in the optimal use of funds. The finance is made available without any hassles and like the industry handling personal loans, this business segment too, has scope for least document submission.

The lenders of cash advances make repayments easy by accepting credit cards as a payment mode. The lenders have made access to the finance option easier by eliminating unnecessary documentation. Without personal guarantee or application or late fees, securing a small business cash advance is easy and a viable option.

Commercial Financing for Business

Financing a business, keeping the economic perspective in mind, is very different from obtaining a loan for personal reasons. From the economic perspective the expenses that have to be borne by a business can be broadly classified into the following categories: Fixed Costs and Variable Costs. Fixed costs remain the same regardless of the level of production. In other words, whether or not a business is in operation, the amount of fixed costs will remain the same. Expenditure on machinery and equipment is an example of a fixed cost. Variable costs, on the other hand, change depending on the level of production. Variable costs are directly related to the level of production. The cost of raw materials is an example of variable cost. Hence, from the point of view of an economist: Total Cost = Total Fixed Cost + Total Variable Cost

From the perspective of accounting, costs can be classified as implicit or explicit. Explicit costs are expenses which can be accounted for in monetary terms. Both, rent and wages paid, are explicit costs. On the other hand, a businessman who does not pay his wife for assisting him in day-to-day workings of a business, is said to incur implicit costs. Hence, for the purpose of accounting, total cost can be defined as: Total Cost = Explicit Cost + Implicit Cost

The above discussion clearly illustrates the importance of commercial financing.

Business Commercial Financing

Commercial financing is needed, not only during the start up phase, but also during the development, operating and growth phase. Let us take a look at the financing required during these two phases.

Operating Income

Operating income is a financial figure that is derived by the employees of an accounting and finance department, at the end of a financial period: a week, one month, a quarter, or a fiscal year, etc. Such a duration sometimes is also known as fiscal period. Operating income is often simply defined as the income or revenue of a firm or a company that is derived form regular operations and sales. Such an income is basically the total of all sales minus the manufacturing cost of the goods and operating expenses. Before this income can be derived, another figure that is, gross income has to be calculated. Gross income is the revenue that is realized by the firm or company in one financial period, through its sales and operations minus, value of goods and services sold. It must be noted that, depreciation, operating costs and related expenditures are included in this figure.

Thus,

Gross Income = Sales - Cost of Goods Sold - Cost of Closing stock (unsold goods)

Operating income is derived from gross income. Once the gross income is calculated, total depreciation and operating expenses are subtracted from it.

Thus, the operating income formula goes as follows,

Operating Income = Gross Income - Operating Expenditures - Depreciation

In some cases, companies also calculate operating income percentage. This type of figure is basically a ratio between operating income and gross income or operating income and expenditure.

Net Operating Income
From the point of view of accountancy, it is important to calculate net operating income at the close of any accounting period. This figure is derived by subtracting taxes paid or payable, from the operating income.

Operating Income Statement
In companies, especially in the accounting departments, income based figures are derived from structured statements. The following is a pro forma of the operating income calculation statement.

Comprehensive Income

Comprehensive income is a term used in the financial reports of a company and is used to calculate the total profits a company gains. Analysis of comprehensive income is necessary from the point of view of the shareholders and it does not take into consideration any change of ownership. It includes unfulfilled gains or losses on particular investments which a company makes in pension liability adjustments, foreign currency items and securities. This form of income is not listed in the income statement of a company, but is used only when it comes to business financial reporting.

Defining Comprehensive Income

The Financial Accounting Standard Board defines comprehensive income as "the change in equity (net assets) of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners."

Comprehensive income can be defined as a change in the net profit of a company due to events which the owners can't control. There may be some events during the course of a financial year like sudden change in operating costs which were unforeseen, which affects the total profits of a company. It's important to keep a track of comprehensive income as it helps to understand the overall financial stability of a company. While calculating it, things like changes in foreign currency transactions are also taken into consideration. This type of income is quite volatile and it keeps changing every year, in some financial years, it may far exceed the net income while in other years it can be well below the net income.

Getting details through this model is one of the best ways of assessing the value of the shares of an owner during that particular financial year. Each event and transaction is broken down and their impact on the shares of the owner is measured while preparing the report. Thus, it helps to get a clear idea of the present status of the business.

A decrease in this type of income in a financial year may not necessarily mean that the organization is in financial trouble. However, if it persists for several years on a stretch, then there may be a need for better financial management and financial planning.

Formula for Calculating Comprehensive Income

Comprehensive income tries to measure the total operating costs which have made a difference to the value of the interest of an owner in a company. It takes into account the adverse or positive effects of options and dilution and is calculated on the basis of per-share. It does not take into account any transaction in which the owner remains indifferent such as those related to issues of shares at market value and dividend payment.
The period of the income statement; Profit/Loss from income and expenses which are determined in equity shares (it includes positive or negative gain or loss from revaluation and profit or loss from fluctuations in exchange rate) (+/-) Loss/profit due to change in accountancy policy (+/-) loss or profit due to corrections in fundamental errors. The amount which remains is the comprehensive income.

How to Raise Money for a Business

The capital is one of the first things that need to be taken into consideration when one is setting out on a business venture, and there are many different sources to obtain this capital. It is not necessary to stick to one particular source rigidly, even a combination of various different sources can be made use of.

Anyone who is wondering how to raise money for a restaurant, a small business, an advertising agency or any other small-scale venture should keep these methods in mind. Approaching the right people for the money is vitally important for the success of the business, and if this is not catered to properly, the business will be doomed from the very beginning.

Personal Savings
This is the most obvious source of money for starting a business. If you have saved up enough money over the years, go ahead and make use of it for your business. You will not be answerable to anyone, and you will not have to worry about repaying someone. If you choose this option, ensure that you are not using all your savings though. Many people neglect this option because if they lose the money, they will have nothing left to live on.

Venture Capitalists
This is the next most obvious source for your potential business. Venture capitalists are professional agencies who put in money, or venture capital, into an upcoming business. What they get in return is either a share of the business, or a share of the profits, or pretty high interest rates. It may sound like exploitation, but this is one of the best ways to get money. Venture capitalists are always looking for new and innovative business ideas that are likely to succeed.

Importance of Social Cost Benefit Analysis

Social cost benefit analysis is a part of calculating the merits of a project or a government policy. As the name suggests, social cost-benefit analysis of anything is associated with its social impact. This means that how a project or a policy will affect people is analyzed. Only after calculating the opportunity cost of a project, it is approved.

The scope of social cost benefits can be applied to public investment and also to private investment. In case of public investment, it plays a major role in the economic development of a developing country. And, in case of private investments social cost benefit analysis is important as investments are to be sanctioned and are monitored by the government. There are two aspects of calculating the cost benefit analysis of any project. One is the private cost-benefit analysis and the other is social cost-benefit analysis. Though, social cost-benefit analysis is usually undertaken by the government.

Social cost is often in contrast with private cost. Major differences between social cost benefit analysis and private cost benefit analysis are as follows:

1. In social cost benefit analysis, not only profit but also other effects like how will it affect life of others are considered. Whereas, in private cost benefit analysis, the focus of the analysis is on maximizing profits.

2. For calculating social cost benefit, market prices for the factors to be considered cannot exist. Therefore, market price is not the main factor taken into consideration while calculating social cost benefit. Whereas, for private cost benefit analysis market price forms the base of the analysis and the key factor that determines if a project is viable.

Social Cost = Negative Impact
Social Benefit = Positive Impact