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Money Coach

March 2011 - Posts

  • Expecting a tax refund? Here's how you should spend it

    It's tax season, and as we all file our taxes and eagerly await our returns, the ideas of how to spend it are floating in our heads like the fabled sugar plums that dance there on Christmas Eve.

    While just blowing it is certainly an option, there are some much smarter uses of your tax refund. Here are a few suggestions:

    • Pay off your high-interest credit card debt. 

    • Rebuild your emergency fund. It makes sense to allocate some or all of your tax return towards covering future emergencies.

    • Create a car insurance savings account. Consider raising your deductible on your insurance policy and saving on your policy payments. If you have the money to cover the deductible tucked away, you'll enjoy the savings on your premiums.

    • Add it to your retirement fund. If you don't want toward retirement, drop it in savings and increase the amount deducted from your paycheck toward your 401(k) plan.

    • Purchase a gym membership. If you pay for a year up front, most gyms offer a discount.

    • Build your kids' college fund.

    • Help your kids save for their future. You can open a Roth IRA with your child, and invest your tax return – up to the amount your child earned last year.

    • Start a car replacement fund.

    • Give it to a charity.

    • Pay extra on your mortgage balance.

    • Get your will done.

    • Take a vacation.

    • Create a checking account buffer by depositing your refund in your checking account, but don't add it into the balance in your check book. 

    Posted Mar 31 2011, 11:25 AM by moneycoach with no comments
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  • Enter into agreements with credit counseling services very carefully

    Unless you’ve been living under a rock, you’ve no doubt heard about consumer credit counseling. And if you have debt you can’t manage, you have very likely checked out one or more of the companies that offer this particular type of service.

    Consumer credit counseling services offer many beneficial programs to consumers and financial institutions alike. They not only seek to educate and offer guidance to consumers who find themselves on shaky financial ground, but they also work to help those same consumers honor their debts and establish more responsible spending habits.

    This type of counseling has become big business over the past couple of decades. But one thing consumers must remember is that while they claim to be on your side, they don’t exactly work on your behalf. In fact, in addition to the small administrative fees they charge monthly for their services, they also receive a percentage of your payment from the creditors they are working “with” in order to get you back on track.

    While it is true that credit counseling companies do provide a valuable service, it is best that consumers remember that they should walk into an agreement with such a service with eyes wide open. Some of these organizations are geared more In favor of a big payoff than in favor of what is best for you and salvaging or repairing your credit score.

    Before you sign up, be sure you ask about the fee. Fees vary from one service to another, and are often dependent upon where you live. Consider whether you’d be better off putting that fee towards your existing bills or paying the fee and working with your creditors to lower your bills. Know what is expected for the fee – some have set monthly fees, but certain actions on their part require additional fees.

    Walk away from services that promise overnight solutions or to completely erase all of your negative credit history for a fee. These companies offer no real or legitimate service. Those that are legitimate work with your creditors to negotiate a lower interest rate for you. Most lenders are willing to work with you in this circumstance, because they know they will still be paid, which is better than not getting paid at all.

    Consumer credit counseling does work and it works well for those who understand it and use it wisely. The key is entering the situation with a honest understanding of what will happen and who the service is really working for. 

    Posted Mar 24 2011, 10:53 AM by moneycoach with no comments
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  • Financial lessons learned from Charlie Sheen

    What's Charlie Sheen doing these days? The obvious answer is…duh, winning.

    But he really is doing just that…winning. He's become one of the most talked about celebrities in the world. He's gotten endorsement deals, sold out speaking engagements and a deal with a T-shirt company that's bound to make him a lot of money. The T-shirts will bear the words, "Duh, winning" and other Sheen catchphrases. 

    All this despite being dropped from his show, "Two And A Half Men," and a public dispute with the creators and producers of the show. His public rants have become legend, and fodder for the late night talk show hosts. Mental health experts have labeled him ready for the Funny Farm, and yet we're still tuning in to the Web site, Funny or Die, just to catch his "winning" recipes, and lining up to see his torpedo of truth live show. 

    In fact, we can't get enough of the guy. And he knows it.

    So, if you're like most Americans, squeezing your pennies and stretching your budget until the elastic snaps, what can you learn from Charlie Sheen?

    First of all, look at what he became. He went from being the good-looking actor in "Platoon" to being the good-looking actor in his now-defunct sitcom. He had it all: looks, money, fame, family and career. Somehow, he lost his focus. He took his eyes off the prize and got mired down in the things that don't really matter. If you're looking to tighten your budget and save more/spend less, keep your eyes on the prize. Don't lose focus and keep your goals in mind.

    If you are fortunate enough to have a job, show up on time and do the job to the best of your ability. Remember that there are literally thousands of people out there looking for work, and they'd be willing to do your job for less money. Sheen forgot that there are thousands of young actors who are hungry in Hollywood, and they'd have been glad to show up on time every day to do the job he couldn't be bothered to show up for. 

    And while we're on the subject of employment, don't mouth off at or about your boss. These days, most of us consider ourselves fortunate that we even have a job. Mouthing off at the boss and tossing insults at him isn't the way to ensure job security. Don't get the idea in your head that you can do whatever you want whenever you want because you're irreplaceable. Sheen seemed to have fostered this attitude within himself, and he lost his job because of it.

    You should never take money for granted. It could be rolling in one day, and the next, you're begging for government cheese. Our lives can change drastically in just one day. 

    Remember that although you should keep the two separate, your personal life can harm your professional life. If someone you work for or with gets wind of your personal shenanigans, it could cost you your job, you could lose potential or existing clients, and you could lose the respect of your peers. And for goodness sake, don't post videos or updates on your Facebook or Twitter feeds about your professional life, coworkers or boss. 

    Perhaps the biggest financial lesson we can learn from Sheen is that you just can't rely on others for your financial success. Because of his antics, a lot of people are now out of work. 

    So, to summarize, keep your eyes on the prize, your nose to the grind stone and your crazy to yourself. 

    Posted Mar 14 2011, 04:17 PM by moneycoach with no comments
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  • Follow these tips to attract investors to your business

    Entrepreneurs with great ideas for business startups may be shocked when it comes to finding funds. The chasm between a startup idea and consumers is filled with product tests, meetings with venture capitalists and efforts at regional distribution. Unless you have personal finances to fund production and distribution, you will need to attract startup money for your new business. 

    The key to drawing investors to your business is presenting your financial needs honestly. By maintaining transparency throughout the initial funding process, your business startup will be tested among industry experts before products even reach consumers.

    Here are some tips:

    1. Focus your business plan on demonstrating what startup money will mean for your business in a tangible way. Show the costs of research, development and implementation paid by investments.
    2. Conduct an open house of workshops and offices to show potential investors where their money is going. 
    3. Offer potential investors and clients easy access to startup information through a well-designed Web site, which should include your business history, business plan, contact information and company news.
    4. Outsource creation of product prototypes to an experienced design firm – don’t try to go cheap. This way, your prototypes will look like finished products, and not prototypes.
    5. Research venture capital firms specializing in your industry to attract startup funds for your business. The investment of funds by venture capitalists in your business startup will inspire confidence among skeptical advertisers.
    6. Publish biographical pamphlets of directors, advisers and prominent clients for your business startup for public consumption. Be sure to have electronic versions on hand to send interested consumers and, more importantly, investors.
    7. File for an initial public offering through an investment bank. This will attract investors willing to put  up money in exchange for shares in your company. 
    Posted Mar 10 2011, 09:51 AM by moneycoach with no comments
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  • Get your budget in line, and your stress level will be lowered

    Most companies don’t use budgets to help them meet profit goals. This is because most owners and chief executive officers reason that the effort required to learn how to build and use workable budgets is just too much trouble.

    But this is a mistake. The fact is, budgeting is the most effective way to consistently meet profit targets and avoid costly surprises. Budgeting helps you invest your resources to your company’s best advantage by using careful consideration, rather than responding to an urgent need to make a move.

    As a smart business owner, you need to control the bottom line – and to do that, use the same tools you use to control the top line. Budgeting is the first step. Here are some tips to help you become a better budgeter for your small business.

    • Take the time to do it right. A budget is not a sales forecast to be put together over a weekend. It has to be put together by you and your management team. It requires time and thought.

    • Regardless of how tough it is to estimate the future, your forecasting accuracy will improve, and you’ll be better able to control the results if you actively use a budget.

    • Any business can be budgeted, whether the business is large or small. A startup has to be forecasted and budgeted in order to get financial backing.

    • Predicting exact results down to the penny is not the objective. Budgeting is more about giving yourself and your employees a direction for the future. If you try to forecast every last expense, you’ll just drive yourself crazy.

    • Remember that your resources are finite. Without this discipline, you will almost always overspend.

    • Set profit and cash flow targets – these two measures are very different and require different kinds of gauging and monitoring.

    With your budget comparisons in hand ask yourself these questions each month: How are we doing compared to the budget? What should we do to have a better result next month? What have we learned to make next year’s budget better?

    By following these tips, you’ll find that your income statement will be more informative, your bottom line is more appealing, and your stress level a great deal lower.

    Posted Mar 02 2011, 02:49 PM by moneycoach with 1 comment(s)
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