Everything Finance: February 2008

Friday, February 29, 2008

What can a dentist teach me about business, life and success?

If you are like most people, you might be asking yourself, “What can a dentist teach me about business, life and success?” Many think a dentist gets out of dental school, opens his or her practice and goes home rich and happy. The sad reality is this is not at all true. It may have been that way 50 years ago, but today a dentist has the same challenges as any other business owner.

As with any business that is going to succeed, we have to attract and keep customers; know how to market and sell; and provide quality customer service in order to become and stay profitable. Dentists, just like any other business professional, have to follow certain principles to be successful both personally and professionally. Many dentists are successful in business but not in their personal life. Many business professionals are successful in their work; yet often lack balance or a happy life. Therefore, they don't have TOTAL SUCCESS.

The daily challenges for dentists are the competition with other dentists and for discretionary dollars. Dentists also deal with pressure from insurance companies to participate in their plans. As part of an insurance plan, we are required to accept a lower payment for our services and are not paid our normal fee. With a lower reimbursement rate comes the increased stress of having to see more patients per day in order to make the same amount of money. To be insurance independent, we must have a well-run practice.

Unless we follow certain principles and systems in our business it is hard to survive and be as successful as we want to be. Chances are this is the same in your industry.

Business success is part of the equation of Total Success. Success in one’s business comes from having systems in place that will give predictable and consistent results in both your business and personal life. It also comes from understanding the relationship of your Product or Service to your Internal and External Marketing and the relationship of these to your Sales Calls and Presentations. It also comes from understanding the relationship between your personal life and your professional life.

In order to have Total Success, you must have success in your personal and business life. Success is fleeting at best if you have it in only one area but not another. In addition, personal and professional success are a direct result of developing a healthy lifestyle, a strong spiritual foundation and respectful and loving relationships in all areas of your life.

Total Success is a direct result of the choices one makes on a day-to-day basis. It is not living with the belief that one day you will make changes you intuitively know you need to make now. It is recognizing areas of your life that are out of balance and making choices today to move closer to a balanced life. Choices that may not always be easy, yet they are wise and beneficial to living a quality of life filled with abundance, joy and happiness beyond most people’s wildest imaginings.

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Thinking about Refinancing ? Read This...

If you're a homeowner, you may have refinanced your mortgage, or perhaps the recent declines in mortgage interest rates have you thinking about it.

For the first time since 2005, mortgage interest rates have dipped below 6%, triggering a small boom in refinancing. Applications to refinance loans jumped 135% between November 2, 2007, and January 25, 2008, according to the Mortgage Bankers Association.

Depending on your mortgage, refinancing can lower your interest rate, reduce your monthly loan payment, and leave you with additional money to pay down debts and invest for retirement. A lower mortgage rate can translate to significant savings in the long term—if you use those savings wisely.

A chance to revamp your finances

Consider savings from your mortgage refinance a gift that can keep on giving—an opportunity to invest in your future.

"If you're able to reduce your mortgage cost through refinancing, that gives you the ability to save more for retirement or your children's college expenses," said Ray Querey, a senior Certified Financial Planner™ in Vanguard® Financial Planning Services.

To make the most of refinancing, ask yourself three questions:

1. How much am I really saving?

If you currently have a 30-year fixed mortgage worth $200,000 at 7% interest, slashing your rate to 5% would cut your payment by nearly $260 a month, or about $3,085 a year, according to Bankrate.com. It may not seem like much at first glance, but it adds up. You could be saving more than $12,000 over the next four years.

Here's the caveat: Refinancing a mortgage costs money.

You can pay anywhere from $1,500 to several thousand dollars to cover your closing costs, including fees for an appraiser, lender, attorney, and insurance. The mortgage lender may also charge you points at 1% of the loan per point.

A mortgage calculator can help you determine the difference between the principal and interest of your new loan compared with your current mortgage. Don't forget to include the years it will take you to pay off each loan.

Now figure out your monthly loan payment. How long will it take you to recoup, in monthly savings, the cost of refinancing? Generally, if you don't plan to live in your house longer than it will take you to cover your closing costs, it may not be worth it. Nonetheless, you should consult a mortgage lender or broker for all the costs under different scenarios.

2. How can I make the most of my savings?

Now that you have an estimate of how much you'll save by refinancing and how long it'll take you to break even on your closing costs, you can plan ways to spend the extra savings. Begin by taking a close look at your finances:

* Do you have high-interest credit card debts? Vanguard's financial advisors recommend you first tackle burdensome credit card debt. Paying down these high-interest debts will automatically increase your saving potential.
* Do you have an emergency fund? If you haven't already done so, set aside money to cover 3 to 6 months of your expenses. Place it in a lower-risk, easily accessible account such as a money market fund. This will come in handy during an unexpected emergency, illness, or layoff.
* Are you contributing to your employer's retirement plan? Not contributing could leave your nest egg in a precarious state. And failing to take advantage of matching employer contributions is like throwing away free money.

3. How can I benefit from my savings in the long term?

Even if refinancing won't amount to thousands in savings each month, every little bit counts.

"Even if you invest an extra $50 a month ($600 a year) in a well-balanced portfolio, it's incredible how quickly and how much that money can grow over time," said Beth Orford, a principal in Vanguard's Advice Services Group.

"If it's a small amount, you probably won't miss it. You probably won't remember that great dinner or new pair of shoes you might have spent it on, but five or ten years from now, you may see your account balance and say, 'Where did all this money come from?'"

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Monday, February 25, 2008

I need Life Insurance! Ok, but what kind ?

What is Life Insurance ?
Life insurance or life assurance is a contract between the policy owner and the insurer, where the insurer agrees to pay a sum of money upon the occurrence of the insured individual's or individuals' death. In return, the policy owner (or policy payer) agrees to pay a stipulated amount called a premium at regular intervals or in lump sums.

As with most insurance policies, life insurance is a contract between the insurer and the policy owner (policyholder) whereby a benefit is paid to the designated Beneficiary (or Beneficiaries) if an insured event occurs which is covered by the policy. To be a life policy the insured event must be based upon life (or lives) of the people named in the policy.
Insured events that may be covered include:

death
accidental death
Sickness

Life policies are legal contracts and the terms of the contract describe the limitations of the insured events.

Below are the types most common types of Life insurance sold these days. The last one is my favorite and thats the one I have in place.

Whole Life Insurance
Whole life insurance provides permanent protection for your dependents while building a cash value account. With this type of insurance, the insurance company manages the policies various accounts.
What it does
It pays a death benefit to the beneficiary you name and offers you a low risk cash value account and tax-deferred cash accumulation. It provides a fixed premium which can't increase during your lifetime as long as you continue to pay the planned amount. It allows the insurance company to exclusively manage the cash value account in your policy. It provides you the option to receive dividends from your policy or apply them to reduce payments. It offers you the right to withdraw from the policy during your lifetime.
What it doesn't do
It doesn't offer the account flexibility to invest in separate accounts such as money market, stock, and bond funds. It doesn't allow you the account flexibility to split your money among different accounts or to move your money between accounts. It doesn't offer premium flexibility. It doesn't offer face amount flexibility.

Variable Life Insurance
Variable life insurance provides permanent protection for you and is the type of life insurance with account flexibility for the more risk-oriented policy holder.
What it does
It pays a death benefit to the beneficiary you name and offers you low-risk, tax-free cash accumulation. It allows the death benefit to vary in relation to the fund returns of the cash value account. It allows you to borrow from the policy during your lifetime.
What it doesn't do
It offers no guarantee to the amount of cash value during your lifetime. It doesn't offer you premium flexibility. It doesn't offer you face amount flexibility.

Universal Life Insurance
Universal life insurance provides permanent protection for your dependents and is more flexible than whole or variable life.
What it does
It pays a death benefit to the beneficiary you name and offers you a low risk cash value account and tax deferred accumulation. It allows you to earn market rates of interest on your cash value account. It offers the right to borrow or withdraw from the policy during your lifetime. It allows you premium flexibility. It offers face amount flexibility.
What it doesn't do
It doesn't offer you the account flexibility to invest in separate accounts such as money market, stock, and bond funds. It doesn't allow you the account flexibility to split your money among different accounts or to move your money between accounts.

*Term Life Insurance

Term life insurance is the simplest and least expensive type of policy. It's pure insurance with no cash value account. A term life policy has only one function: to pay a specific lump sum to whoever you've designated, upon a specific event - - your death. The death benefit and the policy limit are the same - - a $200,000 policy pays a $200,000 death benefit. The policy protects your family by providing money they can invest to replace your salary, as well as to cover final expenses incurred by your death.

There is no doubt in my mind that in this economic era, Term Life Insurance is the best option for me and my family. Just as they say that "You should not mix business with Pleasure", I say, "You should not mix Insurance and Investments". Thats what other financial gurus like Dave Ramsey and Suze Orman also say.

What do you say ?

Related Posts
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Friday, February 22, 2008

6 Steps to a Successful Small Business

A few days ago, I finally followed through on what I have been meaning to do for a very long time....form an LLC to expand my business of websites/blogs. I have called it ATA Consulting LLC. The reason I have given this name is because 'Consulting' is a very broad category and thats why I'm not limited to just websites and blogs.

Below is a 6 step process to building a successful business.

1. Start Smart
2. Plan Ahead
3. Set up Systems
4. Seek out Sales
5. Aim for Growth
6. Leverage Opportunities

1. Start Smart.
Identify a niche. Don't compete to be the lowest cost provider. Look for what makes your product or service unique and adds a special value for the client and charge for that value. Every business has many facets. Start with what you know and like; start a business that has meaning to you. Keep in mind that we don't know what the future holds, many of the jobs and businesses of tomorrow don't exist today. You can create your own success.

Now is the time to dream. To start smart, you should like the idea of the business. The way to earn a good income and build wealth is by serving clients well, making their life better in some way-it's more than filling a need in the marketplace. To succeed you want to test the idea to make sure your potential clients like the idea too. Test your ideas.

2. Plan Ahead.
People often ask me why bother with a business plan? Look at the lottery as an example. You may get lucky and get the winning ticket, but the odds are against you when you rely on random chance. I'm a risk taker...but not that much, minimize the risk of going into business and maximize your potential for success. Take the time to write a plan of how you get from point A to point B. A plan gives you a clear future focus and increases your chances of success.

The first rule of a start-up is put some of your own money in the business. As the owner you must be willing to capitalize the business. The second rule is put as little of your own money as possible in the business. Prepare your plan and look for funding for your business from multiple sources, which can include a business loan or business line of credit.

Don't go it alone. Plan ahead now to build your team. Your team may include a CPA and an attorney that you work with as needed. Add a mentor from your industry and get a SCORE mentor to help you plan for success. No one has all the answers. You get more ideas and information by building a success, support team that can help you plan ahead.

3. Set up Systems.
The most basic system every business should have is a good financial system. Ask yourself how am I going to generate enough income to support myself and my family. Begin here. Put together a personal budget, so you know what it costs you to live. Now, you can move on to the business budget and sales planning, so you can see how many sales you need to break even and make a profit. The start-up expense plan, operating budget and your accounting software are vital to your success.

4. Seek out Sales.
The daunting question is how do you go about seeking out your first sale. Recognize that since you don't have a big ad budget to be seen by everyone, you need to target a niche and get connected in your market community, be it local, regional or national. You need other people selling for you-not employees-goodwill referrals. Get out and talk to as many people as you can. Join organizations that would have clients for your product or service. Become a visible part of your market, and then ask for the sale. You begin the sales process with people that you know. Yes, it's okay to start with friends and family as your first customers, and then broaden from there.

5. Aim for Growth.
The basic tenant of creating a company is that you own the company. You are not just creating a job for yourself. It's less risk and less investment to get a job. Building a business is creating a company that is more than the job itself. Think about the future. How large do you want the company to be in terms of sales, net profit and employees? Your answer to each of these questions will influence how you grow. There are varying costs and profits associated with growth. It's important to make a deliberate choice early about how you want to grow your company.

6. Leverage Opportunities.
Good luck. Good fortune. Good timing. All play a part in business. As a business owner, be very clear about your core focus for the business and how it serves clients. Your core business is what pays the bills. Then, as an entrepreneur you are about opportunity. When you see a potential opportunity or stroke of luck measure it against your core business focus. Good fortune is great, when it matches your vision for the business. Always consider if a good opportunity is the right fit for your business. If something looks great, but it's not in sync with your long-term plan and budget, think carefully before committing your company's resources.

Here are some Bank of America Coupon codes that put money in your account.

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Tuesday, February 19, 2008

Carnival of Everything Finance: #13

Welcome to the February 15, 2008 edition of Carnival of Everything Finance.

We had over 130 really good articles submitted for this edition. Unfortunately I could not include all of them.

Earning Money

poetloverrebelspy presents Claim Your Refund for Foreign Credit Card Transactions posted at Less Than a Shoestring

Joshua C. Karlin presents The Best Fundraising Idea posted at Marketing & Fundraising Ideas

Raymond presents My Favorite Reward Credit Cards and Promotions | Money Blue Book posted at Money Blue Book

Wenchypoo presents Do-It-Yourself Fair Tax Plan (Super L-O-N-G) posted at Wisdom From Wenchypoo's Mental Wastebasket

Jesse presents Career tip #3 - How to get a raise - Guaranteed best guide to salary increase on the web or at least the most entertaining posted at The Penny Saved

Andrew Erickson presents Merchant Processing 102 posted at WebSite Werx

Kingsley Tagbo presents In Search Of A Mentor posted at HOW TO LEARN COMPUTER PROGRAMMING FAST OR GET A JOB EASILY

Freddie L. Sirmans, Sr. presents COLD STEEL RAW BUCK NAKED ECONOMICS 101. posted at CAN US ECONOMY SURVIVE DOOMSDAY?

Jed Norwood presents Forex Trading Plan | Forex Strategy Secrets posted at Forex Strategy Secrets

Derrick Markotter presents Time For A Change posted at Online Business Blog

Cindy King presents Best Small Business Tool For Building Trust In International Clients posted at Get International Clients

LIVING OFF DIVIDENDS presents January's Online Income Grows 36.92% posted at LIVING OFF DIVIDENDS

Kingsley Tagbo presents How To Recession Proof Your Career posted at HOW TO LEARN COMPUTER PROGRAMMING FAST OR GET A JOB EASILY

David B. Bohl presents Is Your Time Worth What You Think It Is? | Slow Down Fast Today! ~ David B. Bohl posted at Slow Down Fast Today!

Niharika presents Double Duty: 77 Ways to Make Money on the Side While at Work posted at Bootstrapper

Jeremy Zongker presents 101 Ways to Make Money Online posted at Destroy Debt

Raymond presents Airline Credit Cards That Offer Free Miles posted at Money Blue Book

Wenchypoo presents Working for Perks and Benefits—Revised for 2008 posted at Wisdom From Wenchypoo's Mental Wastebasket

Cindy King presents 5 Factors To Consider When Marketing To Different Cultures posted at Get International Clients

Wenchypoo presents Comparing Working vs. Staying Home posted at Wisdom From Wenchypoo's Mental Wastebasket

Everything Else Finance

Tiffany Washko presents Raw Food is Easier on the Budget posted at Raw Food Blog

Dan-O presents The Top 5 Survey Sites that Pay You for Your Opinion posted at Danogo.com - Discover. Inspiring . Media

Dobromir presents Selling Covered Calls for additional income posted at Create Rising Passive Income From Dividend Paying Stocks

eduwonkette presents My Value-Added Bucket List posted at eduwonkette

Rob Moshe presents Live Your Best Life By Serving Others posted at Rob Schaumer

Successful Footsteps presents Can Success Make You Happy? posted at Become Successful

Oscar DaGrouch presents Diversification or, di-worse-ification posted at Make me money

Praveen presents Minimalist Marketing posted at My Simple Trading System

nickel presents Lessons Learned From Average Net Worth Values posted at fivecentnickel.com

Oscar DaGrouch presents Anatomy of a successful options transaction posted at Make me money

Oscar DaGrouch presents Buy good banks posted at Make me money

John Crenshaw presents The Biggest Scam Your Bank Gets Away With Everyday posted at Truthful Lending dot Com

Jose DeJesus MD presents Business Credit Cards and Why You Need them posted at Physician Entrepreneur

FIRE Getters presents How to e-File Multiple State Returns with TaxAct Online? posted at FIRE Finance

Ryan Healy presents Debt Reduction: Bills That Are Okay to Pay Late posted at Debt Reduction Formula

Edith presents Prosperity is a Flow posted at Stewart Hsu

Joel Libava presents The JoelPost. January 22,08 The "R" Word and Franchising posted at The Franchise King Blog

Jeremy Zongker presents Statute of Limitations on Debt posted at Destroy Debt

Dorian Wales presents The Personal Financier: When is it Reasonable to Take a Loan? Consider These 4 Questions posted at Personal Financier

Roshawn Watson presents Developing True Commitment to Financial Goals posted at Watson Inc

Sagar presents 10 Countries That Benefit from the Falling Dollar posted at Currency Trading.net

Andrew Erickson presents Merchant Processing 101 posted at WebSite Werx

WBL presents 10 New Tax Laws You Probably Didn’t Hear About posted at Wealth Building Lessons

LIVING OFF DIVIDENDS presents Why The Government Wants A Weaker Dollar posted at LIVING OFF DIVIDENDS

American Entrepreneur presents How to Start Your Own Freelance Writing Business posted at American Small Business News

the simple nickle presents Long Distance Running and Personal Finance posted at the simple nickle

the simple nickle presents An Overview of Tax Software posted at the simple nickle

Praveen presents The 62/70 Solution for Claiming Social Security Benefits posted at My Simple Trading System

shawna presents My secret to debt reduction success posted at One Girl's Quest...

Jeremy Zongker presents 7 Reasons Your Small Business Needs a Credit Card posted at Creditor Web

Personal Finance Claims presents How Credit Card Companies Are Making Millions Just By Overcharging posted at Personal Finance Claims

Madeleine Begun Kane presents Accounting For That CPA posted at Mad Kane's Humor Blog

Llamamoney presents College and a parent?s responsibility posted at Llama Money

Nivek presents Video Humor: Socially Irresponsible Investment Bank posted at Money Clipped

PT presents What's in My Wallet (with Pictures!) posted at Prime Time Money

Sam presents How Day Traders Make Money. Day Trading ! Surfer Sam posted at Surfer Sam and Friends

Big Cajun Man presents Tomorrow might be my last day… posted at Canadian Personal Finance Blog

DotLobby presents How to Increase Credit Score While Lowering Debt posted at DotMakeMoney

Investing

Investing Angel presents Understanding Margin Trading posted at Stock Tips

Mark Runta presents Common Sense Strategies to Survive a Down Market posted at Smart Investing & Money Management

Phillip Lyon presents Want to Make Real Money Investing With Play Money? posted at Intelligent Speculator

Jed Norwood presents Forex Tips and Market Strategies posted at Forex Strategy Secrets

The Dividend Guy presents Watch Out For These 6 Slick Mutual Fund Marketing Tricks posted at The Dividend Guy Blog

Dobromir presents Why do I like Dividend Aristocrats? posted at Create Rising Passive Income From Dividend Paying Stocks

Dobromir presents Create Increasing Passive Income from stocks with above average dividend growth: Dividend Increases in January posted at Create Rising Passive Income From Dividend Paying Stocks

Dividends4Life presents Dividends4Life: The Winning Score - Part 2 of 2 posted at Dividends4Life

The Investor presents How to harvest wheat and mine gold using ETCs posted at Monevator.com

Investing Angel presents How To Avoid A Stock Scam posted at Stock Tips

Ryan presents What Loans Can I Get to Invest? posted at Building Millionaire Money Habits

chica with issues presents A look at some investment strategies posted at One Snarky Chica with Issues

Ryan Healy presents Three Rules for Option Trading posted at A.J. Brown's Options Trading Blog

Real Estate & Mortgage

Nigel Swaby presents Subprime Bailout Plan - The Greater Good posted at Salt Lake Real Estate Blog

Abdulrasool Sumar presents 15 Year Mortgage or the 30 Year Mortgage? posted at Mortgage Loan Calculator

KCLau presents Withdraw EPF Money for Home Loan Installment: How it affects your Retirement Fund posted at KCLau's Money Tips

Kathie Goldsmith presents Awesome news for those with JUMBO mortgages in the Puget Sound area? posted at Team Reba Real Estate

Ned presents Everybody Wins With Loan Pre-Approvals posted at Mortgage Lending Made Simple

Brent Riggs presents G. Brent Riggs - You End Up Wherever You Are Headed - Discipline - Life Management posted at Brent Riggs

Ryan Healy presents Debt Reduction: You Know It's Bad When... posted at Debt Reduction Formula

Saving Money

Personal Finance Claims presents How To Avoid Motor Finance Overcharging posted at Personal Finance Claims

Jeffery A. Smith presents Finance: Get out of Debt! | YooperSmith.com posted at YooperSmith.com

Peter presents Saving money: Why I workout at home instead of at the gym posted at Bible Money Matters

Michael Bass presents Want to really help the Economy? Apply that $600 to your debts posted at Debt Prison

Matthew Paulson presents How to Compensate for Rising Grocery Costs posted at American Consumer News

Marc presents Save £2000 With Everyday Savings posted at Askix - Making every penny count

Nandita presents Budgets « Searching for Crabshells posted at Searching for Crabshells

Mark Runta presents Don't Forget to Pick Up the Change posted at Smart Investing & Money Management

Jeniffer presents Quick Financial Tips You Can Use | thethirtydayyear.com posted at thethirtydayyear.com

Spending Wisely

Matthew Paulson presents Don’t Slack On A Crack posted at American Consumer News

Din BOgdan presents Why people believe weird things about money posted at Top Web Tutorials

Michael Bass presents Reasons to stop using credit and pay cash posted at Debt Prison

Patrick A. Sizemore presents Make a Debt-Free College Budget posted at College Information for Smart Students

Dollar Frugal presents Where is the Money Coming From posted at Dollar Frugal

Michael Bass presents Frugality - How to Cheaply Buy a Used Car posted at Debt Prison

Jesse presents The SECRET to personal finance and top 5 ways to master it posted at The Penny Saved

Stocks

Ryan Healy presents Option Trading: How to Enter a Position posted at A.J. Brown's Options Trading Blog

Chief Family Officer presents I’m staying the course by avoiding my account balances posted at Chief Family Officer

Avant News presents Citing Faltering Economy, Lawmakers to Forego Cocktails posted at Avant News

vitalstarts presents Vital Starts Investing | stock market for beginners posted at Vital Starts Investing

Tyler McKinna presents Shoppers Drug Mart Impresses | Personal Finance 101 posted at Dividend Money

That concludes this edition. Submit your blog article to the next edition of carnival of everything finance using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

Technorati tags: carnival of everything finance, blog carnival.

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Thursday, February 14, 2008

Keep Business and Personal Finances Separate (Bank of America Coupons inside)

Small scale business people may often have problems managing finances. While most of the money they used to kick off came from their savings, most of their personal funds now come from their businesses.

Financial management is really a tough thing to do. But although it’s a given that business and personal money are often be intertwined (especially in the case of a home-based business), it is necessary to keep them separate.

The best thing to do is look at business as one entity and home as another. This works better, not just on the personal standpoint, but also on the financial one.

There are top 5 reasons why:

Your business is a hobby - There are several federal and state government policies that stipulate only businesses are allowed to deduct business expenses. Now let's say your business is more of a hobby and not a means to make considerable money. You may have a difficult time telling the government that you are indeed running a business and not a side hobby. Many business owners compound this problem by using a personal bank account too.
Lack of professional attitudes - The only way people will take your business seriously is if you do too. Accept checks made out to the business and not your own personal name. This establishes a divide between you and your business.
Taxation - Businesses are entitled to pay government taxes, and these don’t cover individual tax payers. When you merge finances, it will be difficult to determine the exact taxable amount rendered by your business every month.
Paper Trail - If in need of money for your business and considers availing of grants or loans, supporting documents (financial reports, etc.) are needed for approval. Financial management makes it easier to know which finances belong to your biz.
Growing Your Business - When finances are separated, you get to focus on your business without thinking of personal concerns. You will be able to see the business’ overall performance and decide on the best way to enhance it.

Separating business and personal funds is difficult, but is definitely an intelligent choice to do. By establishing a separate business profile, you will be strengthening the purchasing power of your enterprise. The simplest tactic to get underway is to open a business bank account. In every transaction concerning your business, place the name of the biz.

To help you out with your accounts here are a few coupon codes for you to use when you open a new account with Bank Of America. Hope this helps.

Bank of America Coupon Codes:

Get $50 when you open a small Business Checking Account. Coupon Code: SBFOL2
Get $25 when you open a Personal Checking Account. Coupon Code: CRREM2

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Monday, February 11, 2008

Financial freedom, no matter how much money you make!

You do not need to be rich to achieve financial freedom. Financial freedom is simply living debt free and organizing your money so that when the bills are due, you have the money set aside to pay them.

Most people believe that a budget is for people who don’t have much money, and it also tends to make people feel restricted in their spending. Nothing could be further from the truth!

A budget is simply a spending plan. Most people like to spend money, so let’s use the word “spending plan” and leave the word “budget” behind us.

A properly used spending plan will provide a person or family (with even a modest income) a true sense of financial freedom. I am experiencing an awesome sense of freedom myself since I have put my own spending plan into place about two years ago.

What I am talking about is this sense of freedom that you get when the mortgage comes due and you have the money already set aside; when the kids have to go back to school shopping and the money is there waiting; when you go grocery shopping each week and you know exactly how much money you can afford to spend because the money is already set aside!

When we took one of our cars in for inspection, we were told that it needed new tires. No problem! I had an automobile maintenance fund set aside and we had just enough money to cover not only the inspection, but a nice new set of high-quality tires, all because we implemented a spending plan with the help of some very powerful, yet easy to use software!

I cannot tell you what a wonderful feeling it is to have money set aside for just about anything and everything that comes up!

An effective spending plan can be created by simply looking at the money you have spent over the past year or so and getting an estimate as to how much money you spend in each area of your life. Then looking at your income and getting an idea of how much money you would need to put aside for each category for the coming year. If you have not been keeping track of where your money goes, simply start now by keeping a general record of where you spend your money.

This article will not go into too much detail about how to do this, but I will give you an overview.

Sit down with your checkbook and make a list of all things you spend money on. Then create 10-15 categories that all those expenses would fit into.

An example would be:

Housing (mortgage, utilities, repairs, insurance, furnishings, etc.)

Automobile (payments, gasoline, maintenance, insurance, etc.)

Food (weekly groceries)

Entertainment (dining out, movies, golf outings, etc.)

Savings (investments, savings accounts, college fund, etc.)

Vacation (ALL vacation expenses including travel, dog sitter, etc.)

Debt (credit cards, loans)

Miscellaneous (pretty much anything that does not fall directly under any other category)

Charitable donations (tithing, other tax-deductible donations)

Christmas (nothing is more awesome than not having to worry about how you’re going to pay for all those gifts!)

Once you have listed all your expected expenses into one of the categories, you’ll have to figure out how much money from each paycheck you need to put toward each category. For each category you’ll have an envelope.

Right about now you are probably thinking, “Is this guy crazy? Nobody uses cash anymore, and nobody keeps cash in envelopes!” This is where software comes into play. There are software programs available that will enable you to have “virtual” envelopes to keep track of your money, which is safely tucked away in your checking and savings accounts. I am not talking about a simple Excel spreadsheet or anything of that sort, I’m talking about extremely powerful software (much better than MS Money or Quicken) that can generate reports, track all of your expenses,pay your bills online in seconds, make tax time a breeze, automatically place the proper amount of money in each envelope, and get you on the highway to financial freedom.

It is probably best start out with a relatively small number of categories. As you become familiar with your spending plan you can expand the number of categories. For example you may want your housing category to include all the monthly bills associated with your home, or you may want to have a separate category for mortgage payments, utilities, homeowners insurance, taxes, etc. You may want to add more categories such as taxes, birthday parties, medical bills, hobbies, allowances, unexpected expenses, etc..

It may take a little bit of time to set up your spending plan, but once it is set up, it takes very little effort to keep it in place. You won’t do it perfectly the first time, you will have to make adjustments as time goes on because unless you are extremely lucky, you’ll find out you had too much money set aside in some categories and too little in others. You can always change your spending plan as your situation changes, your income changes, or your spending categories change.

This may sound like a lot of work, but the concept is simple, and the software will guide you through step by step. Very soon, you will have total control of your money, and will know what true financial freedom feels like!

The software I use is: You need a Budget

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Wednesday, February 6, 2008

8 Steps to setup a Business Paypal Account

After reading the book How Come That Idiot’s Rich and I’m Not? I'm totally committed to setting up my own business. One of the requirements for that is to have a business account with someone like Paypal, because its very easy to handle all your online invoicing and payments.
Paypal is secure, reliable and most important of all - easy to use.

Here's how to set up a Paypal account for your business.

1. Print out these instructions

2. Click here to Set Up Paypal Business Account

3. Scroll down and click where it says: “sign up today”

4. Choose whether you want a personal, premier or business account

If this account is for your business, you should choose Premier Account or Business Account

Here’s the only difference: a Paypal Business Account allows you to set up the account under your business name. But you need to have a business bank account and wait for your Paypal Business Account to be approved.

If you don’t have a business bank account but you want your Paypal account under your business name, here’s how to get around it: sign up for a Premier Account, but instead of putting your name in the name field, put your business name. For example, if your business name is Acme Consulting, put “Acme” in the “first name” box and “Consulting” in the surname box.

5. Choose your country

6. Click Continue

7. Fill in all your info (see note above about business name)

8. Click Continue

After your account is set up you can pay someone by Paypal, or request payment (send an invoice) just by going to www.paypal.com and logging in to your account. It’s very obvious how to do it.

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