The Good Debt


Debt nowadays is considered as a normal part of life. With all the companies that offer ways to pay for what you want, it is now very easy to be in debt. Debt in definition is basically something, usually money, which is owed by one party to another. By borrowing money, you can easily buy what you need and what you want. This could just as easily put you in a rut, not knowing what to do to pay what you owe to others. When you are in this situation, check out Price Waterhouse Cooper. However, you also have to know that there are Good Debts and most people are not aware of this. Knowing the principles of good debt can assist you where to invest the money that you are borrowing.

“It takes money to make money” is an old adage that is true, especially with life nowadays. Not everyone has enough money to start building what they want and there are microfinance agencies that can help you. Being in “good debt” should not leave you worse than you were before being in debt. This should help you to be in a better financial situation. Here are examples of good debt.

  • Student Loan

Student loans help more people to pay for college and graduate. This is considered a good way to invest the money you would borrow because more jobs are offered to graduates than non-graduates. Better jobs and better opportunities are offered, giving graduates more options and ways to pay off their student loans.

  • Real Estate and Mortgage

 Mortgages and real estate loans are good investments because these allow you to have your own home to live in, or a land in your name. These can also be financial assets once the loans are paid off, as the value of houses and lands grow in time. Paying for your mortgage monthly is also cheaper than paying for a house you are just renting and would likely not be yours in the future.

  • Business investments

Starting your own business is a tricky investment. Starting with a good, sensible and realistic business plan  would ensure that your business would be successful. Borrowing money to start your own business is a good debt when you ensure that all your plans would succeed. The money you would loan to start and develop your business would be very beneficial to make all your plans successful.


“Choose your debt wisely….”

To be good debt, start by having a clear vision of where the money will go once you borrow it. Do not stop there; make sure that you also have a plan on how to repay the debt, either as quickly as possible, or through regular and reasonable payments. Find the cheapest possible way to borrow the money you need. Always check for what would be good for you, like the term and charges, amount of money, and interest rate.

Different companies offer enticing loans and financing that would help you with what you need. These come with a lot of conditions, requirements and sometimes hidden charges. Always take a second, more in-depth look at the choices you have to make, especially when it comes to money. Many may still say that a good debt is still a debt, but only a select few can easily pay for what they buy. Take a better approach in borrowing money, knowing where to invest it and how to pay for it. You should control your debts, not the other way around.



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Networks and Networking in Microfinance

Networks and Networking in Microfinance

microfinanceMicro finance is a term that refers to different financial services. The target groups of these financial services are usually people who have lower incomes. Thus, these people don’t have the opportunity to access to the variety of other financial services. Different services that have been offered by micro finance institutions are usually smaller monetary amounts. These products include insurances, loans, savings and fund transfer.

Those who promote micro finance and its services claim that the main goal of these financial services is to offer to the poor the access to a variety of quality financial services and in order to help them get out of poverty. They also believe that this is a sustainable means of economic development through the support of small business.

Micro credit is one of the main services of micro finance. This is the provision of loan services that is offered to poor people as well as people with lower incomes.

Micro credit

It is quite normal today that people who don’t have enough money when they need it, they will borrow that money in order to meet their needs. The existence of micro lending finance network offers people the opportunity to gain a small loan at, in their opinion, affordable cost. People usually need money in cases of life cycle events (education, weddings, childbirth and home building, in cases of disasters such as fires and floods, emergencies (death, illness, unemployment), and in cases of investment such as expanding a business, improving assets or buying land.

People meet these needs usually using a variety of different products provided by micro lending finance network. The others use the financial services such as savings and insurances in cases when they want to safe their money for the future or for the old age or to simply have the protection against risk.

Micro-entrepreneurs and small-business usually use loans to overcome financial obstacles while building or expanding their business. Financial services for entrepreneurs and small-business usually include: micro loans, short-term loans, capital access revolving loan, insurance and order based loans.

According to the promoters of such financial services, it is all for the sake of poor people and their main goal is to help people working their way out of poverty. But high interest rates on loans are not supporting this story.Generally, the higher the risk for micro finance institutions, the higher interest rates.

 The expansion of micro lending finance network and a wide array of its product offers people the opportunity to borrow money required for different services but the high interest rates are still the biggest constrain for most of the poor people who are the main focus of these financial services. On the other hand, the main benefit of micro loans is the fact that they are accessible, this accessibility presents the opportunity to set up business or to extend education. The small loans enable people to invest these loans in order to improve their socioeconomic status. As for the micro-entrepreneurs, loans are way to build and support new business and this can lead to the economic development of their community.

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Micro-lending Finance Network  Types

Micro-lending Finance Network Types

    Before going into types of micro-lending networks and their characteristics I will say few words about micro-lending.

   Micro-lending is also known as peer-to-peer lending and it represents lending of smaller sums of money without financial intermediary. Most of these lending are unsecured personal loans and they don’t have collateral.

   Now enough about common knowledge and let us focus on why we are here. Micro-lending finance network is known as institutional network and within itself we have two networks, focal network and principal network

                                                   Focal Network


Focal networks consists of formal sub sectors which in turn consist of clusters of people ( from 20 to 30 ) that have related business choice. Two or three people are chosen from every cluster and they form “hubs” that serve to maintain stability within sub sectors of a focal network. These “hubs” often contain few people from focal network that help with problems that arise.

  Objectives and goals of focal network are focused on practical problem solutions. This focused specific approach helps with removing bottlenecks and with that kind of small acts they improve conditions for whole network. Organization at small level, which impacts the productivity and provides work for many different entities from within that focal network is main goal of a members of focal network.
 Main characteristics of local network is that it operates on two types of linkages. First type of linkage is between administrative hub and hub members, while the second one is linage between members of a hub. These linkages must be strong in order for a hub and network to prosper. Information sharing is the most important aspect of both of these linkages, but it is the most important for relationship between members. By sharing important information and avoiding secrets that can harm other members, trust is built between members and thus cooperation leads to acquirement of capital.

                                                   Principal Network


Principal network operates over focal network or networks. Principal network pub is compromised from chosen individuals from all focal networks that work under it, and representatives from microfinance institutions. This form of governing body that is a key for success of an institutional network. All representatives of their focal networks must be chosen wisely because they decide what path and what resources are brought and injected in their network.

Objectives and goals of principal network are connected to problem prevention by information sharing between different pub representatives. Also their objectives are to provide support from microfinancing institutions for those parts of focal networks that need it. Creating and improving reputation is the goal of principal network. Among other things, visiting conferences and presenting their network successes is just one way they raise reputation.

Characteristics of principal network are related to connection of microfinance institutions with right focal networks. In some cases, only thing that holds members together is their relationship with the same microfinance institution. Different focal networks obtain different information which may be irrelevant to them but may be critical to other focal networks but they are not aware of that and are loosely connected to that network, and in these situations microfinance institutions play their part. They gather that information, analyze it and after confirmation of a value of that information to certain network they pass it to member of principal network that represents that focal network.

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