Money Coach : financial planning

Get it right now in order to retire like you want

moneycoach — Thu, 15 Jul 2010 17:15:00 GMT

Nearly half of all older baby boomers, ages 56 to 62, and about 44 percent of all younger boomers, ages 46 to 55, will likely not have enough money in retirement to pay for basic retirement expenses and uninsured medical expenses. A recent study by the Employee Benefit Research Institute, which assumed that boomers will retire at 65, found that lower-income retirees are most likely to run out of money after 10 years or retirement, while higher-income retirees are least likely.

The reality is that most people don't run out of money, they just run out of lifestyle. As they age and spend down their assets, they just downgrade their living standard. Some research shows that Americans will be forced to spend less. After factoring in health care and long-term costs, some 65 percent of American households are at risk of not having enough money to maintain their living standard in retirement.

It's not likely most boomers will retire at 65. Most, assuming good health, will work past 65. According to Sun Life Financial's Unretirement Index, 55 percent of Americans expect to work full- or part-time after age 67. There's also a sharp rise in the number of workers who say they'll have to work longer than planned because of the economic crisis.

Americans are already working longer, whether it's to maintain a standard of living, stay mentally engaged or for the health care benefits. Americans age 65 and up now typically get about 40 percent of their income from working.

But the bottom line is still this: saving more and reducing your standard of living now may the be only way to ensure you have a standard of living later on. Most people will need to up their savings by 25 percent.

If you don't have a clear view of your financial picture, consult a financial planner. Getting it right now means living like you want later.

Managing Your Debt

moneycoach — Sun, 13 Jun 2010 06:54:00 GMT

In the current uncertain economy – managing your debt may be one of the most important financial survival skills you have

many consumers find themselves in an uncertain financial position these days. In the not-so-recent past, using up home equity and leveraging expected (and usually successful) financial market returns is no longer a viable or sustainable method of debt management.

Far too many consumers are finding themselves in a debt hole – as evidenced by the still-mounting home-foreclosure numbers. For more and more consumers, reduced credit scores and the decreased availability of credit due to the tightening of credit by banks and other lenders has come as an unpleasant shock. Some consumers have had their credit limits cut, which may have a negative impact on their scores, while others undergoing serious financial stress due to unemployment or other factors have seen their credit scores drop rapidly.

It is a good time for all consumers to “wake up” and carefully examine every debt/liability account they have – deciding in each case whether the accounts are really serving the purposes for which they were obtained – and if they remain affordable. One example of an unnecessary account is a charge account from a retail store that you no longer shop at . It may be time to finally close that account.

One tried and true rule of thumb is that your total monthly debt should not exceed 20% of your net income.

Your credit score is determined by your payment history, total amounts owed, the length of your credit history, and the type of credit you use as well as new credit obtained recently. Paying bills on time and keeping credit card debt at reasonable levels are major factors in changes to your credit score. A credit score of 750 or better is likely to get you the best rates on loans; a score of 710-750 is also considered high. Credit scores in the 580-710 range will most likely get you approved for a loan, but at slightly higher rates of interest. Anything below that means you probably be denied credit or will be charged very high interest rates if you are even allowed to borrow.

You can obtain a free copy of your credit report every 12 months at AnnualCreditReport.com. To obtain your actual credit score, you'll need to go through one of the three credit bureaus, which will charge a fee of up to $15 typically.

Contact your creditors if you have a problem paying bills on time. Dispute negative or incorrect information on your reports. Consult a nonprofit credit counselor if necessary, and avoid websites and offers that promise immediate credit repair or results.

A Business Plan

moneycoach — Sun, 30 May 2010 11:38:00 GMT

A business plan can be one of the most effective tools that you have as a small business owner

A business plan has three main purposes – communication, management and planning.

As a communication tool, an effective and complete plan can be used to attract investment capital, obtain a loan and pitch the business to potential employees or business partners. Many business owners share their business plans with their employees to give them a broader understanding of where the business is going. As a management tool, your business plan can help you monitor and evaluate your progress. By using your business plan to establish and evaluate goals, you can easily check your business' progress and compare projections to actual accomplishments. As a planning tool, a well-written business plan can help identify obstacles so that you can avoid them or establish alternative plans when you face a setback.

The development of a comprehensive business plan requires a realistic look at every phase of your business and allows you to identify potential problems before they occur and and help decide on alternatives

Although there is no single formula for developing a business plan, your plan can be sub-divided into eight distinct parts:

The Executive Summary: The purpose of the executive summary is to capture the interest of lenders, stakeholders and potential partners. This section summarize the information contained within the business plan and be no longer than 2 – 3 pages. The executive summary is usually written last, after the rest of the plan is completed.

Business Description: This section provides a detailed overview of the company, giving a clear “Mission Statement,” the history behind the idea or current business concept, a description of the company's current legal form (sole proprietorship, corporation, LLC, etc.) and a description of the product or service offered.

Market Analysis: No business plan is complete without an analysis of the environment that the business operates in – its target customers and competition. The main objective of this section of your plan is to convince your reader that an opportunity exists. You can do this by addressing the following areas:

Description of the industry
Targeted markets
Marketing research
Competition
Barriers to entry

The Management Team: You should provide an overview of the background and strengths of yourself and your team. The strength of the management team can play a key role in an investor's or lender's decision to fund a venture.

Operations: Provide an overview of your strategy for implementing the plan. You need to demonstrate that you have a complete understanding of how your business plan will be implemented. This section should also focus on any relevant costs associated with implementing the business plan.

Critical Risks: You need to identity and address any potential problems that could have a significant adverse affect on your operations. By disclosing such possibilities, you are letting everyone know that there are risks associated with the business up front. Make sure that the following are covered:

External Risks
Internal Risks
Insurance Provisions
Contingency Plan

Financial Projections: The purpose of the financial section of your business plan is to translate your idea into a plausible set of financial projections which address the purchase of merchandise and equipment, the efficient allocation of financial and other resources, return on investment and cash management. The financial section should include actual performance data for 3 to 5 years if available. If the company is a start-up, then this section will deal only with financial projections. For both existing and new businesses, be sure to include:

Financial Performance (historical data)
First year financial projections (monthly and quarterly)
Three to Five year forecast
Analysis of “break-even” point

Appendix: The appendix is where you should provide information referenced in other sections, as well as any additional supporting documents, such as copies of patents, trademarks or copyrights that have been completed, reviews by independent firms, publications, or outside agencies, reference letters, marketing questionnaires, agreements signed with other firms, tenants or suppliers, resumes of key management personnel and any advisors or corporate directors and promotional brochures or advertisements that describe your product or service.

Writing a business plan can be a HUGE undertaking, but if you are applying for a loan or looking for investors or partners it is a necessary job. Even if you are just going to use the business plan to better understand your market and operations, it can be an invaluable tool.

Good luck!

Do You Know What You Own?

moneycoach — Wed, 14 Apr 2010 09:25:00 GMT

Create a home inventory – it can be a valuable tool after a disaster strikes!

After recent disasters such as Hurricanes Katrina and Rita, most financial and insurance experts recommend a "home property inventory" as an invaluable tool for homeowners seeking to obtain insurance compensation after a catastrophic event or natural disaster. Although few people will dispute the value of a having a complete and up-to-date inventory of their possessions and property, most people admit that it’s on their “to do” list, right below getting that root canal or paying taxes. And yet, as recent tragic weather events have shown us, having a detailed home inventory can be the single most important action you can take to protect yourself in a time of crisis.

Creating a list of the things we own that are important to us needs to be a task we take seriously.

"The complete inventory, including photos, may be one of the most valuable investments for peace of mind we will ever make for ourselves and our families," said Gail Haubrich, FEMA (The Federal Emergency Management Agency) individual assistance housing supervisor. "If a catastrophic event disrupts our homes and surroundings, a home inventory will eliminate the need to piece that information together in the aftermath of the event."

FEMA has created a web page with resources available to those wishing more information on creating a home inventory or for those facing the aftermath of a storm or disaster (http://www.fema.gov/news/newsrelease.fema?id=33513).

Money Coach : financial planning

Get it right now in order to retire like you want

Managing Your Debt

﻿A Business Plan

﻿Do You Know What You Own?

A Business Plan

Do You Know What You Own?