Managing Money for Times Ahead

Wipe our Debt (Photo credit: Images_of_Money)

Personal liquidity is a measure of how much cash you can hold or easily access. If you have a large saving account, you are highly liquid. If your money is tied up in investments such as a house or a car, or you are paying off any mortgages, you have a low liquidity ratio.

The global financial crisis has widely changed everyone’s way of managing money. All of us are facing some kind of secured or unsecured debt that we find increasingly difficult to pay back. Many of us are looking for debt settlement programs to manage our debts. People are no longer willing to take out a mortgage on a house that they cannot afford. Everyone is more conscious of how much they spend on a purchase. This is all because people understand the importance of personal liquidity in times ahead.

Rising unemployment and uncertainty of keeping their jobs has affected people greatly. Investments in a house or a car are getting rare. Personal saving accounts have seen a major boost in the last few months. People are trying to save as much money as they can in order to keep them going in case of losing their jobs.

Personal liquidity is becoming highly important in the current situation of the U.S. economy. The introduction of the debt deal has already forced the people to rethink their way of managing money. There are steps you may take now in order to maintain your liquidity.

You may try to sell off your assets to get cash in your saving accounts. Selling your assets will continue to get difficult as the situation prevails. The prices of commodities are staggeringly high and cutting back on luxuries seems essential. People are trying to budget their expenses and saving as much money as they can manage.

You should also make an effort to pay off your debts and you may try and get a debt settlement program. The interest rates and penalties on late payments are expected to rise and it will become harder to manage your debts. Debts also lower your liquidity ratio and if you are looking for improvement, this can prove helpful.

Creating a source of passive income is also recommendable. You may look for ways to safely invest your money in financial assets that yield a steady return, which can improve your saving account. If possible, you should consider looking for a part-time employment to earn some extra money.

If you wish to invest your saving in fixed assets like a house or a car, prioritize according to your needs. Take up as minimum mortgage as possible since high mortgage will negatively affect your liquidity measure. If you are planning to buy more than one asset, it is advisable to pay off one mortgage first and then take up another one. Rather than tying up your money in assets or mortgages, try keeping as much as you can in a saving account.

Being more liquid will prove to be beneficial for you in the future. Your chances of borrowing money are also affected by how liquid you are. If you have high liquidity, you are likely to get a loan at a much better interest rate. The lower your liquidity, the difficult it will be to get a loan at reasonable rates, even if you are facing financial crises.

If you find it difficult to assess your liquidity ratio, you may take help from a number of financial service providers. They can easily help you in measuring the value of your liquidity. In case of low liquidity, they may also help you in finding ways of managing money in a better way, guiding you with your investments and debt settlement.

Personal liquidity has become more important than ever before. Managing your money better today can lead you to a secure future financially. If you maintain a high liquidity ratio, you can still send your kids to good schools or retire in peace without having to worry too much about economical upheavals. Living within your means, saving as much as you can, and creating a secure investment portfolio is the key to manage your liquidity.