Payment Methods
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Cash/Cheque/Debit/Credit
Cash
Physical currency (coins and bills).
Immediate transaction, no fees, widely accepted.
Not secure (can be lost or stolen), not traceable, not suitable for large amounts.
Cheque
Good for large amounts, traceable, can be postdated.
Processing time can take days, risk of bouncing, less common nowadays.
Debit
Immediate deduction, no interest, secure (requires PIN or signature), widely accepted.
Requires sufficient funds in the account, some transaction limits.
Credit
Allows for larger purchases, builds credit history, offers rewards and protections.
Interest on unpaid balances, potential for debt accumulation, fees for late payments.
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Payment Plan
Short-Term Financing
Funds that need to be repaid within a year, often used for immediate needs or working capital.
Long-Term Financing
Funds that are repaid over a longer period, often used for significant investments like real estate, machinery, or business expansion.
Purpose of Financing
Covering daily operating expenses.
Funding new projects, entering new markets, or acquiring other businesses.
Buying real estate, vehicles, or equipment.
Paying off existing debts with new loans that have better terms.
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Leverage Your Home
Home Equity
The part of your home that you own outright, calculated as the market value of your home minus the amount you still owe on your mortgage.
For example, if your home is worth $300,000 and you owe $100,000 on your mortgage, your home equity is $200,000.
Ways to Leverage Home Equity
Home Equity Loan
A loan where you borrow a lump sum of money based on your home equity and repay it over time with fixed monthly payments. It’s like a second mortgage.
Home Equity Line of Credit (HELOC)
A line of credit that you can draw from as needed, similar to a credit card, using your home equity as collateral. You only pay interest on the amount you borrow.
Uses for Home Equity Loans and HELOCs
Renovating or making repairs to your home.
Paying off high-interest debts like credit cards.
Funding college tuition or other educational expenses.
Covering unexpected costs like medical bills.