APR is one of those wonderful acronyms. Everyone’s seen it, everyone kind of knows what it means but no one’s exactly sure. APR stands for Annual Percentage Rate.

It illustrates the true cost of the money borrowed on loans, mortgages, and credit cards, and by law, consumers must be provided with that information, although the rules governing credit advertising under the Consumer Credit Act set out "triggers" that indicate when an APR must be shown in an advert.

The APR calculation takes into account the basic interest rate, any initial fees, when interest is charged (i.e. daily, weekly, monthly or annually) and any other costs you have to pay. As all lenders are legally required to calculate APR the same way, it should enable consumers to make meaningful cost comparisons between lending products, including any fees that are added in addition to interest charges.

Now, that’s the basics out of the way. Now things get a little more complex. You’ll have seen Typical APR written down most of the time. Typical APR means that 66.666% or 2/3rds of their customers got that interest rate or less. However, APR can range. That remaining 3rd may have got a much higher rate.

OK, now what’s a variable APR? All lending in England & Wales is based upon the bank of England Base rate. The company then adds onto that based upon the risk they perceive in lending to you to come up with your interest rate. They then add any fees and such like to work out the APR. Now because the Bank of England base rate goes up and down a variable loan goes up and down with it. If the loan is not fixed and is variable then the interest rate you’re paying on your loan is variable too. At the moment, despite recent rises in the base rate, lending in the UK is still quite cheap. However consider if you take out a variable rate loan. Could you afford the repayments if the interest rate doubled, or even tripled? It’s worth considering.

No Need To Be A Mathematician

The balance between your income and your spendings is a simple matter. However, thanks to modern credit tools, you can get into such a spending inferno that could end up in disaster, caused by the fact that you lose sight of that simple balance, on a monthly basis.

That Wonderful Little Piece Of Plastic

Credit cards are fantastic when you consider that you don’t have to go around with cash and even pay for what you buy at the end of the month. The trouble comes when you start buying too much and have to refinance. That is a dangerous tool that must be used with extreme care. This fact alone can mean the turning point in the middle of a mortgage repayment or a home equity loan.

The Beginning Of The End

You have no equity left to lay your hands on, in order to pay off the credit card debt. Well, I don’t need to go into detail of the inminent default and risk of losing your home, just because you let things get out of hand.

A Miscalculated Loan

It often happens that you take a loan with a shorter term because you think you can manage. When you realize that, you also realize that a remortgage is of no use, because the rates have gone up. Even more so, there are fees to be paid for the remortgage to extend the loan period. So, you are stuck in the mud.

My Luck!

You might trust your luck to get an unsecured loan to pay for the swapping fees, but what about the increased interest? Even if you do get the unsecured loan, the monthly instalment has to be made, adding even more expenses to the one you have for the mortgage. This situation could be catalogued as jumping from the pan into the fire.

There is only one solution to this: Get a better job, an extra job, increase your income in such a way that you escape the claws of bankruptcy… or risk losing your home due to default.

It All Sounds Too Far-Fetched

Yes, it certainly does, but it is also quite probable. Surfing on the Net some weeks ago, I came across a survey on mortgage default. It states that, on average, 1,5% of mortgage borrowers run into default, with a high peak in the State of Ohio of more than double. These figures correspond to 2005, after a dramatic increase during the previous six years.

The Real Solution

Shop around carefully before finally applying for your mortgage. Write everything down: The cost of the loan, the monthly payment with a little allowance in case something unexpected arises, whether you can really afford the cost of the house you want to buy, everything you can think of. Ask the loan officer whatever you are not sure about.

What you must be sure about is that your home will remain yours. Get free quotes on-line, work out your budget for a typical month during the payment period, do this a dozen times or more but don’t go for your first loan without finely calculated figures.

Ah, spring is in the air. A crisp breeze is blowing, the sun is shining again, and flowers are just beginning to blossom. This is typically a time when we open our windows, sweep the dust out from under the sofa and clear away the clutter that we hoarded over the winter months.

Spring cleaning is underway!

In addition to your physical surroundings, there may be another area to spring clean that you haven’t yet thought of.

At the end of the day, we could all use a little extra money. How about taking a bit of time to spring clean your spending habits?

The exchange of money for goods and services actually was quite an ingenious invention. It is a great tool of exchange, that allows us to accumulate wealth and then later decide how much of that wealth we would like to put toward the acquisition of things we need or desire.

Often we get caught up in spending habits that have little to do with the initial purpose of exchanging money.

* We purchase items spur of the moment without much thought.

* We purchase items because we think it will make us feel better.

* We purchase things with the notion that they might make us look good.

Yet, in the end, these spending habits leave our bank accounts empty and us wanting for more. Essentially, these spending habits actually create the atmosphere of lack and insecurity that we are attempting to fulfill with our spending habits.

See the cycle?

Ready for a little spring cleaning? Take a moment and review the following:

* What are your spending habits like?

* What are you sweeping under the sofa, not wanting to admit it's there?

* What are you spending that you don't really need yet are attempts to feel good?

* What clutter are you accumulating that cost you money and you are now spring cleaning out of your home?

* What are you willing to eliminate that could give you a little extra money at the end of the day?

* How many articles of clothing did you purchase that still have tags on them in the closet?

And, here are some money-saving ideas that you can implement right now!

* Make those Christmas returns!

* Highlight the items on your bank statement that you didn't really need and eliminate them from your spending this month.

* Empty your pockets at the end of the day and throw your change in a jar.

* Make coffee at home and go to the coffee shop as a special treat.

* Create a simple budget for yourself this month.

And, just as our physical spring cleaning task becomes easier each year when we establish empowering habits, so will your spending spring cleaning.

I challenge you to eliminate your spending clutter this spring. Make it a goal to invest only in higher pursuits - things that enhance your career skills, enrich your spirit, sharpen your financial skills, improve your relationships. In time, you will find that you've traded your lackadaisical attitude toward money for one of abundance.

It is important for everyone to understand basics of personal finances and also effectively use them .

Any individual has two types of income . Assured income as well as income which is not assured.

Assured income is one which will keep flowing whether you are personally working or not . For example, Rentals, dividends, royalties , Interest , etc .

On the other hand income which is not assured is one which stops flows the moment you stop working. For e.g Paycheck, Bonus, etc ..

Similarly , there are broadly two types of expenses .Fixed and discretionary. Fixed expenses like , taxes, Debts, Insurance, household expenses , etc .

To achieve " personal financial freedom " we should be concerned about a Flow , which we can term as freedom flow . This is the difference between the Total expenses and the assured income .If the result is negative , then one can smell freedom . On the other hand if the result is positive , it implies continued imprisonment in the trap of debt.

There is a simple formula by which one can determine how long would a person take to achieve "personal financial freedom" .

N = Freedom Flow / AIOP x Plough back

Where , N = No of years required to achieve threshold of freedom .

Freedom Flow = Total expenses - Assured income

AIOP = Assured Income that can be generated as a percentage of the plough back. A 10 % conversion is a good reference .

Plough back = (total income) - ( total expenses ) . This is the money available for conversion to assured income .

To take an example, if for a person ,

Assured Income = $25,000

Total Income = $ 1,00,000

Total Expenses = $ 85,000

AIOP = 10 %

Then the plough back is $ 40,000.

So , as things stand , the number of years required to reach the threshold would be :

60,000 / .1x 40,000 = 15 Years .

Now , let us say the person is able to reduce his total expenses by 20 % and improve his AIOP to 15 %, then the number of years required for him to achieve threshold would be :

43,000/.15 x 57,000 = 5 years .

Such is the power of this equation , which essentially means that we should

Keep the freedom flow as low as possible . Increase income and reduce expenses .

Maximize AIOP

Maximize the plough back .

This formula , however does not take into account inflation . It is best to use this as an indicative tool rather than dissect it for accuracy .

Presumably the object of having a bank account is to save you money, or at least to help you more easily and properly manage it. But there are also several ways in which your use (or misuse, as the case may be) of your personal banking account could lose you money. Below you'll find out how to avoid the eight most common blunders when it comes to personal banking.

1. DON'T pay more than you have to: If you're like most people, you haven't really made the effort to comparison shop for the best personal banking terms you can find. Most bank accounts have some sort of fees or another associated with certain aspects of utilizing and/or maintaining your account, from annual fees to check-writing fees to fees for falling below a minimum balance to so-called "overdraft protection fees" to counter fees (to name just a few). These fees can slowly eat away at your savings. Banks change their policies all the time, so it's never a waste of time to look around and make sure that you really are getting the best deal for your money.

2. DON'T ignore your bank statements: When your bank statement arrives in the mail, do you simply toss it without even reading it? Many people do. But bank statements often contain errors, and the only way you'll know when one occurs is if you read through each statement carefully and compare it against what you know to be true (hopefully by way of a regularly balanced checkbook). Without reviewing your statements, you could wind up stuck with a fee for a payment you didn't make. You could find that someone has copied your ATM/debit card and made purchases against your account. The only way to catch this is to take it upon yourself to read your statements and check them for accuracy.

3. DON'T be careless with ATMs: Be conscious of other people around you when using an ATM. Do not write your PIN number anywhere near your ATM card and be sure to shield it as you type it in. If you make a mistake writing out a slip, don't just throw it away or leave it lying there - pocket it and dispose of it properly later. If you request a receipt make sure you take it. And many machines automatically spit out a receipt after a transaction is completed whether you request it or not. Be alert to this happening and make sure to grab that receipt before you walk away.

4. DON'T leave paper lying around: After you're finished reviewing your bank statements, don't just carelessly leave them lying out where anyone can see - or steal - them. Even simply throwing your statements away can lead to identity theft. Digging through trash is one of the primary ways identity thieves get the goods on their victims. Don't make yourself an open target. Lock away any bank statements or other related documents that you wish to hold on to. Invest in an expensive shredder - the confetti type are best - for the ones you don't. And then remember to use your locked file cabinet and shredder diligently whenever you are through with your bank statements. It's for your protection.

5. DON'T bank online in a public place: Forget about people looking over your shoulder for a moment. An even bigger threat in banking online at a library or a cyber-café or other WIFI hotspot is another computer user on the same internet connection being able to snoop on what you're doing. Wireless networks are not totally secure. People can use that opportunity to capture your personal information and sabotage whatever transaction you're making. No online banking emergency is so urgent that you need to make yourself that vulnerable.

6. DON'T be a loyalist: In other words, don't become so enamored with your bank, or so lazily accustomed to it, that you continue to bank there without consciousness of how comparatively good or bad a deal you are getting. If you've consistently borrowed money from the same bank, maybe it's time to start exploring your other options. Even if you shopped around long and hard to find this bank, time passes, deals change. It's worth reevaluating every now and again your decision on where to bank. And it's particularly easy to do this type of research online.

7. DON'T be a stranger: Establish a relationship with your bank and the people who work there. The best way to get the best possible deals from a bank is to let them get to know you. Set up a meeting with the manager of your local branch, just to introduce yourself and key them in to your financial goals. You may never actually need their assistance beyond the norm, but if you do - if a problem arises, an error or a financial emergency - you'll benefit greatly from having already established a rapport with the folks whom you're asking for help.

8. DON'T be afraid to ask: Banks are in the business of keeping their clients. This sometimes means they will go above and beyond their normal service offerings to keep your business. Whether you are looking for a more favorable rate on one of your accounts, free financial software, or even a toaster, don't be afraid to ask about specials. In the process don't forget to remind them how loyal a customer you have been. You'd be surprised how many promotion items that are available to you, but are not given to you. It's just taking up space in your bank's storage room.

In summary, taking care with your banking habits, being protective of your banking information, and remaining aware of how the deal you're getting compares with other deals available to you will help prevent you from making many of the most common and detrimental mistakes in personal banking.