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May 2010 - Posts

  • Running and Money

    Nike, Adidas, Puma, Saucony, Asics. Does the $20 Billion running shoe industry deliver on its promises? Or should we run barefoot like Abebe Bikila at the 1960 Olympics in Rome?

    I ran constantly as a teen, completing two marathons by the time I left for college in 1982. I kept up my running – and even entered a few races, but as the years went by and my responsibilities (and my weight) increased, I found less and less time for my favorite exercise. I took up cycling for awhile, but now, at the age of 45, I find myself 60 lbs. heavier and out of shape.

    With a practically new pair of Saucony trainers from a yard sale (the same brand I swore by as a high school cross country runner), I started running a few days ago.

    But I wondered – are the shoes that cost me virtually nothing good enough? Maybe I need a new pair from a running store. Boy, how things have changed since I last purchased a $30 pair of shoes!

    Adidas has come up with a $250 shoe with a microprocessor in the sole that instantly adjusts cushioning for every stride. Asics spent $3 million and eight years (three more years than it took to create the first atomic bomb) to invent the Kinsei, a shoe that boasts 'multi-angled forefoot gel pods', and a 'midfoot thrust enhancer'. Each season brings an expensive new purchase for the average runner. And some experts recommend getting new shoes every three months!

    Is all of this technology really necessary? Our ancestors ran (and certain modern African and Central American tribes) run miles barefoot or with minimal foot covering.

    A new book by Christopher McDougall claims that injury rates for runners are actually on the rise, that everything we've been told about running shoes is wrong - and that it might even be better to go barefoot! Every year, 65 to 80 per cent of all runners suffer some type of injury. Until 1972, when the modern athletic shoe was invented, runners typically used thin-soled shoes, had stronger feet and had a much lower incidence of knee injuries, he contends.

    By contrast, Abebe Bikila of Ethiopia trained and ran the 1960 Rome marathon barefoot – maybe, just maybe – running WITHOUT SHOES makes your foot stronger and shoes actually cause some of the musculature of your foot and ankle to weaken – leaving you vulnerable to injury. Perhaps all that technology is part of the problem.

    My high school cross country coach had a similar theory – advocating that we run sprints once a week on the football field (where there were no rocks or uneven terrain) to counteract the weaknesses caused by shoes.

    Maybe my coach was right after all.

    Nike seems to think so – and in perfect capitalist fashion – has found a way to make money from this.

    For the bargain price of only $85, you can own the Nike Free, a thin soled shoe meant to protect against, well, very little. Its almost like running without shoes.

    Nike's slogan? “Run Barefoot.”
    Posted May 31 2010, 04:25 PM by moneycoach with no comments
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  • A Business Plan

    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!
    Posted May 30 2010, 07:38 AM by moneycoach with no comments
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  • Falling Euro Offers Good Deals For U.S. Tourists

    Now is a great time to find bargains in Europe – cheaper destinations, flights, hotels and shopping once you arrive

    Due to the falling Euro, U.S. tourists have a golden opportunity to take advantage of a relatively weak European economy. In just the past six months, the U.S. Dollar has risen almost 17% against the Euro, making travel more affordable for Americans.

    While it may cost more now for plane tickets than it did a year ago at the height of of recession price  cuts, travel to a host of European destinations may still be a good deal for your budget. Many hotels are offering big discounts in an attempt to attract tourists this summer. Some of the deals being advertised by travel agencies include a king-sized room at Rome's 5-Star hotel, Ambasciatori Palace, which cost $310 per person last year, but can now be had for $205 a night. In Barcelona, where hotels rates are an average of $222 a night during the summer, you can find a room for $89 per night at the 3-star Hotel Onix Fira or a $113 per night room at the 4-star Novotel Barcelona Cornella.

    Just six months ago, a five-night stay might have cost you an average of $500 Euros (approximately $750). Due to declining exchange rates, that same stay would only cost you about $620 – even without any discounts from the hotel!

    Even better, shops and stores are increasingly offering deep discounts and slashed prices in an attempt to keep summer sales strong in the face of a depressed European economy. As more deals arise, many Americans are heading to Europe to “splurge” on newly affordable travel bargains.
    Posted May 28 2010, 03:44 AM by moneycoach with no comments
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  • Financial Reform

    How the House and Senate Versions of the New Finance Bill Affects Consumers

    If you are struggling, amidst all of the newspaper articles, blog posts and nightly television news sound bites surrounding the topic of financial reform, to understand what the House and Senate are doing – and how it is likely to affect you, here is a quick summary of what the new law may do:

    Both the House and Senate versions of reform call for the creation of a new consumer protection agency. The agency would oversee many consumer loans and work to make the products more financially transparent. The new agency would write and enforce rules protecting consumers of financial products like checking accounts, mortgages and payday loans. The Senate bill gives the federal regulator broader authority and places regulators under the authority of the Federal Reserve, while the bill being considered by the House creates a free-standing regulator.

    The Senate version of the finance bill could affect how you use your credit card. The bill specifically allows stores to set minimum purchase amounts for customers using credit cards, so long as they do not require different minimums for different card issuers. Businesses would be allowed to pass on the differing fees that they are charged by card issuers to customers, or to give discounts for certain types of cards, such as debit cards. The bill even suggests that discounts for using cash are acceptable.

    The Senate bill requires anyone who uses your credit score as a reason for denying credit to furnish the credit score used to that person free of charge. The House version does not include this provision.

    Both bills makes three changes to the way mortgages are issued. Mortgage lenders would face restrictions on when they can charge borrowers a penalty for paying off certain types of loans early, including mortgages that have balloon payments or for negative amortization loans. For more traditional types of mortgages, prepayment penalties would be allowed only in the first three years. The bills also regulate the amount of money loan brokers can earn for originating mortgage loans. These reforms aim to protect consumers from some of the abuses of past years, when banks paid mortgage brokers extra for putting customers in loans with higher fees and terms. The bills also require lenders to consider applicants’ income, assets and credit history before making a loan, instead of assuming that lenders would do this anyway.

    For the first time, federal oversight of derivative trading would be the law. Derivatives are complex products that bet on the future movement of underlying securities. The Senate version of the bill bars banks from derivatives trading completely.

    The financial reform bills authorize regulators to impose restrictions on large, troubled financial companies – so called “too big to fail” companies. Under the reforms currently being considered, there would be a process for liquidating failing companies, similar to the way the F.D.I.C. Currently oversees the  liquidation of failed banks.

    The Senate’s bill also includes the Volcker Rule, which President Obama proposed in January, after the House bill had already passed (the House bill does not contain any version of the Volcker Rule). This change restricts banks from making investments that do not benefit customers, such as certain investments in hedge funds and private equity funds.

    Posted May 27 2010, 06:33 AM by moneycoach with no comments
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  • How To Choose a Bank

    Choosing a bank can be confusing. Here are some ideas to help make it easier.

    If you are shopping around for a bank to do business with, or if you are unhappy with your current one and are looking for a better deal – how do you decide?

    Here are some of the criteria you might use to choose a bank that you'll be happy (or happier) with:

    Does the bank offer a debit card or a check card? Be sure to ask for the schedule of debit card fees before you get hit with charges you weren't expecting.

    More than half of consumers choose their bank based on a convenient location or ATM. Is there a charge for using the ATM (or for using an ATM at another bank? Most lenders don't impose ATM fees for using their own machines. Many smaller banks belong to banking networks that don't charge customers for ATM use. One 2009 study revealed that 93 percent of all banks surcharge non-customers an average of $1.37 for each ATM transaction!

    Is the bank safe? With the government's list of troubled banks hitting its highest level since 1992 in the first quarter, there's good reason to double-check the financial position of the bank you are considering. With any federally insured bank however, the Federal Deposit Insurance Corporation (FDIC) insures each depositor up to a maximum of $250,000. Depositors at insured credit unions are also covered up to $250,000 by the National Credit Union Administration (NCUA). To check if a bank is federally insured, you can visit the Federal Deposit Insurance Corporation's Web site.

    Does the bank offer free checking? Are there any catches – read the fine print - that free checking account you sign up for may not end up being so free if your bank makes you pay other service fees, or if the “free” period is temporary. Also, a “free” checking account may be subject to minimum balance requirements. Ask questions such as, “are there any limits on the number of checks I can write? Is there a minimum deposit? Is checking free if I enroll in direct deposit? Is there a required daily balance on the account?"

    Are the bank's interest rates competitive? Look carefully at the interest rates paid on savings as well as the rates for loans if you plan to borrow. Sites like and let you compare interest rates.

    Sometimes online banks offer great deals and higher interest rates. If you're very comfortable banking online and want to earn the very best return on your money, you may also want to have a savings account with an online bank. If you need local branch access, you may still want to consider having a free checking account at a local bank.
    Posted May 26 2010, 02:18 PM by moneycoach with no comments
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  • Some Creative Ways To Earn Extra Cash!

    If you, like many people, find yourself in a cash crunch - there are often ways to get our of the bind – but sometimes you have to get creative!

    There are ways that you can earn extra money to supplement the earnings from your regular job, earn a bit of needed extra cash when you are out of or "between jobs," and in some cases, replace your regular job! All it takes is a little initiative on your part and a willingness to work hard and be creative!

    One tried and true method is to get a part-time job, although in the current job market, part-time positions may be hard to come by. If you are a victim of unemployment, consider a position that is different from what you have been doing, even while continuing to job-hunt for your next "career position." Even if the money is not as good, you may find that the variety helps relieve the stress caused by being out of work and searching. Temporary Labor or "Temp-services" can also be a short-term solution to bring in income while you are looking for a permanent position. Some "temp" positions lead to permanent jobs, as well - so keep your mind open!

    Organize a yard sale. Look around the house, in your basement or attic ... do you have clothes that no one wears anymore ... books, appliances or toys that have outgrown their usefulness? Are your closets full of "stuff" that you haven't taken out in years? Yard or Garage sales are one of the oldest, most tried-and-true methods of earning a little extra money.

    Sell on eBay. Books, CDs, unused or used sports or exercise equipment, clothing, novelty items -- almost anything will sell on eBay! Even if you are only selling small items, the money can add up. Make sure that you have a digital camera so that you can upload pictures of the items you are selling to the web site. Be sure that you don't underestimate the cost of shipping when you list your item for sale.

    Check to see if there is a Flea Market in your area. Flea markets are like large yard sales. Vendors at a flea market may range from individuals or families renting a booth for the weekend to sell a few unwanted household items to a commercial operation including a large variety of used and new merchandise. The owner of the market will charge a fee for your use of a small booth, typically 8' x 10' and will usually provide one table.

    Everyone has skills that can be used to earn a little bit of extra money. Once you figure out what services that you have to offer, you can advertise those services by posting ads on on-line marketing sites such as Craigslist. You can earn money by cleaning houses or apartments, offering babysitting or daycare (check to see what the laws in your state are for home-daycare), pet-sitting or dog-walking, doing home repair and outside yard work and tutor students in a subject you are good at! If you have a van or truck, a great money-making idea is to offer "man-with-a-van" services for people who need to move or haul things.

    Direct selling is one of the easiest ways to earn some extra cash, especially if you sell products you know and use yourself. Avon, one of the oldest direct-selling companies, allows you to start your own business for about $10 -- your take home depends on your efforts. Any direct selling company will require at least a few hours each week of your time. All pay by commission, so the more you sell, the more you can earn!
    Posted May 12 2010, 02:59 AM by moneycoach with 150 comment(s)
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  • Gulf Oil Spill Cleanup Effort May Cost More Than Exxon Valdez Disaster

    The oil company British Petroleum faces an environmental disaster in the Gulf of Mexico that is eventually expected to cost more than the Exxon Valdez tanker spill in 1989.

    The thousands of tons of floating oil threaten the gulf coast have caused Alabama governor Bob Riley to declare a state of emergency, saying the oil spill posed "a serious threat to our environment and economy". His declaration followed similar actions taken by the governors of Louisiana and Florida.

    The spill followed an explosion on the Deepwater Horizon offshore drilling rig, which then sank off the coast of Louisiana. Eleven rig workers are missing and presumed dead – and the explosion injured at least 17 other workers. The oil spill is estimated to cover a surface area of at least 2,500 square miles  according to estimates. The spill, which is still currently discharging more than 200,000 gallons of crude oil a day into the ocean, may result in severe damage to the Gulf of Mexico fishing and tourism industries, as well as the habitat of hundreds of species of bird and animal life. Crews are attempting to block off bays and estuaries, using anchored barriers, floating booms, and sand-filled barricades along shorelines.

    According to analysts, the total costs of dealing with the huge oil slick that currently threatens the coastline and fisheries of the U.S. gulf coast could exceed the billions of dollars spent by Exxon in cleanup and legal costs.

    David Axelrod, a senior advisor to President Obama, was quoted as saying that BP would pay for the clean-up, adding that no new oil drilling would be authorized unless proper safeguards were proven to be in place. President Obama has sent officials from the US Department of Justice to monitor the company's handling of the crisis.

    The full scale of the legal and financial backlash facing BP is yet to be revealed. At least one lawsuit has been filed already, on behalf of a  rig worker injured in last week's blast – and there have been calls for criminal charges against the company.

    A BP spokesman said it was too early to say what had gone wrong or if anyone was responsible until investigations had been completed.
    Posted May 12 2010, 02:44 AM by moneycoach with 1 comment(s)
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  • As Promised – Some “negatives” Of Health Insurance Reform

    Some of the arguments against health insurance reform

    The landmark health insurance legislation signed into law by President Obama at the end of March, like any bill has its detractors and naysayers. While the new law is expected to bring approximately 32 million Americans onto the rolls of the insured (which is a good thing), there are costs associated with the effort to bring health coverage to all.

    • Paying for the reforms will be accomplished through a combination of measures: by payroll tax hikes on high-income earners, by forcing healthier people to pay more for insurance in certain circumstances, by squeezing the income of health care providers.
    • If you don't eventually purchase health coverage, you may face a fine. The fines start in 2014. By 2016 the fines reach $695 a year or 2.5% of your income, whichever is higher, if you don't have health insurance. This is to prevent healthy people from opting out – a problem in a system where insurers have to take all comers. If healthy people drop out, the pool of people paying in will typically be sicker and more expensive to treat. That causes premiums to rise, which causes more healthy people to drop out, which means higher premiums, and so on. To prevent this, the law pushes people to buy.
    • You will pay more tax if you earn over $250,000. Starting in 2013, couples will pay additional taxes on earnings above $250,000 ($200,000, if you're single) -- 0.9% on earned income and 3.8% on investment income. For a household earning $300,000 in salary, that adds up to about $450 more a year.
    • You could get less generous coverage at work. By 2018, a so-called Cadillac-plan tax slaps employer insurance plans that cost more than $27,500 a year for family coverage. For every dollar above that limit, the insurer has to pay a 40% tax; since the plan would no doubt pass that cost on to enrollees, it's basically a tax on people with very generous health benefits ($27,500 is more than twice the average for employer plans).
    • If you are young and healthy, your premium could go up. Today insurers that sell policies to individuals generally set their price based on risk, the same way an auto insurer does. That can mean higher prices for people who are sicker, while healthy people pay less. By leveling out the premiums -- as well as mandating benefits that a healthy person might choose to forgo -- the new law could result in higher prices in the individual market for those who rarely go to the doctor.
    • The new law makes other big cuts in the Medicare system that will save an estimated $400 billion over 10 years. (That's out of $7 trillion in total spending.) For example, it slows the rate of growth in fees to hospitals, on the assumption they can become more productive along with the rest of the economy.
    Posted May 12 2010, 02:41 AM by moneycoach with 1 comment(s)
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  • Report Shows Consumer Borrowing Rose in March

    For only the second time in the last 14 months, the amount borrowed by consumers from the credit markets rose.

    A report by the Federal Reserve showed that consumer borrowing posted an unexpected increase in March, only the second gain in the last 14 months. The increase totaled $1.95 Billion, which was much better than the $3.85 billion drop that economic analysts had expected. The gain represented a 1 percent rise at an annual rate following a 3 percent drop in February and a 3.2 percent January increase.

    Even more encouraging to analysts, the largest component of the gain came from “non-revolving” credit such as auto loans – a category of credit that has struggled during the recent recession.

    Since consumer spending fueled by the credit markets accounts for almost 70% of total annual U.S. economic activity, analysts and economic forecasters have been concerned that any recovery from the recent recession will be restrained by tighter credit conditions imposed by many banks in the wake of the financial crisis – causing consumer spending to remain restrained. The March report comes as a welcome indication that this may not be happening.
    Posted May 11 2010, 05:56 AM by moneycoach with no comments
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