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Sunday, December 28, 2008

Tightening the Money Belt


Spending Squeeze

Money is tight. That could spoil plans for a new home, car, vacation and more – unless you take action.

By Lori Johnston
The persistent credit crunch is impacting the way of life that Ericka Basile – and the millionaire readers of Naples Dog Magazine, which she publishes – used to take for granted. Recently the Florida entrepreneur was astounded to discover $257 in fees on one of her credit cards – just the latest surge in rising debt that's finally catching up with Basile and millions of consumers like her. "I'm trying to figure out, How do I get out from underneath this? It's a weight on my shoulders," says Basile, whose annual salary averages $159,000.
As the headlines remind us daily, the free-spending money train has left the tracks. Prices are up, but the ample assets we had to cover ourselves during good times are disappearing. Home equity has dipped to its lowest level in more than 60 years, and abysmal savings rates have left dwindling cash reserves. And credit? The creditors that were once all too willing to hand out cash now don't have it, or have turned off the spigot for fear of escalating losses. In short, we're learning again (if we ever knew how) to pay as we go. Even among women who have a good hold on their finances, the new tight -money environment can create a sense of panic – and require a new approach to money, says CPA Belinda Fuchs, president and founder of Own Your Money, a Boston-based financial coaching firm.
"Options are more limited now," she says. "The credit card companies and banks have taken quite a hit with everything happening in our economy. They're recognizing they can't be doing what they were doing before because they're going to get the same results. One of the things they're doing is making it harder to take out credit."
For big purchases, lenders are requiring more paperwork, higher down payments and higher credit scores for the best rates. Credit card lenders are taking a much harder look at new lines of credit, and they're more reluctant to cut existing customers some slack. "The products that are offered are much more scrutinized right now," says Jayne Malinowski, a vice president with Fifth Third Bank. "It's severely tightened."
Basile was denied a lower rate by one card company but is hesitant to consolidate her debt because of concerns about how it could affect her credit rating. Her best option now, she says, is to take control of her spending, which includes doing away with plans for a vacation with her two kids.
The most conspicuously absent safety net for consumers is still home equity – the one-time cash machine that's as anemic today as it was six months ago. "People were using that money as a financing source for many different things, such as maybe starting a business or funding education for children," says Faith Read Xenos, CFP, co-founder of Singer Xenos, a boutique wealth management firm. "They thought they had it available, and now they don't."
Alyssa Gilmore, 36, a senior marketing professional for a Boston-area financial technology company, was banking on her home as the capital behind plans to relocate her family to a better school district this year. But now those plans are on hold. A few years ago, she and her husband would've had much more equity in their home and could've sold it at again. "With the shrinking margins of home affordability, and with the tightening restrictions on loans, the chances of our being able to buy a place in a great school district, or sell our current home, in the next several years is probably slim," Gilmore says.
Easing the Squeeze
Overall, professional women may not be feeling the crunch as much because they typically have more cash reserves and are ideal borrowers, says Shiva Sattar, a Wachovia wealth management regional director. But it would be a mistake to feel immune to the crisis and allow it to catch you by surprise. Advisers relate cautionary tales of some clients – suddenly cash poor with no lending available – who have had to ask parents for inheritances in advance.
"It's really important that people look now" for lending they might need in the near future, Malinowski says, whether it be for a new car, a tuition payment or anticipated medical expenses. "Don't wait until you need the money. If you need the money, you're not going to qualify for it."

For those who are already taking a hit, financial advisers suggest a few basic steps that can help control ballooning payments and protect your future credit options.
First, make sure expenses don't exceed income.
Sounds obvious, but earlier this year the U.S. personal savings rate went negative, meaning we paid out more than we took in. That may work for the federal government, but it's not sustainable for the rest of us. Gilmore, for one, says she's trying very hard to save more, diverting cash into risk-free CDs and interest-bearing money market accounts. "We are in a time where money may be tighter and wages may stagnate," she says. "Opportunities to earn more money might shut down."

Second, enact a strategy to stay in financial shape.
If necessary, talk to your lender and ask for help with a debt management plan, says Jessica Cecere, president of the nonprofit Consumer Credit Counseling Service in Florida. And avoid raiding your future to pay for your present. So-called hardship withdrawals from 401(k) plans are on the rise as a way to make mortgage payments or raise quick cash. But if you don't return the money within 120 days, Xenos says, it's a taxable distribution, and you could lose 40 percent of the funds to taxes and penalties.

Third, keep an eye on your credit report.
As minimum scores for loan approval and the best rates increase, women can take steps to improve their credit scores. Malinowski advises directing any extra money toward minimizing debt loads. Paying credit cards down to 50 percent of the line amount can make a dramatic impact on a credit score, she says. And when the debt is paid off, dump most of your cards, keeping just a couple. Sattar adds: "Do you really need a card for Macy's, Nordstrom, Dillard's and other stores?"

While an overnight fix to your credit rating isn't possible, a little prudence and discipline will pay off in the future. "Over time," Cecere says, "if you're good, the good behavior outweighs the bad."

Cool Tool: Network IQ


Great article from Fabulously Broke in the City: Cost per Use is a Shopaholic's Saviour

I'm going through one of my favourite blogs, Fabulously Broke in the City and I found this great article on Cost per use.

Cost per use is a concept I hold near and dear to my heart only because it helps me make very quick decisions about whether or not I purchase the item today, tomorrow, or have to sleep on it for a couple of months.

Let’s take purses for example.

The basic idea of cost per use or wear, is if you are to spend $30 or $80 on a nice purse, you are planning on using that purse day in, day out.

Case in point. I bought a soft, faux leather, bronze metallic purse for $30 about 4 years ago. That is now the purse I bring with me on all of my travelling trips because it is elegant enough to be a work purse, soft enough to squish into my suitcase and not worry about it being damaged, and big (but not too much bag) enough to hold my items when I go sightseeing. Plus, I paid only $30 for it.After 4 years, that purse has cost about $12.50/year so far. That's 0.034 cents a day. And every year I take care of it, and use it, the cost per use goes down until it approaches zero.

This is the same principle that can be used for clothing. I bought a cheap shirt for $5 on sale a month ago, took care of it, and now just looks dull, faded, frayed, ugly and stretched. In contrast, I purchased a $50 shirt about a year ago, took the same care with it, but it still looks sharp, and it has kept its dye and colour well over the years. The quality was just simply better.And just the other day, I bought the most amazing looking sapphire blue top that fit me like a glove, felt amazing, and cost about $74 after all the taxes were in. This was a great buy because the quality is clearly there, the colour looks great, and the fit is fabulous. If I take care of it, it won't pill, rip, or be stained. It also helps that the fact that I spent more money makes me want to be more careful with it as well.

I am not saying that EVERYTHING that costs more money is worth it, or you should blow money on something JUST to make you take care of your things better, but I'm just saying pick and choose what you want to pay more for, and what you won't.

The only time I ever spent $80 on a purse, was 2 years ago for this Friis & Co. gorgeous black-lace gathered overlay on a faux white leather purse, with a silk black lining. I love it, and I carry it whenever I'm out on the town. Sure, the cost per use is a lot higher for that purse, but I plan on keeping that purse well into the future, and by that time, that purse will still be worth every penny I had paid for it.But I can guarantee you would NEVER have seen that purse in a thrift store, and if I had waited and missed out on my chance to buy it on the cheap for $80 CAD and still be able to love it after all this time.In short, I'd much rather have ONE $30-$80 purse I love and like to carry, than buying $4-$10, or a $20 purse and end up throwing the purses away, donating it, or shoving it into the back of my closet, untouched and unused, saved for the firs day I bought it. That cost per use for that "thrifty" bag that I never really loved in the first place was $4-$20, instead of $7.50-$12.50.Sure, I could just use my laptop bag, or maybe a free plastic grocery bag to carry around my items, but as most women can attest to, it just isn't the same. And besides, how cheap are you going to get? There has to be a limit somewhere. I'd treat this free plastic grocery bag cheapness akin to stealing ketchup packets from McDonald's and squeezing it into your ketchup jar to save $3 per in addition to spending 6 hours of your time squeezing each packet in.

Being too frugal can be a bad thing for your karma. Trust me, I know! You tend to feel resentful of your debt and the bad feelings just pile up.With that being said, I'd never cross the threshold of $100 for a bag, because it's just a bag. But some people will buy $400 - $2000 It Bags for the season, use it for a season (about 4 months, maybe 6 months), and discard the former It Bag into the back of their closet, or sell it at a fraction (albeit still over $100) of its original retail cost.Now, which one seems more economical to you?You can even apply this to buying cars, or really, buying anything in general. If you're going to buy a new car because buying a used one just doesn't appeal to you, that's fine. But if you buy a new car once every 3 years to upgrade, that's not being as economical as if you bought that new car, took super good care of it, and made it last 15 - 20 years. The cost per use goes down, and in the end, you are still thrilled with your purchase.

Saturday, December 27, 2008

Recession Survival Guide


Survive and Thrive

The worsening financial crisis has brought out the best and the worst among women investors. Even if you fall into the latter category, it isn't too late to change.

By Mary Claire Allvine

In a crucible, liquid boils off and only essential chemicals remain behind to be identified. Today's market has boiled off all excess liquidity – literally – and what's left in your financial crucible? Answering this question honestly will determine who will thrive following this global economic crisis and who might never recover. Every investor opened her third-quarter statements to bad news. Whether she owns bonds or stocks, her results are down. Compounding these paper losses, the threat of layoffs, loss of credit access and evaporated home values have raised the heat. Two clear metals have emerged: I'll call one gold; the other is clearly lead.

Gold Investors :In times like these, the valuable investor traits you want to see emerge come out sparkling. This savvy investor seems to have nerves of steel, but in reality she simply has a focus on what she's trying to accomplish. She has diversification, and she has the means to be patient.

What else, exactly, is she doing?
- Like anyone seeking to grow net worth who has cash she doesn't need in the next seven years, she's buying on horrible market days. She does her research, learns to use limit orders, sets them and goes back to work. She also sticks with her pre-existing dollar-cost-averaging plan, perhaps even accelerating it. She diversified equity mutual funds from low-cost, tax-efficient companies. She doesn't act rashly to buy or to sell; instead she takes measured steps with an eye on the long run.
- This same woman confirms her liquidity sources, retains lines of credit priced advantageously off the low prime rate, and reduces unnecessary spending to ensure that reserves last as long as possible. She's not ignorant of world news, but she's not immobilized by it either.
- She's also cutting her taxes now and in the future. While she's hanging onto appropriate stock investments – indeed, she's adding to them – she's also swapping funds or stocks with losses, replacing them with equivalent funds without leaving the market for even a day. In this action, she's taking losses she can use against taxes this year – and banking losses she can use against likely higher capital gains in the future.
- Finally, she's confirming the financial organizations with whom she invests. Likely, she long ago consolidated into a surviving, global mutual fund company. She is not buying one-off CDs at various banks; she's not searching for the next hot idea; and she's not listening to a broker on commission.

Fool's Gold: Sadly, many other women are not finding value today. Indeed, they're undermining their own objectives and missing opportunities. Over the last three months, I have witnessed:
A woman who wanted to sell all her stocks. Emotionally exhausted, she can't imagine how long her investments will take to recover, and she's worried about paying bills next month. Another had too much of her money in her company's stock, which has tanked, while her job security has evaporated. "I knew better!" she admits. "But I was investing in a company I believed in."
A woman who admitted too late that she was living from commission check to commission check in an industry where buyers are all sidelined. She also found that her home equity lender could cut off the $50,000 line it had previously offered her against her home. All of a sudden that $1,000 purse and $500-a-month leased car make her sick, not exhilarated.
Another woman, with a portfolio of individual stocks, who can't bring herself to sell them, take the losses and invest in an index fund. "I don't know why I can't do it. I just can't," she says.
A woman who has four different 401(k)s, a brokerage account, a bank in her home town, one in her new town, and two different mutual funds at two different fund companies. "I don't even know, really, how much I've lost because I don't know where I started," she says, "and I can't make time to total up where I am."

Change NowEven for those of us who didn't turn out to have the inherent strength and value we had hoped for, there is some common-sense alchemy we can practice. Conversion always starts with these magic words: "I need to change."

Where to start?
1. Start with where you want to be in 10 years. Yes, 10. There's no quick turnaround, but envision the future. Every step toward that financial future needs to be directed purposefully.
2. Admit where you are. Total it up: Make a balance sheet of assets and liabilities. Detail your fixed living expenses. Track where your cash comes from reliably and admit what's variable income. Note that the economy will likely get worse before it gets better. Make an immediate plan to survive: Cut costs, pick up a consulting job, sell your more valuable personal assets.
3. Get help. Truthfully, most successful professionals aren't trained in personal finance. Find an adviser who is not selling you a product or promising you an easy solution. Find one who will teach you and whom you will trust enough to follow her advice.
Mary Claire Allvine, CFP, is co-author of The 7 Most Important Money Decisions You'll Ever Make (Rodale, 2005) and a partner at Brownson, Rehmus & Foxworth Inc., a national fee-only financial plannin

Friday, December 19, 2008

Holiday Budgeting


Follow this link for expert financial advice from Jean Chatzky during the holidays. You'll find info on making a holiday bugdet, holiday travel and entertainment tips.

Black Belt Shopping Strategies

  1. Start now
  2. Make a gift list
  3. Know your limits
  4. Comparison shop
  5. Go in the morning, late night or early in the week
  6. Enlist the professionals - Ask for help
  7. Negotiate and haggle
  8. Schedule a get ready day
  9. Remember the "Magic Factor"

Beware of Holiday Sales


Everywhere you look latetly during this holiday season stores are offering massive sales but don't fall into the trap of purchasing stuff you don't need and throwing your money away just because it is cheaper. Here are some ways to hold on to your cash during the holiday:
- Don't shop when you are hungry: It turns out that this is not just true for grocery shopping but all kinds of shopping.
- Don't bring children shopping with you: Kids have their own techniques to persuade parents when it comes to purchasing.
- Make a list: Take 10-20 minutes before you go shopping and write down everything you need to buy and stick to the list it will make sure you stay within budget and don't stay too long in the crowded stores.
- Don't fall for sale discounts: It doesn't matter if it's on sale if you don't need it or want it for yourself or someone else. If you don't need it you could save 100% instead of 30%.
- Get Creative !

Money Saving Tips from the View

Click on the Bank on the View Icon above to watch clips relating to money saving tips for the holiday season and all year round.

Tuesday, December 16, 2008

Shopping Secrets from Shop Smart Magazine

  1. Try it on, then go online
  2. Ask for freebies
  3. Always check return costs, especially for large items
  4. Put sale items on hold
  5. Give used cars the twice over
  6. Google "promotion code" before you buy
  7. Don't buy electronics based on the features alone
  8. Haggle with the doctor
  9. Print coupons before you hit outlets
  10. Keep reading the ads even after you buy
  11. Don't shop when you're exhausted
  12. Check e-bay first
  13. Stock up on pet food
  14. Think twice about final sale items
  15. Find a supermarket the price matches
  16. Always check receipts
  17. Look good and spend less
  18. Get software for less
  19. If it's a bargain grab it
  20. Always try to haggle
  21. Get advance notice of sales
  22. Check your insurance plan for discounts

For detail on all the items on this list and more just click this link: http://http://www.shopsmartmag.org/files/Shopping_secrets.pdf

First Post of the Christmas season

I would like to apologize to all my readers. I've been really busy with school and as such have not been posting on my blog.

Thank you for your patience

Saturday, August 9, 2008

Shop Smart Magazine


Sunday, June 29, 2008

Getting Started: Common Pitfalls to Avoid

Common Pitfalls to Avoid

Before you race off through the rest of Investing Basics, there are some cautionary points to consider before you proceed. These are common mistakes many people make when considering what to do about investing.

Doing Nothing. There is no guarantee that the market will go up the first day, month, or even year that you invest in it. But there is one guarantee: Doing nothing at all will not provide for a comfortable retirement.

Starting Late. Postponing your investing career is second only to not investing at all on the list of investment sins. You already know that the earlier you start the better off you are. (Take another look at the compound return example we gave above.) If you're already past those formative twenties (you don't look a day over 32 to us), we'll reword this first pitfall to read: "Not starting now."

Investing Before Paying Down Credit Card Debt. If you have money in your savings account and you have revolving debt on your credit card, pay it off. Many credit cards have an annual interest rate of 16% to 21%. Let's say you have $5000 to invest, but you also have $5000 debt on your credit cards with an average annual interest rate of 18%. It doesn't take an astrophysicist to figure out that you're going to have to get an 18% return after you pay taxes just to break even on that $5000. Pay the debt off first, then think about investing.

Investing for the Short Term. Only invest money for the short term that you're actually going to need in the short term. Invest money in the stock market that you won't need for at least three years, and preferably five years or longer. If you'll need your cash next year for a down payment on a house or for the family Caribbean cruise, use one of the shorter term and safer havens for your cash, such as money market funds or CDs.

Turning Down Free Money. You'd never turn down a dollar if it was offered with no strings attached. That's what you're doing if your company offers a 401(k) or similar retirement savings plan with an employer match and you're not participating. Take advantage of all tax-advantaged, employer-matched savings programs.

Playing It Safe. If you're young, most of your investing dollars should be in the stock market. You have enough time to weather any dips in the market and to reap the rewards of long-term gains. Although you may want to transition into bonds later in life as you depend on your investments for income, stocks should make up a large portion of the portfolio of every investor.

Playing It Scary. Not every investment is for everyone. We'll help you determine your psychological investing profile in Step 2. Investing Concepts. Even if you're a daredevil, you shouldn't pour all of your money into something that could end up going down the drain.
Viewing Collectibles or Lottery Tickets as Investments. If old comic books, Barbie dolls, and abandoned exercise equipment could be used to fund retirements, do you think the stock market would exist? Probably not. Don't make the mistake of thinking your jewelry, those Beanie Babies, or the lottery will provide for you in your latter years.

Trading In and Out of the Market. We believe the best approach to investing is the long-term one. Pick your investments well and you'll reap rewards over the long term that you had ever dreamed possible. Trade in and out of the market and you'll be saddled with fees that chip away at your returns, and you'll potentially miss out on gains that long-term investors enjoy with much less effort.

Getting Started: Savings and Investment Vehichles

Long-Term Investing Vehicles

Bonds: Bonds come in various forms that you will learn about in Step 5. They're known as "fixed-income" securities because the amount of income the bond generates each year is "fixed," or set, when the bond is sold. From an investor's point of view, bonds are very similar to CDs, except that they are issued by the government or by corporations instead of banks.

Stock: Stocks are a way for individuals to own parts of businesses. A share of stock represents a proportional share of ownership in a company. As the value of the company changes, the value of the share in that company rises and falls. Stocks are discussed in detail in Step 3 of Investing Basics.

Mutual funds: Mutual funds are a way for investors to pool their money to buy stocks, bonds, or anything else the fund manager decides is worthwhile. Instead of managing your money yourself, you turn over the responsibility of managing that money to a "professional." Unfortunately, 9 of 10 "professionals" tend to underperform the market indexes, a fact that we'll look at in Step 4.

Getting Started: Savings and Investment Vehichles

Short-Term Savings Vehicles

Savings account: Often the first banking product people use, savings accounts earn a small amount in interest (anywhere from 2.0% to 4.0%, often less), making them a little better than that dusty piggy bank on the dresser.

Money market funds: Money market funds are a specialized type of mutual fund that invests in extremely short-term bonds. Unlike most mutual funds, shares in a money market fund are designed to be worth $1 at all times. Money market funds usually pay better interest rates than a conventional savings account, but below what you could get in certificates of deposit.

Certificate of deposit (CD): This is a specialized deposit you make at a bank or other financial institution. The interest rate on CDs is usually about the same as that of short- or intermediate-term bonds, depending on the duration of the CD. Interest is paid at regular intervals until the CD matures, at which point you get the money you originally deposited plus the accumulated interest payments. CDs offered by banks are usually insured.

Friday, June 6, 2008

60-Second Guide to Short-Term Savings

Could you cover the cost of a new water heater if yours suddenly went on the fritz? Would you have to put the unplanned purchase on a credit card, and then adopt a Ramen-only diet for months afterwards just to cover the tab?

Having money at-the-ready for life's financial hiccups -- both planned and otherwise -- can cut a lot of stress from your life. Give us just 60 seconds, and we'll show you how to establish a short-term stash of cash in no time.

0:60 Calculate how much you spend every month

The first rule of savings is to bank enough to cover the necessities if -- knock on wood -- an emergency arises. How much do you need? Well, how much do you spend on a monthly basis?

Add up what you spend each month on necessities such as food, shelter, transportation to work, and anything that you promised to buy your kids. (If you're not into keeping detailed records, Mint.com's free online service can give you a pretty good immediate snapshot of where your money goes.)

0:52: Add some padding for "just-in-case" scenarios

There are small emergencies (bad perm) and big ones (job loss). Bump up your monthly spending number a tad to account for things like job-hunting expenses, should you suddenly find yourself in need of a new gig. Then multiply that figure by three or six (for the number of months that you want to cover), factoring in other available monetary resources and the number of people for whom you're financially responsible.

Voila! Now you have the amount of money you need to stash in your emergency savings account.

0:48: Gaze into your 1- to 5-year "big expenditures" crystal ball

With your emergency savings covered, now it's time to figure out what other kind of cash you should put aside. Planning a renovation, extreme dental work or a family vacation? These things are also part of your short-term savings strategy. Put 'em down on paper and estimate how much these purchases will cost.

0:40: Figure out how quickly you will meet this goal

You want to fund your cash kitty ASAP (emergency expenses tend not to wait around until it's convenient). Come up with an amount you can afford to contribute each month. Make it one of those must-pay expenses -- just like your electric bill and grocery money. Yes, it's that important. Once the emergency stash is stashed, move on to the non-emergency short-term savings goals. (Use our savings calculators to crunch the numbers.)

0:37: Pick a parking spot for your cash

Easy access is essential when we're talking about emergency savings, so your money should be stashed somewhere you'll be able to get your hands on it quickly ... in case of, well, an emergency. It should also be in a "safe" investment -- meaning one that won't tank every time the stock market takes a tumble. That narrows it down to:

  • High-Yield Savings accounts
  • Money Market Accounts
  • Money Market Mutual Funds

For non-emergency savings (where you pinky-swear to let the money sit untouched until you need it) less liquid investments -- such as certificates of deposit -- may offer you a better interest rate on your money.

0:29 Click around and comparison-shop

Look at bank ads in newspapers, check out the best national rates on Bankrate.com, see what your broker is paying on cash in your brokerage account, ask your regular bank or local credit union what they offer, and get information on money market funds from websites like iMoneyNet. Find out:

  • What interest rates are available
  • What are the comparable yields over identical time periods
  • What timeframe the rate applies to
  • What fees (if any) there are to purchase and maintain the investment
  • The minimum investment required to get favourable interest rates

(Investors beware: Some institutions will offer aggressive rates in order to lure you to send them your dinero, only to lower the rates soon thereafter. Check historical rates at Bankrate.com to test the interest rates over time.)

0:17 Just do it

The clock is ticking. There's no time to waste. A short-term emergency fund is one of The Motley Fool's top money "must-haves." In fact, it may be the very thing that saves you from a long stretch of high-interest credit card debt after a fender-bender, chipped tooth, basement flood, or really unfortunate haircut.

0:03: Extra credit: Automate it!

If you're having trouble saving, we highly recommend an automatic transfer program. You can also see if your employer will split your paycheck (direct deposit) between your ordinary account and your short-term savings account, or you could set up an auto-transfer from your checking account into your emergency account.

Investing Basics: Getting Started Continued

Getting ready to invest

After seeing all those impressive numbers, you're probably itching to take the next step. You want to drop everything and start investing right now. But ho-o-o-ld on! Would you start running a marathon without first stretching? Would you pour syrup on the plate before the pancakes are done? Having dazzled you with the power of compounded returns, we want to make sure it's not working against you. This means that you've got to get rid of your high-interest debt.

Why? Because, by the very same principle discussed above, a dollar of debt can quickly compound into a few hundred dollars of debt. Does it make sense to try to save money at the same time your debts are multiplying like bunnies? The first thing you should do to prepare for investing is to pay down all of your high-interest debt, such as credit card debt. Although some kinds of debt may be low-interest or tax-advantageous (such as your mortgage), the rule of thumb is: Be free of high-interest debt when you begin to invest.

Every dollar you can put toward investing is a dollar that can work for you. And, Fool, every dollar you avoid putting in the pocket of a financial professional, a full-service broker, or a mutual fund manager, is also a dollar that is creating value for you. (We'll get back to this point later.)

Pay yourself first

How can you become a successful investor? By making investing a part of your daily life. It's not such a stretch -- money is already part of your daily routine. Think about each decision that affects your finances, whether it is ordering a $4 glass of wine with dinner or getting a home equity loan to pay down credit card debt.

We're not suggesting that you obsess over every penny you throw into a wishing well. (Please don't embarrass your mother by diving in after it.) If you pay yourself first, you won't have to. What do we mean? When you pay your bills -- the credit cards, the gas, water, electric, cable, and phone bills, and the kid who mows your lawn and the one who throws the newspaper onto your neighbor's porch instead of yours every other morning -- add one more item to that list. In fact, we think it should be the first item. Put yourself at the top of that list: Pay yourself first. Then you don't have to think about it again until next month.

The Motley Fool recommends that you put away as much as possible, with the goal being to save 10% of your annual income (total, not take-home). Depending on your obligations, you may be able to save more or less. The more you save, the more wealth you create -- but anything is better than nothing. Remember, even a few dollars saved now will be worth more than lots of dollars saved later. So take advantage of services that automatically withdraw money from your checking account and transfer it to some savings or investing vehicle. You'll be surprised how easy it is to live on a few less dollars each month. You probably won't even notice the difference.

You can be flexible about this. If you find yourself eating beans and rice every night for a month (and you don't like beans and rice), then maybe you're paying yourself too much, or perhaps you're not in a position to start paying yourself at all. But as soon as it's feasible, jump in. Remember Patrice and Bianca!

Stay tune for descriptions of Saving and investment vehicles ...

Investing Basics: Getting Started

Why invest?

Welcome to Investing Basics! If you've found your way here, chances are you've either got some money socked away or you're planning to do so. What are you saving for? Retirement? College for the kids? A new speaker system complete with woofers and tweeters? An exotic animal menagerie complete with Chihuahuas (woofers) and canaries (tweeters)? A retirement villa in the sun-baked hills of Tuscany?

Say you take $2000 of your savings and put it into the stock market. If your money returned 11% a year (the S&P 500's historical average), two grand would be worth $53,416.19 after 30 years. You could buy that Tuscan retirement villa (or at least come up with the down payment) with that kind of money.

Maybe you don't have $2000 burning a hole in your bank account, but perhaps you can afford to invest your lunch money. Brown-bag your lunch and sock away just $4 a day, 250 days a year. It's not a lot, but if you're in your early 20s, you've got the investor's best ally on your side -- time. If you invest $1,000 once a year in an investment that averages an 11% annual return -- the annual stock market return since 1926 -- it'll grow to more than $1 million after 46 years, which is right around the time you'll be ready to retire.

Of course, as you get older and more financially stable, you should be able to put away more to invest. Upping the ante to just $166 a month (lunch money plus about what you pay for basic cable TV and a movie channel), would put you at the million-dollar mark in just 39 years.

Simply put, you want to invest in order to create wealth. It's relatively painless, and the rewards are plentiful. By investing in the stock market, you'll have a lot more money for things like retirement, education, recreation -- or you could pass on your riches to the next generation so that you become your family's Most Cherished Ancestor. Whether you're starting from scratch or have a few thousand dollars saved, Investing Basics will help get you going on the road to financial (and Foolish!) well-being.

The power of compounding

The table below shows you how a single investment of $100 will grow at various rates of return. Five percent is what you might get from a certificate of deposit (CD) or with a government bond, 10% is a little less than the historical average stock market return, and 15% is what you might get if you decide to learn how to pick your own stocks . (Click the link to go to the table)

Why is the difference between a few percentage points of return so massive after long periods of time? You are witnessing the miracle of compounding. When your investment gains (returns) begin to earn money, too, and those returns start to earn... small amounts of money can mushroom very quickly. Extend the time period or raise the rate of return, and your results increase exponentially. For instance, if you start young, say at 15 years of age, note how quickly a single $100 investment grows, especially in the later years.

Looking at it another way, let's compare two teenagers and their lifetime savings habits. Bianca baby-sits a lot and spends most of her spare time reading. She saves $1000 a year starting when she's 15 and invests it in the stock market for 10 years earning 12% per year on average. After 10 years, she comes out of her shell, stops adding money to her nest egg, and spends every penny she earns club hopping and on trips to Cancun. But she keeps her nest egg in the market.

Compare her account to that of her friend Patrice, who squandered her early paychecks on youthful indiscretions. At age 40 Patrice gets a wake-up call when her parents retire on nothing but Social Security. She starts vigorously socking away $10,000 every year for the next 25 years. Guess who has more at age 65? That's right, Bianca. (You figured it was a setup, didn't you?) Her 10 years of saving $1000 per year (just $10,000 total -- the same amount Patrice put away in just one year) netted her $1.6 million by age 65. Patrice, on the other hand, scrimped for 25 years to invest a quarter million dollars out of her own pocket and ended up with just under a million. Neither will be going to the poorhouse, but you see our point: Bianca's baby-sitting money grew for 50 years, twice as long as Patrice's, and Bianca barely missed it.

(It's almost not fair to mention this, but Bianca's money was in a Roth IRA. Patrice could only put 20% of her money in the Roth ($2000 per year). So Bianca's $1.6 million is tax-free, but Patrice will be paying capital gains taxes on most of her money.)Every day you are invested is a day that your money is working for you, helping to ensure a financially secure and stable future.

Financielle Note: I myself am a very cautious investor and stick to things like GICs. Good luck finding an investment that will give you a 15% return if you are willing to go into riskier investments than I am; you are much braver. For those like me who seek the more secure investor vehicles some institutions provide GICs that are linked to a diversified portfolio of stocks where you are guaranteed a certain percentage but can make more on top of that based on how that portfolio does. If you want to tread lightly into stocks something like that may be an option.

Sunday, June 1, 2008

Cool Stie: Shopping Notes


Are you always buying things at regular price only to find that a week later it's gone down in price well stop because shopping notes is here. Shopping notes instantly alerts you to a drop in price on items via e-mail. Just enter the web address of the item you want to watch, provide an e-mail to receive price alerts and let the savings begin.

Beauty More or Less


Even though a day can be a total waste of makeup doesn't mean you have to waste your money on looking good.
Check out LouLou Magazines More or Less Spring beauty trends and its One Look, two Prices section.

State Farms Red Portfolio

State Farm's Red Portfolio takes you from:
Getting Started which includes taking inventory, managing your money, eliminating your debt, Setting your Goals.

Reaching your Goals which includes saving for a home, getting married, Having a baby, raising your kids, planning for post-secondary education.

Planning for Retirement which includes Getting an early start, Balancing family and future, Making the most of it.

Protecting yourself which includes protecting your family, protecting your belongings, protecting your future.

Owning a Business which includes starting a business, choosing what's right, protecting your business, taking care of employees.



The Money Diaries: The Frugal Giver

Lyndsey Payzant Wells
Age: 23
Home: Los Angeles
Job: Public-Relations Asscociate
Famiy: Married no Children
Monthly Spending: $2,058
Goal: Save for a down payment on a house

Lyndsey's Monthly Outlays

Rent .................................................... $551
Car payment and insurance..................$301
Church donation..................................$230
Savings................................................$200
Gas.......................................................$153
Groceries..............................................$130
Phone, Internet, Cable...........................$96
Eating out..............................................$89
Health Insurance and expenses..............$80
Household and laundry..........................$78
Gifts.......................................................$59
Clothes...................................................$39
Grooming and beauty.............................$39
Utilities..................................................$13

The Story:Thanks to personal discipline , Lyndsey, who earns just $30,000 a year, managges to spend the bare minimum on almost everything. She packs a lunch most days for herself and her husband, Brandon, who is as frugal as she is. And she rarely shops for new clothes or indulges in beauty treatments.Still, she is willing to set aside money for things that are meaninful to her. She gives nearly 10 percent of her income to her church and puts $200 a month into savings for a down payment on a house. (Brandon is saving an additional $300 a month) she knows she should invest in the 401(k) retirement plan her employer offers but she just hasn't gotten around to it yet.

The Feedbacl by Certified financial planner Peggy Cabaniss: "Lyndsey should be really proud of her frugality," says Cabaniss. If she and Brandon continue to save $500 a month, the couple will have $25,000-enough for a down payment on a modest home-in about four years. If Lyndsey wants to have the down payment sooner, she might have to reconsider tithing 10 percent of her income until she reaches that goal, since the rest of her spending is so lean. "it's about choosing her priorities," says Cabaniss. The planner sees no major problem with Lyndsey's delaying 401(k) contributions until she and Brandon buy, especially because she's so young. Meanwhile, She shouldn't be afraid to spend a little on fun once in a while.

The FruGal does Sex and the City



In Honour of this weekend's much anticipated release of Sex and the City and thanks to an article in the Ottawa Citizen "Faking it in NYC" by Rebecca Stevenson; I decided to take a look at getting carried away to NYC on the cheap.


Best Guide for a FruGal: Frommer’s NYC Free and Dirt Cheap by Ethan Wolf . Follow the link to see free exerpts.

12 Month New York Sales Calendar

Free and Cheap Movies

Cheap Shopping/Fashion: Housing Works Thrift Shops

Bag, Borrow and Steal

Sunday, May 18, 2008

Must See TV !


Click the link and watch any and all the shows offered by the Business News Network.

Saturday, May 17, 2008

Informative articles from this month's ShopSmart Magazine

Cool Tool ! Stock Calculators !

Cool Tool ! Credit Card Calculators

Top 5 Smart Money Moves !

  1. Create a Budget: Nearly half of American families spend more than they earn each year, according to the Federal Reserve, plunging them further and further into debt. That's why it's imperative to create a budget, says Judy Lawrence, author of "The Budget Kit." Make a list of your fixed costs, like your mortgage or rent payments. Then add that to the total amount you spend per month on such things as utilities and taxes. Together, these expenses shouldn't surpass 35% of your monthly take-home income, says Lawrence. Meanwhile, car loan and insurance payments, as well as car maintenance costs shouldn't exceed 24%. Next, add up any regular monthly expenses that regularly fluctuate in price such as a cellphone and grocery bills. Once you've tallied up all of these costs, you'll know how much money you have left to spend on miscellaneous expenses like dining out and shopping.
  2. Build Up Savings: In times of uncertainty, it can be a life saver to have a savings cushion. After all, no one knows when they may be faced with an emergency or the possibility of getting laid off. To feel confident that you can financially weather anything that comes your way, you should have at least three to six months worth of expenses socked away, says Jane Newton, a fee-only certified financial planner at Chatham, N.J.-based RegentAtlantic Capital. The best way to build up your savings is to pay yourself 10% of your take-home salary each month before you pay your bills, says Newton. Set up an automatic deposit, which will transfer that amount from your checking to your savings account each payday. That way, you won't be as tempted to touch the money. Consider stashing your cash in a high-yield online savings account like those offered by HSBC Direct and Emigrant Direct. Although their interest rates have been dropping -- they're currently 3.05% and 2.75%, respectively -- they're still higher than the rates at most major banks. High rates can be found at the bricks-and-mortar banks as well, but they'll come with a slew of restrictions. Washington Mutual and Wachovia are now offering savings accounts with 5% rates. But there are limits to how much money you can put into these accounts and how long these rates will last. There are also rewards checking accounts offered by small community banks and credit unions that carry yields as high as 6.26%. But you'll need to do all of your banking online and you must make a set number of debit transactions each month.
  3. Tackle Credit-Card Debt: If you're not aware of the credit crunch yet, you will be soon. Faced with a growing number of delinquencies, credit-card companies are tightening their lending standards on their delinquent and responsible card holders, subjecting them to decreased credit lines and skyrocketing interest rates. This means that getting out of debt as soon as possible is more crucial than ever. The most important tip to keep in mind is to not be late or miss any payments. "In this economy, credit-card companies won't hesitate to raise your interest rate if you're late on just one payment," says certified financial planner Sheryl Garrett. They may also notify the credit bureaus, which could result in higher interest rates on all of your cards -- not to mention any loans you may want to take out in the future like a mortgage. Start by paying down the balances that are easiest to tackle, says Garrett. You'll see results faster, and you'll be motivated to deal with the more challenging cards, she says. Keep in mind that a quick way to pay off some of your debt is by putting any income that's separate from your salary -- like your tax returns or any salary bonus -- toward it. You should also call the credit-card companies to negotiate better rates on your credit cards.
  4. Plan Your Retirement:Between putting money into savings and paying down all your debts, it's easy to see why retirement planning is often put on the back burner. Even if you have just a little money leftover each month, it's important you start contributing to your 401(k) as early as possible. Thanks to the power of compounding, contributions made earlier on in your life will have a longer time to grow and multiply. A 25-year-old worker who contributes $300 per month to his 401(k), assuming a 6% return and a company match of up to 6% of his salary, will have $920,142 at age 65. The person who starts at 35 will have just $470,043 by that age. If you can afford it, your 401(k) contribution should equal the amount required to get your company's full match, says Pamela Hess, director of retirement research for Hewitt Associates. Consider this free money that you should take advantage of no matter what. To keep your 401(k) properly diversified, you'll need a mix of both conservative and risky investments. If you feel uncomfortable choosing them on your own, consider signing up for a target-date retirement fund. These mutual funds are specific to each age group and become more conservative, moving from equities to bonds, as the investor nears retirement.
  5. Estate Planning: You've worked hard to acquire your assets, and you probably plan on passing them down to the people you care about whether that's your spouse, children, or friends. But if you suddenly pass away without having planned your estate, there's no guarantee that your assets will be given to the people you intended them for. That's why it's important to start estate planning from the moment you have assets in your name, be it real estate, investment portfolios or cars. Prepare a list of all of your assets, and give it to a professional estate planner who, for around $200, can draw up an estate analysis, which provides an estimate of your assets' current value, says David Phillips, author of "Estate Planning Made Easy." Then, give the estate analysis to your attorney. As a rule of thumb, individuals with less than $100,000 in assets should opt for a will whereas those with more than $100,000 should go with a trust. With both a will and a trust, you decide who gets which assets and if that person will receive them in a lump sum or in increments over their lifetime. However, with a will, after you die the court will have to determine if it's valid before your beneficiaries can receive your assets, which can tie the process up for months, says Phillips. Keep in mind though that if you have any outstanding debts at the time of your death credit-card companies and banks can take what you've owed them, leaving your heirs with a smaller estate than you had planned.

Wednesday, April 16, 2008

Six Step Debt Elimination Plan

Step 1: Know wher you standIgnorance may be bliss, but it won't solve your problems. The only way to get out of a debt predicament is to know how beholden you are to creditors. Where are you starting from? Look honestly, as painful as it may be, at how much you currently owe.Once you've tallied your debt, add up your income and subtract fixed expenses. The amount leftover is money for discretionary spending and paying down debt.
Step 2: Create a Plan Take a short self-inventory to determine the best repayment plan. There are two main approaches to paying off debt:

  • High to low. You pay off the card with the highest interest rate first. This gets the most out of every cent you send.-
  • Big to small. You pay off the card with the biggest balance first, regardless of interest rate. This creates big results fast, but may not be the best bang for your buck.

Step 3: Set aside some savings - While it may seem counterintuitive, saving is a crucial aspect of a sound strategy to pay down debt. If you have three to six months of living expenses saved up, you're golden; otherwise, build an emergency savings buffer.A savings cushion can keep you from falling back into the deficit-spending cycle. After paying your minimums, put half of any extra money into savings and half into paying down debt.

Step 4: Pay more than the minimum - Do you understand how much you're paying if you only make minimum payments or how long it will take you to repay your debt?It is crucial to pay down more than the minimum each month. If you can't afford to pay down more than the minimum, sit down to figure out where you can save more. Leave no stone unturned.

Step 5: Imrpove your Terms - Creditors may waive fees, reduce interest rates or agree to more flexible repayment terms. All you have to do is ask. Knowing how to ask is important, though. Your chances of successfully negotiating with creditors increase greatly if you have a "deal breaker," such as another creditor willing to take on your debt at better terms.

Step 6: Seek Counsel- If you don't have the time or know-how to get results on your own, turn to a good credit counseling company rather than stalling or feeling frustrated by ineffectual attempts at vague behavioral changes.A consultation with a good credit counselor takes an hour or so -- you can even phone in. A credit counselor can get you on a budget or refer you to other options.

5 Steps to Making a Budget you can Live with

  1. Keep Track of your Regular Expenses:If you're the one paying the bills each month, this is probably the easiest part of your budget to put together. Take note of all your regular monthly expenses, including fixed payments for, say, your car and mortgage (or rent), and your fixed (but sometimes variable) costs, such as gas, cable and phone bills. Then jot down your seasonal, biannual and annual expenses. For example, if your car needs a tune-up at least once a year, factor that cost into your annual budget. Once you're done, you should have a good sense of what you're day-to-day living costs you. While there's no set formula that proves whether or not you're spending too much of your monthly income on these expenses, you can typically expect home payments, including your mortgage, utilities, taxes and maintenance costs to consume up to 35% of one month's salary, says Lawrence. And transportation costs including car payments, insurance and maintenance don't normally surpass 24% of one month's pay. Obviously, these percentages will vary based on your location and marital status, among other things, she says. Click here for more on how to track your spending.
  2. Prepare for Rising Energy Costs:For the 2007-2008 winter season, the average household is projected to spend $1,955 on heating oil, a 33% increase from the previous winter, according to the Department of Energy (DOE). Homes with natural gas are expected to pay $865, a 6% increase. Rather than getting hit by a monstrous bill, re-adjust your budget with a few simple steps. If you live in a state with cold winters, ask your oil or gas suppliers if you can sign up for a set pay rate for the entire year. That way, rather than receiving exorbitant bills in the wintertime, you'll pay a set amount each month, says Antoine Smith, information specialist at the DOE. Keep in mind that once you sign up, the rate won't change even if there's a mild winter. You can also keep costs down by winterizing your home. "Little things like insulating your doors and windows can save you a couple hundred dollars a month," says Jason Rich, author of "Make Your Paycheck Last." Click here for more on how to cut your winter energy bills. Gasoline retail prices are also projected to rise to an average $3.15 per gallon from $2.62 in 2006, according to the latest DOE annual data. Before you fill up, check web sites like GasBuddy.com and Mapquest, for gas stations with the lowest prices. You can also increase you car's fuel efficiency with some basic maintenance, like a tune-up and checking your tire pressure, says Rich. For more tips, click here.
  3. Eliminate Credit Card Debt:The average household with at least one credit card carries $9,616 in credit-card debt, according to Cardweb.com. If you have credit-card debt, it's time to start paring down the lifestyle and focusing on paying it off. First, remove as many entertainment and other unnecessary expenses from your budget as you can, and then put all of that money toward paying off your debt. Otherwise, no matter how well you plan your budget, you'll always end up overspending on the high interest rates and fees that accompany your credit cards, says Rich. Click here for more ways to tackle debt.
  4. Build an Emergency Fund:Unexpected emergencies, like temporary unemployment and medical expenses, can blindside you financially. Rather than depending on an interest-charging credit card or loan to help weather such storms, try to save as much as you can when your finances are stable so that you'll have a cash reserve when you need it. In order for this fund to serve its purpose, it should have three to six months' worth of your take-home pay, says Lawrence. That may sound like a lot, but even if you're on a tight budget, you should try to contribute to your emergency fund as often as possible, ideally each month. Set up an automatic contribution to your bank account from your paycheck, for, say, $50, during each pay period. That way, you pay yourself first without even realizing that you're left with less money for day-to-day expenses, says Elaine Morgillo, a certified financial planner with offices in North Andover, Mass., and York, Maine. To help your fund grow, put it in a high-yield savings account where it accrues interest and where you can access your cash within 24 hours of requesting it, says Morgillo. If you use an online account, make sure it's FDIC-insured. Online banks such as HSBC Direct and Emigrant Direct have an annual percentage yield of 4.25% and 4.65%, respectively -- some of the highest rates out there. If you still have extra cash after contributing to your emergency fund, deposit it in your 401(k) -- and make sure you're taking full advantage of your company match -- or your IRA. Click here for more on 401(k)s and click here for more on IRAs.
  5. Estimating your Tax Bill: Before you finalize your budget for the year, schedule an appointment with your accountant to get a rough estimate of your tax bill. Because of last year's volatile markets, you're likely to get hit with capital-gains taxes if your holdings include mutual funds in brokerage accounts that had high returns in 2007, says Theodore Lanzaro, certified public accountant and managing partner at Shelton, Conn.-based Lanzaro CPA. This is especially the case if you invested in the energy sector and foreign markets, such as China, India, Russia or Brazil, he says. Click here for more on capital-gains taxes. Your accountant can also keep you abreast of the developments surrounding the alternative minimum tax (AMT). As of press time, President Bush is expected to sign a bill into law that will spare more than 20 million middle-class taxpayers from the AMT. Who will get hit with this tax? That depends mainly on whether you itemize deductions for state and local taxes, your number of personal exemptions, and if you exercise any incentive stock options. Although it's difficult to pin down a starting salary that's affected by this tax, it's unlikely the AMT will hit single taxpayers with income under $75,000 and married people filing jointly that make less than $150,000. Click here for more on the AMT.

Micro Loans for Macro Change

I've always been fascinated with Micro Loans and finance; the idea that giving women in developing countries small loans to start their own business has such a huge economic impact is incredible to me. I was reading the pink magazine website and saw this e-newsletter interview and thought how I would like to share it.


SUCCESS SECRET
:"Being aggressively optimistic, bold and persistent, and having zero fear of failure."Jessica Flannery, Co-founder and director, Kiva

Micro Loans for Macro Change
The founder of Kiva tells how small donations add up to a whole new life for women entrepreneurs in developing countries

By. Cynthia Good

Thirty-year-old Jessica Flannery came up with the idea for Kiva (kiva.org) four years ago, inspired by a Nobel Prize winner speaking at Stanford, where she was a student. To date, the nonprofit run by Flannery, her husband, Matt, and their team has raised more than $23 million in no-interest loans from 250,000 lenders to fund microbusinesses in 40 countries. About two-thirds of Kiva's borrowers are women. I caught up with Flannery, co-founder and director of Kiva, at its headquarters in the Mission District of San Francisco this week to talk about connecting people through lending to alleviate poverty.

PINK: What's your biggest success story?

Jessica Flannery: Any woman who takes a loan – despite the cultural poverty, despite not being seen as valuable outside the home – is brave in her own right. I met this one woman, Elizabeth, in Tanzania. She was humble but confident; she looks you in the eye and has a firm handshake. She tells me she started her charcoal business with $100 a few years ago. It turns out she also started five other businesses and employs her husband. She's like a mogul in this Tanzanian village. I thought, "If you'd had half the opportunities I've had in my life, I'd be working for you."


PINK: Which lender has most impacted Kiva?

J.F.: Every lender on the site is doing something heroic. For instance, a woman named Ann Brown, who has her own business in Seattle making leather purses, started her company with a small loan. So she wanted to give back to another woman

PINK: What's your ultimate goal for Kiva?
J.F.: It's possible to hit $1 billion in five years. But more importantly: What if everyone in the world could be connected, and could either empower someone or be empowered? Or, better yet, both? I'd love to see everybody on the planet have the chance to either provide or access dollars.

PINK: You have 26 full-time employees and hope to have more than 40 by the end of the year. Is Kiva more than a job to your employees?

J.F.: Yes. Each person has a story about why he or she connected with Kiva. This year we had a staff retreat where everyone explained why they're at Kiva. It was one of the coolest moments of my life. One day this married couple just showed up and said, "We want to help." They've been here for two years. Everyone's had an experience that opened their eyes to people who need so much. They are so passionate. One of those who manages our microfinance partnerships is 24 and a total rock star. He just got back from East and West Africa visiting borrowers, and he came straight to work from the airport. It's not "just a job" for any one of us. We're all able to use our gifts.

PINK: Unlike at other charities, 100 percent of donations to Kiva go to recipients. How are you able to keep the organization running?

J.F.: We're able to pay our salaries and keep the lights on thanks to lenders who add an optional donation to Kiva when they lend to an individual on the site. Based on that, we've even been cash flow positive in the past, but we're growing so quickly now that we're fundraising quite aggressively again. It's a nice thing, culturally, to know that the majority of our operational costs have been paid for by lenders who tack a few extra dollars onto their loans. We know they support us holistically.
We've set up Kiva like a business. We have other revenue streams, such as interest on the money in our accounts before it gets to borrowers and after it comes back. We also get additional donations from large foundations and wealthy individuals, and revenue for services. For example, instead of frequent flier miles or points for other stuff, we designed a system for one credit card company to turn their clients' points into Kiva credits.

PINK: You've been on Today and Oprah, and Fortune called Kiva "the hottest nonprofit on the planet." What's your secret to great publicity?

J.F.: The Kiva story is just compelling, and our community of lenders and borrowers is so vibrant. Every person has a story, and there are thousands of these stories posted on our site. It's endlessly interesting. And the connections that form are blurring the traditional donor/recipient lines that exist elsewhere. On Kiva, it's not about the strong, in-control American giving a handout to a weak, needy poor person. It's individuals in 72 countries lending to individuals all over the world, and it's a relationship of equals – of business partners. Lenders kick things off by sharing resources and lending someone $100; but the borrower is the one who then has the power, and when she repays you, this virtuous circle can continue.
Also, the Kiva model is sustainable, which is somewhat rare in the nonprofit sector. Instead of a donation or a financially profitable investment, we created this new product, a charitable loan that you get back and can use again after the borrower has repaid, usually in six months to a year

PINK: How do those who want to start businesses find you?

J.F.: We have microfinance institution partners who serve as our experts on the ground. There are 100 million potential borrowers, and only 20 percent of the need is currently met, so we believe in empowering these expert partners of ours to serve more people. Our partners need more cash. So Kiva offers them a platform to fundraise through a peer-to-peer lending connection on kiva.org.

PINK: How do you make sure they don't take advantage of the goodwill and the cash?

J.F.: We do a ton of due diligence, find great partners who manage the entrepreneurs and administer the loans well, and keep information flowing by requiring partners to blog on our website about the business owners' progress. It's a lot of work to do all of the necessary audits and manage the relationships, but we have a program that deploys a large number of amazing volunteers in the field to check up on how things are going.

PINK: What surprises you the most in your work?

J.F.: We deal with human growth and human potential, and nurturing this can be a slow process, and then you hook that up to the rocket ship of the Internet. It's interesting to be stretched between these two worlds. I feel like it made me realize everything is so possible. You don't need to have 40 years of experience to have an idea that can make a difference.

PINK: What is your greatest hope?
J.F.: If we can blur the lines between rich lenders and the poor, and treat and think about each other as equal human beings – that would be the end game. The rich and the poor thinking about each other as people. That would be pretty cool.


Friday, March 21, 2008

Cheap Frill !

It has been a while since I did a cheap frill post but With this long winter dragging out I figured you could use a cheap and chocolatey frill. I got this recipie off of Pink of Perfection.


Chocolate Truffles
makes 3 dozen
Messy and hands-on, these would be so fun to make with kids. I have made these with both super high-quality chocolate and Bakers Treat, and both are fantastic. Buy the best you can find, or scrimp on the chocolate to put some pennies away for Paris. Either way you will have made delicious truffles. Oh, and if you can bare to share, I ought to mention these make great gifts.
1 pound bittersweet chocolate
1 cup heavy cream
cocoa powder, for dusting
Chop chocolate finely and place in a large bowl. In a small saucepan, bring the cream to a boil and then pour directly over chopped chocolate. Let stand for 10 minutes. Stir to combine chocolate and cream, and then leave alone for another 15 minutes to thicken.Pour ganache mixture into a shallow dish or baking pan. Refrigerate ganache has set, and is very cold but still pliable, about 30 minutes.Scoop out teaspoons and roll between your hands to form ball-shapes. The heat of your hands will warm up the chocolate and cause a big ole mess. You could wear rubber gloves, but what's the fun in that? If the truffles are quite melty at this point, you could pop them in the freezer for a few minutes to stiffen them up again.Next, dash the chocolate balls through cocoa powder until covered. Crown a plate with one or two, and carry to bed.

Know Your Marginal Tax Rate

According to Patricia Lovett- Reid, "Proper tax planning means knowing always where you fall on the marginal tax rate scale. Your marginal tax rate is the amount you'll have to pay on each additonal dollar of taxable income you make in a year." Verify the rates with the Canada Revenue Agency (CRA) as rates may change.

Ten Sure Fire Ways to Save Tax Dollars

Strategy #1: "Buy and hold" to defer taxes for a lifetime
Strategy# 2: Maximize your RRSP contributions
Strategy# 3: Split your income with family members
Strategy #4: Invest in your home
Strategy #5: Dividends - your secret weapon
Strategy # 6: Borrow to invest
Strategy #7: Maximize your RESP contributions
Strategy #8: Maximize tax deductions
Strategy #9: Maximize employee benefits
Strategy #10: Employ yourself (part - or full time)

Note: the taxes you save from the above strategies depend on your marginal tax rate, your employement status and your investment strategies.

7 Tips for RRSP Contribution

Have a plan: It is all too common that Canadians invest in "something" when they scramble to make their RRSP contribution before the deadline. Often, the "something" is an investment recommendation from an advisor that unfortunately results in a potpourri of holdings that turn out to be yesterday's winners. This year, when investing your contribution make sure that you have a well-defined asset allocation strategy and refuse to invest until you or your advisor comes up with one

Park your contribution in a money market fund: A RRSP allows you to hold cash but while you wait to develop an investment strategy, invest the contribution in money market funds or cashable GICs. That way, you have the access to cash when you are ready to actually invest but you are earning something on your funds in the meantime.

Ignore the ads: When money managers take out ads showing the excellent past performance of some of their mutual funds, you should remember that a) investors don't get to earn past performance b) there is no correlation between past performance and future results and c) when retail investors jump on a trend, it is already too late to ride that train. So, this RRSP season, just ignore the glitzy ads and the drooling returns so prominently displayed.

Check out low-fee options: Canadian mutual funds are notoriously expensive. The average MER of a Canadian equity fund is close to 2.5%. The math is simple - the higher the fees, the lower your returns. Fortunately, low-fee funds are available from many boutique money managers whose fees are substantially lower at 1.2% to 1.8%. By paying lower fees, your chances of earning higher returns than average increase substantially.

Don't hold too many funds: Many investors are under the mistaken impression that the more funds they hold, the better diversified they are. A handful of funds representing different asset classes will provide you with all the diversification you need.

Consider indexing: Index funds simply track a popular index such as the TSX Composite or the S&P 500. Index mutual funds or Exchange-Traded Funds that can be bought and sold like a stock have the following advantages: a) low fees b) tax efficient because their turnover is typically very low c) since the vast majority of funds fail to beat their benchmarks, an index fund is likely to provide you with higher returns.

Tread warily among these investments: In my opinion, it is best to stay away from these investments: principal-protected notes, labour-sponsored venture capital funds, funds that invest in narrow sectors such as biotechnology or energy or materials, funds that invest in narrow geographic areas such as China or India, mutual fund wraps etc.

Households Forced to Budget Money

With the recent downturn in the American economy , the effects of which are being felt here at home in Canada people are being forced to take stock of their priorities and consider their financial well being. Thi article from AOL finance should be read and considered in making some financial decisions.

By Nick Carey,
Reuters

ATLANTA (March 18) - After years of living large, U.S. households are finally learning what financial experts thought they never would: to live within their means.

Economists have long warned that the U.S. consumer was on an unsustainable spending frenzy and that savings rates were dangerously low. Now, families are being forced into financial responsibility by the housing downturn and a weakening economy.

"For many years people on Wall Street have refused to believe that American consumers could ever change their spending habits," said David Rosenberg, North American economist at Merrill Lynch . "But it's happening."

"Frugality is in, extravagance is out," he added.

Consumer spending accounts for 70 percent of the U.S. economy and, according to Rosenberg, 30 percent of that is discretionary spending -- that is, buying stuff you can live without.

Theresa Parks is a case in point. Parks, 36, paints lines on roads and highways for the city of Atlanta for a living. She bought a home in 2006 for herself and her three daughters in the suburb of Riverdale, but fell behind with her $669 monthly payment. Her lender agreed last September to a repayment plan that required an additional $188 a month through to June 2008.

"We had to cut eating out at restaurants and we had to stop shopping," Parks said. "That was the hardest part for my teenage daughters because they love to shop. But I sat them down and we agreed we'd do anything to keep our home." Regina Grant of the Atlanta Cooperative Development Corp helped Parks rework her budget and said most of her clients require help managing their spending. "None of them have ever prepared a budget, but they have to now if they want to keep their homes," she said. Just a few miles away, Ozell Brooklin, director of nonprofit Acorn Housing tells a room of some 15 struggling borrowers that if they want their banks to lower their interest rates or even forgive some of their debt, they must prioritize spending. "Your first priority will be your mortgage, then food, then utility bills then one family car if you need it for work," he said, standing at a lectern and counting off those priorities on his fingers. "Everywhere else we're going to cut spending because your lender won't make a deal with you if they think you have money to spare for luxury items." Some 700 miles further north, in Cleveland, Ohio, Mark Seifert of nonprofit East Side Organizing Project says counseling stricken borrowers means telling them harsh truths. "We get home owners coming to us in trouble, but then we look and see they have only make $50,000 a year and yet they own an Escalade," he said, referring to a Cadillac sport utility vehicle that sells for about $55,000. "And you have to ask them 'What on earth were you thinking?'" As the U.S. housing crisis deepens, many more Americans will be forced to budget to avoid foreclosure, with serious implications for an economy teetering on the brink of recession. "This is going to take a bite out of consumer spending and is an ominous sign for the economy," said University of Maryland business professor Peter Morici. "We are in a recession that was manufactured on Wall Street by the major banks

BACK TO BASICS
One of the hallmarks of the recent property boom was that buyers could get into a home with little or no money down. Those days are apparently over. "What we're seeing a lot of is people with good income who haven't put any money aside and now have to save for a deposit on a home," said Van Johnson, president of the Georgia Association of Realtors. "When people like that don't spend, restaurants and retailers suffer and it tends to slow the economy down." "There will be pain in that correction," he added. Terry Kibbe of Washington, DC-based nonprofit group the Consumer Rights League -- which is campaigning against any form of government "bailout" for banks or borrowers -- said that higher down payment requirements are a natural consequence of the excesses of the boom years. "The real estate boom was not going to last forever and it is becoming more difficult to buy a home," she said. "But the market will correct itself and this is part of that process." There are already signs that American consumers are "trading down" in the search for bargains, with February same-store retail sales showing customers favoring discounters like Wal-Mart Stores Inc over higher-end retailers. Merrill Lynch's Rosenberg said that in the fourth quarter of 2007, Americans' household debt almost equaled 140 percent of their after-tax income and that they were spending 14.3 percent of their after-tax income paying down that debt. "Simply put, that means Americans are spending more on servicing their debt than they do on food," Rosenberg said. "This is not just affecting stressed-out or soon-to-be-foreclosed home owners. This hurts everybody." Rosenberg predicted Americans will start saving more, which he said will shave 1 percentage point off annual U.S. consumer spending growth for years to come. "It is hard to say how bad things will get," Rosenberg added. "We're in unchartered territory at this point." As for Theresa Parks of Atlanta, she says that her days of loose spending are over. "When I catch up with my mortgage, I aim to save every penny I can and plan for my daughters' future." Reporting by Nick Carey; Editing by Eddie Evans