Ways to Stay Out of Debt
If you are worried about getting into debt, then you should take a good look at your finances and come up with a budget that will allow you to live within your means. It will be even better if you can find a way to put by some savings as this will ensure you have an emergency fund to use instead of being forced to go into debt if you suddenly find yourself in need of a bulk sum for repair work, a new car or medical bills.
You should begin by making lists of your outgoings and income. Make sure you allow for all of your outgoings. It can be easy to overlook less frequent payments or ones that seem small individually but which can add up to a substantial amount.
Once you know how much you are spending and earning, you should make sure that the amounts balance. If you are spending too much, then you need to find some way of cutting your costs or of earning some extra money. You may want to change your shopping habits by buying less or shopping in more affordable stores, get a car that uses up less gas or take on some overtime at work, for example. If you find it difficult to keep track of what you are spending when you use a debit card then make sure you use cash instead.
Some of your expenses will vary from month to month, and you should set a limit on how much you will spend on these. If you spend less than this limit, you can add the remainder to your savings account.
Having some savings set aside will be a huge help if you are trying to stay out of debt. Rather than relying on borrowed money to cover bills that arrive before payday or to help yourself out of an emergency, you can use your own money. You should invest your money in a savings account in order to earn a good rate of interest. If you build up a large amount of savings, then you can look at some riskier, but potentially higher earning investments, but remember that you should always have a secure, easily accessible lump sum saved up which you can use when you need it.
If you are going to stay out of debt, you will need to make sure that you have the right attitude towards money. You must not be tempted to buy what you cannot afford. You must not be tricked by offers of credit cards, store cards and other borrowed money that will end up costing you a lot more than you may expect. You should concentrate on saving rather than spending your money. The only safe way to borrow is to borrow from your own savings. When you need some extra money, take it out of your savings, and then make sure that you pay it back and build up your savings again.
Common Myths on Sale and Purchase of Properties
As a lawyer who sometimes deals with the sale and purchase of properties, I’ve come across a few common myths or perceptions people have before the enter into such transactions. With that in mind, these are some of the most common myths that people have when they are about to get themselves into the selling or the buying of a property:-
If I am selling, I don’t need a lawyer
Many sellers (I’ll describe them as Vendors) assume that if they are selling (and receiving money), there is no risk on their part and therefore, there is no need to spend money appointing a lawyer to act for them. Afterall, most if not all, buyers usually appoint a lawyer. So, they feel that it would be better to just let the buyer’s lawyer do the job and all they need to do is just to sign on the dotted line. That’s perfectly fine if the Vendor is capable of understanding the legalities of the terms and conditions in a sale and purchase agreement and, if the property being sold is free from encumbrances or restriction-in-interests. Otherwise, the Vendor would have to sort out the discharge of charge or obtain a receipt and reassignment (if there is an existing loan) or to apply for state consent (if the property is leasehold) by themselves.
If the Vendor has a lawyer, I don’t need a lawyer
Likewise, some buyers think that it is perfectly okay to just rely on the Vendor’s lawyers. The thing is, the Vendor’s lawyer’s interests and professional duty is to protect the Vendor and to draft the agreement favouring the Vendor. Unless the buyer knows what he is in for, it would be foolhardy for the buyer to be unrepresented.
I will get my keys as soon as I sign the sale and purchase agreement
No, you won’t. On the average, you will probably get your keys between 1 to 3 months after the signing of the sale and purchase agreement. The agreement needs to be stamped, the transaction needs to be valued by the Inland Revenue Board and monies need to be paid. Make that longer if the property is leasehold (where state consent is required), charged to a bank and or the purchase is to be financed by a bank.
Inflate The Purchase Price So That I Can Get A Better Loan
Buyers who need a full loan to purchase a property sometimes think that if the purchase price is inflated, the banks will grant them a loan which would cover the original purchase price. Eg. the property is to be sold for RM100,000.00 but the buyer can only qualify for a loan of RM90,000.00 (usually banks offer a maximum of 90% loan). So, the price is inflated to RM112,000.00 so that the buyer can get a loan of RM100,800.00. However, they fail to realise that the banks usually will conduct a valuation of the property to ascertain the market value and the loan approved usually is dependant on the market value or the sale price, whichever is the lower. By the way, as far as the Inland Revenue Board is concerned, stamp duty payable would be based on the market value or the sale price, whichever is the higher and that can add up to quite a lot.
Inflating the Sale Price would be good for the Vendor
Some buyers persuade the Vendor to inflate the selling price for the reason described in the immediate paragraph above and pay the Vendor a little bit extra to cover any “inconveniences”. Vendors better think twice because pursuant to Budget 2010 culminating with the Finance (No. 2) Bill 2009 which was gazetted via the Real Property Gains Tax (Exemption) Order 2009 effective 1st January, 2010, Vendors will have to pay tax on the chargeable gains. And inflating the sale price would increase the chargeable gains.
