Annual Percentage Rate

APR or Annual Percentage Rate should be known to everyone, at least by those who are having loan, mortgage, credit card etc., which deals with interest rate. In order to avoid bugger lenders or different credit card companies and compare the percentage rates on different loans or credit cards.

What is APR?

APR is the Annual Percentage Rate is the interest rate calculated for a whole year, rather than just a monthly fee/rate, as applied on a loan, mortgage, credit card, etc. APR tells you how much you are going to pay annually for the amount borrowed, so it is the cost of loan in terms of percentage. If your loan has a 10% rate, you’ll pay $10 per $100 you borrow annually. All other things being equal, you simply want the loan with the lowest APR.

Why it is necessary to know APR?

The fees included within the APR vary from one lender to another. The fees included within the APR involve charges related to the making of the loan and other fees such as title fee, escrow fee, attorney fee, tax service fee, home inspection fee, recording fee and credit report fee. The fees for the preparation of loans include loan processing fee, underwriting fee, document preparation fee, private mortgage insurance, loan application fee, credit life insurance and appraisal fee. Lenders often mislead borrowers by charging hidden fees. In order to reduce the confusion, US Government made the provision that the lenders have to quote APR to potential borrower, as per the Truth in Lending Act.

For example if the APR is 36%, the percentage is 3% per month, but the interest rate or cost of funds for the entire year may be greater than 36% due to the effects of compounding. By law, a credit card company or other lender must inform the customer of the APR before any agreement is signed. The APR provides the customer with a convenient number against which to compare the cost of funds for other loans or investments.

So you have to do some research work before applying for any loan, mortgage or credit card and find out which is having lowest APR.

How is APR Calculated?

APR is the equivalent interest rate considering all the added costs to a given loan. Naturally, it is a function of the loan amount, the interest rate, the total added cost, and the terms. The APR would equal the interest rate if there is no additional costs to a given loan.



1) For example, consider a $100 loan which must be repaid after one month, at 5% interest, plus a $10 fee. If the fee is neglected, this loan has a (year-long) effective APR of approximately 79% (1.05^12 =~1.7958). If the $10 fee were considered, the interest increases by 10% ($10/$100) for the month, with the effective APR being approximately 435% (1.15^12 =~5.3502, as 535%-100%=435%). Hence there are at least two possible "effective APRs": 79% and 435%.

2) For example, a credit card company might charge 1% a month, but the APR is 1% x 12 months = 12%. This differs from annual percentage yield, which also takes compound interest into account.


What are APR Limitations?

Unfortunately, all other things are not equal. APR can include more than just the interest cost of a loan. On a mortgage, APR might include Private Mortgage Insurance, processing fees, and discount points. There are other fees and charges that may or may not be included in a given APR quote. Therefore, you need to look closely at each and every APR.

You can’t simply rely on an APR quote to evaluate a loan. You need to look at each and every charge and expense related to your prospective loan in order to judge whether or not you’re getting a good deal. In addition, look at the bigger picture – you need to know how long you’ll be using a loan to make the best decision. For example, one-time charges up front may drive up your actual cost on a loan – even though an APR calculation might assume those charges are spread out over a longer lifetime (and therefore the APR would look lower).

APR Calculator:

1) Loan Amount (C):----------- 2) Extra Cost (E):---------- (The Extra Cost (E) is the lump sum of all extra costs involved in the loan, which include points, application fee, closing cost, processing fee, title fee, and so on. In short, it's the money you borrowed that you never saw.)
3) Interest Rate % (R):------- 3) No. of Months (N):-------
4) APR (A):------------------- 6) APR (A):----------------- Calculator

The calculator first calculates the monthly payment using C+E and the original interest rate r = R/1200:

P = (C+E)r(1+r)N/(1+r)N-1

The APR (a = A/1200) is then calculated iteratively by solving the following equation using the Newton-Raphson method:

{a(1+a)N)/(1+a)N-1) – P/C = 0

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Life Saver: Debt Consolidation

The rich rule over the poor, and the borrower is servant to the lender.

Don't go in the sea of debt that far, that either you have to choose slavery or bankruptcy. Under the huge burden of debt, either one will go on paying the debt for years, due to increment in interest rates, or have to file for bankruptcy. Both the cases cause immense damage to the individual's credit score and makes mentally depressed. Don't drown yourself in debt ask for lifesaver, ask for Debt Consolidation. Debt Consolidation helps to save your money, so that you can swim out of debt. Debt Consolidation as a life saver not only helps you to swim out of debt with ease but also improves your credit score with time. Debt Consolidation helps the debtor by lowering the interest rates of consolidated debts and bills and lowered monthly payments. It provides lot of flexibility to the debtors so that they can easily swim to the shore.

Five Steps To Become Debt Free



1) "A hundred wagon loads of thoughts will not pay a single ounce of debt" - One has to accept the fact, at right time that he/she is in debt and act accordingly. If not attended properly the situation will worsen with time.

2) "A man in debt is so far a slave" - Stop being slave to your debtor and take professional help. Too many public opinions may confuse you. By seeing your situation (incoming and outgoing finance) they can better tell, whether to take financial help or not.

3) "There is something called Free Debt Counseling" - There are different kinds of Debt Consolidation program. One single kind of program can't be applied for all the debtors. The programs vary on the amount of debt, tenure of payment, debtor's income and various other factors. Various Debt Consolidation Companies provides free Debt Counseling to the debtors and suggests a program which suits best to their situation.

4) "Pay every debt as if God wrote the bill" - After you have enrolled in any Debt Consolidation program make the payments on time, to avoid any kind of late fees or fines. Default in payments should be avoided, in order to get rid of the debt soon.
In case you choose Debt Settlement, you'll have to stop payments to your creditors and make monthly payment to the settlement company. The payments accumulate into lump sum cash after months. The lump sum amount is then paid off to the creditors/collection agency.

5) "Never spend your money before you have it." - Put a check on your expenses, say no to any kind of fresh loan or debt unless and until its emergency. Any new loan would worsen the situation and delay the debt payment. Expense in control would lead to debt in control.

Hooray, there you are on the shore alive and safe, free from the clutches of debt!

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Its Time to Turn your Summer Travel into Cash

I was very excited as Summers were approaching and this time I had made some unusual plans for it. No doubt summer vacations are always very expensive. To afford a good trip it is important for anybody to take a dip into their well planned savings account. I will not consider myself to be smart but yes I think that I played very safely and smartly here. I somehow managed to turn my summer vacations into money making opportunity vacation. And I made huge profits while traveling. This is the reason I decided to post it out so that all of you can do same things and earn some income in your summer vacation this time.

It is really a great idea to earn while you travel

1.) I wrote a lot about my travels : Many people think that it is just not worth of writing where you are traveling. But I think just the opposite. I wrote each and everything thing I did while I was traveling, about exotic locations I visited, different people I met and almost everything. It actually becomes a great source of entertainment for others. I got in touch with a local magazine of my area and shared my experiences in a form of an article. And for each article I was paid by the magazine. So in this way I earned a good income (at least a pocket money for a month or so)

2.) I updated my traveling experiences in different blogs : After reading my article in the local magazine, one of the blogger called me up and asked me to share my traveling experiences, traveling tips, about traveling insurance in his traveling blog. The offer was great. He paid me for the same. I started building a good networking with his fellow bloggers. I also started writing articles in their blogs. In this way for each blog post I was paid, a typical freelancing job. I really enjoyed it.

3.) I sold my trip photographs : I just love photography and even more when I am traveling to some exotic locations. I decided to click some great pictures, pictures that are usually out of our norms. With a little extra effort I got in touch with a stock photography website. I made a deal with them that for each photograph I would charge around $10. She agreed and I started sending her the photographs. Later I also sold the pictures to a local fine print shop. They really appreciated my work.

My traveling bag full of money. I am loving it :)

4.) Create an art yourself while you travel : I have been familiar with some sort of paintings and so as a result of that I started making my own art while I was traveling beautiful places. A lot of time was consumed but trust me if the paintings is good you can get huge sum of money. I managed to sell two of my paintings out of 6. With that money I bought six of my favorite dresses. Isn't it a good idea? I hope I am able to sell other four as well as soon as possible.

5.) I started my own small business : I really played smartly here. I used to purchase local jewelery from the places I visited and used to sell them to my friends and relatives, making sure I am earning a profit out of it. I am still doing this business and very soon I will opening my own Junk Store.

6.) Learn skills : I made sure wherever I used to travel, I used to learn a special skills from the local people there. I visited Beijing last year. There I learned about Chinese Magic. I performed same tricks here in my city and it was highly acclaimed. I started doing my own shows. In this way I earned quite a good amount of money.

Now I am happy, Finally I have some extra hard earned incomes

7.) I acted as a Teacher : I am quite aware of 2 foreign languages including french and German. When I visited China, I taught the local children about these languages. They really enjoyed it and I have decided that I ll learn more of foreign languages.

If you want to share your traveling experiences then do email me or post your comments here.

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Totally Blown Away with Jewish and Muslim Financial Challenges

Have you ever wondered that Religion can play a great role in managing your finances. As a Catholic I am trained to manage my finances in terms of Christianity. But after I read about finances of other religion including that of Jewish and Muslims, I am really in utter shock that Money can actually play different roles in terms of religions.



I was just reading one of the articles in Money Magazine when I came to know about financial religions of different communities and trust me I was just blown away after reading it. It was really a wonderful article where it showcased stories of three different community families with different faiths and how they cope up between their financial stability and values. You can found the stories here.


I was really moved away after reading the article. The christian part was very known to me but the Jewish and the Muslim part, I would definitely like to discuss as it was more interesting and taught me some really good values of religion and money. I do not want to give any long lectures to anyone of you. It is just that I want to share what I have learned.

The Muslim Family Part :

1.) As per Quran, the holy book of the Muslims, You can never earn nor pay any interest. This is very difficult on the part of us, The Americans.

2.) Since no interest can be paid, therefore, no mortgages, no credit cards and limited amount of retirement portfolio.

3.) Education is always an exception here.

4.) The most shocking is that the charitable donations should equals to 2.5% of the net worth. I have no idea how they calculate the net worth, But I am sure they give more percent than what is exactly allocated.


The Jewish Family Part :

1.) They prepare high, extremely high, budget. The cost of a biscuit is not less than $14.99. I wonder what they earn and how they live a living.

2.) The veg and the non-veg items are always kept separately. That means they always have 2 sinks, 2 refrigerators, and almost 2 of everything.

3.) Each and every family members needs to have everything separate. No matter its a car or a house.

I am sure that the financial religion between different communities are taking place in US also, the only difference is that here it is more challenging.

Jewish Tokens

I would love to hear from all of you, what religion you practice and how you manage your finances with it. No matter what our faith is, the only thing i know is that it should be practices with best of our abilities.

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Consumers Feel Protected with new Credit Card Laws

A Reform that was much awaited since quite a long time has now came into existence when President Obama signed into a new law regarding credit cards. The reform was well supported by the house as well as the senate. Trust I am very happy with this decision since it has given a relief breathe to all the consumers. The best part is the legislation passed even when the credit card industry people were against such a decision.

President Obama declaring new credit card reforms

The decision came into act when President Obama came to know that the credit card industry people are taking advantages of the consumers and violating the rights. The legislation was brought up in between because so many people started falling into the trap of credit card debt.

But in my opinion the worst part is that the legislation will make the rules effective not before 2010 which is quite far away from now.

Let me quickly discuss the ways in which this new reform would help the consumers :

1.) Nobody will be allowed to keep the credit cards until he/she is 18

2.) The rate will be increased if in case you are 60 days late and will restore the original rate after 6 months of minimum required payments.

3.) By order, all the credit card companies need to post rules on the internet.

4.) In case of any interest rate hikes, the credit card companies are need to inform the consumers in advance 45 days.

5.) It forces them to apply for payments for the highest interest rate first.

6.) No credit card companies will be allowed to increase the rates, no matter you are late on payments to any lenders.

I am really impressed with these new rules, but only one thing with which I am not satisfied is the effective date which has been fixed in Feb, 2010. Avoid paying any kind of penalties if you don't have credit card debt. Now there is no need to wait for the government to help you. You can easily help yourself. 

I just noticed that our President is left-handed. I wonder how many left-handed presidents we had? Let me know how many of you are satisfied with Obama's New Reforms.

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Ways to prevent Identity Theft

Identity Theft has become a natural phenomenon these days and the most painful thing is that, Identity theft is growing day by day. This is a criminal offense but the criminals are becoming more and more sophisticated day by day. Millions of people have become victims of identity theft and this is like a nightmare if it occurs to you. So we should be more careful so that we can prevent identity theft and protect ourselves from identity theft.



Helpful tips to prevent identity theft:

1. Keep all your personal information and documents safe and secret, like your back account number, credit card and ATM card number, your social security number etc.

2. Do not share your important personal information over telephone or internet. Sharing personal information over telephone and internet is highly risky.

3. Do not give your social security number to anyone. You may need to give your social security number when paying tax or at the time of identification, but otherwise there is no need to share the social security number. If anyone asks you to give the social security number then you should why he needs it.

4. Use safe passwords to all your accounts and memorize the passwords. You should also memorize the social security number and password.

5. Check your credit report at least twice a year from all the three credit reporting bureau.

6. If you find any mistake then try to correct it as soon as possible so that you have not to face any inconvenience in future.



7. Check whether all your bills come every month. Other wise the criminals can steal your credit cards documents.

So if we can be a little bit careful then we can easily prevent Identity theft. Hope it helps. Feel free to share your thoughts and suggestions.

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Can bankruptcy stop foreclosure

Can bankruptcy stop foreclosure?
In this financial crisis, foreclosure is a common phenomenon. So how can we stop foreclosure? Can bankruptcy stop foreclosure? Yes, definitely; bankruptcy can stop foreclosure but it should be your last option to choose. There are other options available which can stop foreclosure, like- short sale, loan modification, loan repayment plans, forbearance, deed in lieu of foreclosure etc. If any of these options don’t help you to stop foreclosure then you can choose to file bankruptcy .

How can bankruptcy stop foreclosure?

There are different types of bankruptcy but you can choose to file bankruptcy chapter 7 or chapter-13. You should better hire an experienced bankruptcy attorney who can help you to file the bankruptcy properly. As soon as you file bankruptcy, the creditors cannot harass you and foreclose on your property.

If you file bankruptcy chapter-13 then you will be able to pay off the creditor with an affordable repayment plan made which will be made by the bankruptcy court. It will affect your credit score and you may not be able to get a loan in nest 3 to 5 years but the best thing is that you can avoid foreclosure which can affect your credit score much more than bankruptcy chanter-13.


Bankruptcy chapter 7 is really your last option to choose. It will affect your credit report almost like a foreclosure. Your credit score will be dropped by 250 to 300 points and bankruptcy chapter-7 will be shown on your credit report for 7 to 10 years. All your non exempt properties will be sold to pay off your creditors, but the creditors will not be able harass you or they will not be able to demand the deficiency judgment.

So if you are facing foreclosure then check out all your options available and talk to your lender as soon as possible. If no option suits and your lender is not co-operating with your then filing bankruptcy is the option that you can choose to avoid foreclosure. Hope it helps. Please share your thoughts and feel free to ask if you have any questions in your mind.

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