Here are the 5 financial tips for the fourth week of May 2013.

Tip no 1: Taking out soft loans from friends or relatives is a better idea that borrowing from payday lenders.

Taking out a soft loan at zero or low interest rate is a better idea than borrowing from payday loan lenders. Unlike payday loans, soft loans have flexible repayment terms. So, it becomes easier for you to pay back your friends or relatives.

Payday loan lenders know how to do business. If you can’t make the required payments, then they will add extra interest rates and fees upon the loans. Payday loans usually have very high rate of interests. So, the extra interests create double pressure upon you.

Tip no 2: Living on a budget does not mean depriving yourself. Effective budgeting is just living within your means.

It is myth that you've to deprive yourself of all the pleasures in life in order to follow a strict budget. Don’t ever think that you’ve to live on bare minimums. All you need to do is live within your monthly income. This means refraining from useless expenditures. For instance: frequent visits to restaurants. If you want to have a hearty discussion with your friends or family, then choose a park or home as the venue. You can gossip with your friends and family while having homemade snacks. You don’t have to spend extra bucks on burgers or hotdogs.

Tip no 3: Cosigning a loan might seem like a helpful thing but remember that you are assuming a fresh liability.

It is difficult to say "no" when someone asks you to co-sign on a loan. After all, you’re asked for being a co-signer when someone needs money desperately but is unable to get it due to poor credit score. However, you need to be aware of the consequences of being a co-signer on a loan. You take fresh liability after becoming a co-signer on a loan. You’ve to withdraw funds from your savings account and pay back the lender when the primary borrower defaults on the loan.

The bottom line is, you’re not using the loan for your benefit. Someone else is using it. Still, you’ve to pay the loan or be satisfied with a low credit score. Think if you’re ready for it prior to becoming a co-signer.

Tip no 4: If you owe the IRS, it is a best to repay them as a matter of priority. A tax lien does not look good on your credit report.

If you owe the IRS, they give your best effort to repay them. This is because the consequences of ignoring the debt will not be good for you. Uncle Sam map impose a lien against your property for neglecting the debt. The property can be a piece of real estate, financial assets or a personal property. Unless, you pay the full amount to the IRS, you wouldn’t be able to get rid of the debt. Once IRS receives full payment from you, they’ll withdraw the tax lien within 30 days.

Tip no 5: Investing in performing assets is a sound financial idea. They generate a steady income stream.

One of the best investing strategies is to put your money on the performing assets. They help you reap lucrative profits and offset the loss incurred through the non-performing assets. Performing assets can be anything - from bonds to mutual funds to anything that gives you a good return on your money. All you need to do is find those assets and invest in them. If you’re confused or you need help, then consult a financial planner.