What a Bootstrapped Business Owner Knows
When you have the cash to throw at a problem, it's really tempting to just spend the money and get it done. But there's a big problem with the beliefs created by having all the money you “need.”
A bootstrapped business is more likely succeed than an angel or venture capital invested business – period. And there's good reason for that. It's called being blinded by abundance.
There's something a bootstrapped business owner knows that an invested business owner doesn't. Actually, two things.
The first key bit of knowledge is where to get the most bang for their buck. A bootstrapped business owner not only has to find the best value out of necessity, but they're more creative about their solutions – which usually means they come up with a better solution.
Secondly, a bootstrapped business owner has to be really selective about where he invests in his business. He has taken a long hard look at his business and knows where the snowball begins – he knows the key areas of focus that will help his business grow by leaps and bounds.
Having too much money is a disability. However, if you're out there looking to get your business invested, don't think you're doing the wrong thing. Instead, just take a moment to figure out what a bootstrapped business owner knows before you spend even one thin dime.
Article What a Bootstrapped Business Owner Knows: Written May 17, 2008
The Number One Credit Card Mistake
I saw a statistic somewhere about the fact the nationwide savings average is actually in the negative if you include nationwide numbers for debt. More people are in bigger debt today than have anything to speak of saved for that rainy day.
It's more than just a little disturbing if you realize that even the 20% of people who have 80% of the world's wealth can't compensate for all the people in debt. Apparently, we have a great big spending problem.
...and it all centers around one horribly wrong belief with credit cards.
As a financial advisor, 99% of the people I helped were all in some sort of credit card debt. When I asked them what assets they bought with their credit card, they just looked at me like I had three eyes.
Chew on this for a moment. When you buy a house, you get a loan. You're buying something that appreciates in value, with a loan that – hopefully – grows in cost slower than the house grows in value.
Why aren't you thinking the same way with your credit card? It's the same concept, except you're buying at a much higher interest rate. If anything, you should be even more focused on making sure that anything you buy on credit will appreciate in value even faster than that interest rate.
Do yourself a favor and stop buying gas, clothes, and whatever other shiny worthless object that catches your eye on your credit card. Limit yourself to buying things that increase in value or will return value – like marketing, advertising, education, software, stocks, and material assets.
By the way, cars aren't assets. Just think about it for 3 seconds.
Cars lose at least 40% of their value as soon as you drive it off the lot. They're just really expensive money pits – unless it's a classic.
The Number One Credit Card Mistake: Written May 15, 2008
Seven Forgotten Ways to be a Responsible Consumer
I like to think of myself as a responsible consumer. That is, I research all the products I buy ahead of time to ensure that it's not only free of chemicals and toxins, but is also produced, packaged, and shipped in a socially responsible fashion.
However, it's not just what you buy, but how you buy that really matters.
These are the seven ways to be a more responsible consumer that I think get overlooked much too often.
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Seven Forgotten Ways to be a Responsible Consumer: Written May 12, 2008
5 Ways to Avoid Student Loans
According to a recent study, two-thirds of undergraduate students graduate with some debt and the average student loan debt is $19,237. That's right, you read that correctly. The average student graduates with nearly $20,000 of student loan debt.
Does anyone else think this is a problem?
To make sure you or your children don't spend your post-college years stressing about student loans, consider these alternatives...
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5 Ways to Avoid Student Loans: Written May 11, 2008
Call Smart, Save Money
I got a call yesterday from a guy with a $14,000 per year cell phone bill. Granted he runs a business and absolutely must have all 10 cell phones -- but still, that's nuts.
I got a call today from that same guy thanking me to no end for the solution I suggested. In all, it's going to save him $12,000 per year. That's like, what, an 86% savings... something like that.
What was that miracle $12,000 discounted solution? It's so simple, I can hear him kicking himself from 6 states away.
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Call Smart, Save Money: Written May 9, 2008
Amassing Wealth is a Matter of Choice
The concept of choice or choosing is one we would be wise to learn at a young age. Yet time and time again, we blame external forces for our own bad behavior.
How many times have you said or heard one or all of the following (or some similar version) throughout the course of your life?
“You made me get angry by not doing what I asked.”
“You forced me to behave badly by doing what you did.”
“I wouldn’t be in this mess if it weren’t for you.”
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Amassing Wealth is a Matter of Choice: Written May 7, 2008
The all-important "available balance"
You would think that since I used to be a financial advisor I would be better with my money -- but I used to overdraft my account at least once a month. It's sad, but my New Year's Resolution was to go just one month without overdrafting.
You see, I do math like a normal human being, and banks do math like... well, banks. I've been doing good though. Ever since the New Year, I have only overdrafted once.
There were two key things I changed which prevented me from overdrafting until I forgot why I set those personal rules and broke one... and overdrafted. I guess you need that one regression as a painful reminder.
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The all-important "available balance": Written May 6, 2008
Why spend $100 when you could spend $400?
I spent $400 the other day, all in one day -- and it was quite possibly the smartest thing I ever did.
Normally you would think such a splurge would be really dumb, but spending more all at once is a much better idea for a lot of reasons. For one, it gets your buying bug fed. Secondly, you make smarter decisions when large lump sums are involved.
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Why spend $100 when you could spend $400?: Written May 1, 2008
The Thoughtless Thief
I use to steal money. Yup! That's right. I would wait until my mom wasn't paying attention and I would swipe a twenty dollar bill right out of her purse. I was 10. She never noticed which was so cool! I continued my bill swiping late into my twenties. Embarrassing and awful, I know. But I am here to admit the gory details of my mismanagement of money and I believe that is where it started; stealing, quite innocently from my parents.
You see, it wasn't just the bill swipe... it was the searching of pockets after my dad got home from work (yes, still 10). I thought it was quite clever, actually. He would leave change in his suit pockets and I would find ways in which to redistribute the change. Call it lets say my own little 'economic stimulus package.' Other than the fact that I was lifting money from my parents (stealing seems so strong) what is curious to me still, to this day, is why they never noticed? They weren't playing dumb. They just didn't have a clue.
We were not rich but we had money. We had everything we ever needed growing up. We were spoiled. My parents were generous and wanted us to have what we wanted because their parents weren't as capable of giving them what they wanted. I don't think my parents ever managed a budget. If they did, they would know that twenty-dollar bills went missing mysteriously, often.
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The Thoughtless Thief: Written April 21, 2008
Five Ways to Reduce Your Chances of Being Audited
With tax day looming large and the IRS preparing their proverbial red pens, you may be a bit concerned about being audited. Just the word "audit" is enough to send tingles up the spine, but it really isn't as dire as it sounds. As long as you are honest and careful, then you should have nothing to worry about. Besides, your chances of ever being audited are extremely slim.
Despite these words of comfort, you are probably still very eager to keep a low profile as far as the IRS is concerned. The following five tips should make that slim chance of an audit even slimmer.
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Five Ways to Reduce Your Chances of Being Audited: Written April 4, 2008
Eight Avoidable Causes of Business Debt
Entrepreneurs are the brave souls who make our economy go, or at least they were when our economy was actually going anywhere. Especially in this currently questionable financial climate, starting your own business is undeniably a dicey proposition....
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Eight Avoidable Causes of Business Debt: Written March 28, 2008
Thoughts on Bad Credit Home Mortgages
Poor credit ratings, without doubt is the biggest hindrance in securing a loan. However, when it comes to home mortgage, you have better chances of getting a loan. Bad credit home mortgage or mortgage for persons with poor credit score is possible. The main reason for lenders releasing money to home mortgage is that they consider home mortgage as relatively safe. You provide your home as collateral and no one can go to thin air with his or her house. People are also likely to pay their due, especially when it comes to something that affects their home.
The main advantages of home equity include:
- Lower interest rates - since it includes the big amount risk free business, lenders provide you with low interest loans.
- Tax deductibility - federal financial laws view your paying for home eligible for tax deductions.
- Availability of bigger amounts as loan - up to 80% or more of the total value of your property is available as loan.
- Low monthly pay - you can completely pay the loan over many years, in 10, 20 or 30 years.
- Longer terms up to 30 years
- Easier to qualify with bad credit score - lenders have your house as collateral. It is thus possible to attach your house in case you default in your payments.
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Thoughts on Bad Credit Home Mortgages: Written September 30, 2006
Are you being overcharged for Bank Overdrafts?
Unauthorised overdraft fees. These are three words that worry every bank customer. An unauthorised overdraft fee is the fee charged by a bank when customers go over their overdraft limit.
These fees can be very steep, with some banks charging high premiums for customers who exceed an agreed overdraft limit by as little as a few pence. A recent consumer report suggests that bank customers paid more than £4 billion pounds in unauthorised overdraft fees in 2004.
Scale Of Overdraft Fees
The BBC have reported that the seven major banks charge unauthorised overdraft fees of £25 to £38 pounds. Interest rates on the unauthorised amount can also be high. While some banks charge under 8% interest, others have interest rates that hover around the 30% level.
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Are you being overcharged for Bank Overdrafts?: Written September 12, 2006
How do mortgage companies get away with this stuff?
I feel like I'm already a bit jaded and cynical about marketing, especially in the financial world - hence my creating this Web site in the first place - but as a homeowner, there's still one area of finances that astonishes me, and that's mortgage refinance companies.
Have you ever received a letter from one of these firms? They not only go far out of their way to hoodwink you into opening the letters, making them look like legal documents, letters from your own mortgage bank, or worse.
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How do mortgage companies get away with this stuff?: Written September 5, 2006
How to understand financial statements
Financial statements (or financial reports) are a record of a business’ financial flows and levels.
The big four statements are:
1. Balance sheet which describes a company's assets and liabilities.
2. Income statement which describes a company's income and expenses.
3. Statement of Cash Flows which describes how corporate operating, investment, and financing activities have affected the company's cash position.
4. Statement of Retained Earnings which describes changes to shareholders equity (for example a payment of dividend).
Because these statements are often complex an extensive set of Notes to the Financial Statements and management discussion and analysis is usually included. The notes will typically describe each item on the Balance Sheet and Income statement in further detail. In many cases the notes are much longer than the financial statement they are elucidating.
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How to understand financial statements: Written July 25, 2006
How safe is online banking?
Today, people are aware of the concept of online banking offered by several banks, of which some are newly opened banks and some are expansions of a well-established banking company. But one question remains to be answered, is Online Banking safe?
Despite the cut-rate deals offered by most Online Banks, numerous customers are questioning themselves about the safety of Online Banking. Most of the newly established online banks inform their customer that they have the advanced and secure technology to insure their client’s accounts with total confidence and give the assurance that their security is the one that you can trust.
Despite of all these assurances given by these Online Banks, most customers are still worrying, because their confidence is already shaken by computer viruses and hackers. Even a very established bank suffers online security malfunctions. The very reason why customers fear online is because if, in fact, their account was compromised, it could be a life-altering virtual nightmare of stolen identity and depleted funds.
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How safe is online banking?: Written June 28, 2006
How safe is online banking?
Today, most people are aware of the concept of online banking offered by a wide variety of different banks and financial firms, of which some are newly opened banks and some are expansions of a well-established banking company.
But one question remains to be answered, is online banking really safe?
Despite the cut-rate deals offered by most online banks, numerous customers are questioning themselves about the safety of online banking. Most of the newly established online banks inform their customer that they have the advanced and secure technology to ensure their client's accounts with total confidence and give the assurance that their security is the one that you can trust.
Despite of all these assurances given by these banks, however, most customers are still concerned, and their confidence is already relatively weak because of the ceaseless barrage of computer viruses and hackers. Even a well established bank like Wells Fargo or Citibank suffers online security malfunctions. The very reason why customers fear banking online is because if, in fact, their account was compromised, it could be a life-ruining digital nightmare of stolen identity and depleted funds.
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How safe is online banking?: Written June 28, 2006
Get started with your retirement, before it really is too late
So you didn't get started on your retirement savings at 20, but it isn't too late. While advisors warn that if you don't start early, you won't be able to save enough, that doesn't mean that you shouldn't start at all.
Better late than never.
Millions of Americans are over 40 with no substantial retirement savings. The key is taking full advantage of every penny between now and retirement.
First, you need to sit down and estimate how much money you will need to retire. Don't focus on how to arrive at the number; there are a lot of conflicting methods. You don't need to necessarily set the round $1 million figure as a goal, either. Simply get a good ballpark figure by looking at what bills you pay right now and what you intend to pay in retirement. There are a few online retirement calculators that may be useful.
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Get started with your retirement, before it really is too late: Written May 31, 2006
Common Financial Planning Mistakes
Planning for your financial future is by all means a difficult task and to make it harder you have to realize that any mistake may be a detrimental one. For so many aspects of financial planning there is no going back, at least not without some sort of penalty.
The goal is naturally to wind up with a secured future in which you can sustain yourself throughout your retirement.
One of the biggest mistakes, in every sense of the word, is sometimes one that is unfortunately unavoidable. It was one that is worth any possible sacrifice to try to avoid though. This is where people take out a longer mortgage than they really have to. A thirty year mortgage over a fifteen year mortgage winds up costing so much more then you should ever have to pay for a house. Paying it off quicker means you'll have less money to invest in the first years of your home life but you will have a massive amount more to invest later.
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Common Financial Planning Mistakes: Written April 24, 2006
How to Manage Your Student Loans
Almost half of all the professionals I know complain about either their student loan payments or their credit card payments. A few can't even afford their own place because their debts are so high. What are college students doing wrong?
I believe that we simply don't teach our young people how to wisely manage their finances. Personally, no one ever sat me down and talked about credit, interest, saving and debt. This is partly because my parents didn't understand those things either.
Most college students don't understand the consequences of credit cards. The average undergrad in 2004 had four credit cards and over $2,000 in debt. Seniors had the highest balances, probably because over time it simply builds up.
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How to Manage Your Student Loans: Written April 13, 2006
How to avoid common tax filing mistakes
Simple tips that could save you time, aggravation and... oh right, money.
With tax day just a few weeks away, there is no better time to cross your t's and dot your i's.
Unfortunately, many people mix up their i's and t's, forget the dots and make common tax blunders that could easily be avoided with a little extra time and some help troubleshooting.
Even before the big numbers are calculated, it can be the details that often trip up taxpayers. So before you get cracking, here are some simple do's and don'ts that could literally pay off on tax day.
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How to avoid common tax filing mistakes: Written April 5, 2006
A Brief History of Interest Rates
Although I am sure that someone at the State Department will argue otherwise, Cyrus The Great (590 - 529 BC), founder of the Persian Empire, was no terrorist. Quite far from it. Although one might not have wanted him as next-door neighbor, Cyrus II of Persia was very illuminated for his times, according to the Greek historian Herodotus. Cyrus, in fact, beheaded only those who would not bend under his rule. But all others were spared. Such was the case with Croesus of Lydia, whose life was spared by Cyrus after the battle of Pterium, and that of Nabodinus after the battle of Opis and the siege of Babylon. However Cyrus, like all military geniuses, had his ... shall we say ... pet-peeves: if he ever caught anyone charging interest on loans, he would order him tied at the stake, would personally pull out his Zippo and ... woosh, set him ablaze right there and then.
In this day and age of mortgage and lending interest rates as well as returns on investment and yields, it is interesting to look at how the very concept of interest - both active and passive interest - has developed throughout the centuries to the point of where we acknowledge and understand it today. Looking back at how things were once seen is always gratifying, to the extent that it provides us with a measure of how times have changed.
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A Brief History of Interest Rates: Written March 13, 2006