Debt Is An Ugly Word (How To Get Out Of It Quickly)! Part 2

In part 1 we discussed the different ways people can borrow money, in part 2 we will discuss how to reduce the debt the hardship has brought you.  Once you are in a better place financially you will want to start focusing on your debt.

Family and Friends – This is a sticky situation.  Some family and even a few friends will not want you to pay them back the money you borrowed.  Even if they do not want you to pay them back it is advisable to do so anyway.  If you ever have a need again in the future to borrow money they will be more likely to do so if you paid back the original loan.

Personal Loan – There is not too much you can do here.  These types of vehicles are usually fixed and have a defined payment over a specified period of time.

Retirement Plan – When discussing the withdrawal with your tax advisor you should also discuss if you will need to repay the money to the plan or not.  I am not a big fan of taking this money in the first place what good is it for retirement if you have to live on the streets today.  If possible and the laws allow you to repay it, by all means do so if possible.  Get that money back into its tax deferred or tax free plan.

Home Equity Line Of Credit and Credit Card Debt – I bunched both of these together on purpose.  There is a specific payback method that we will review here.  This makes it easy to put these two together. 

Let’s say you have been using these two instruments to get you through your hardships.  You have not only maxed out your credit cards but you also added debt to your Home Equity Line Of Credit.  There are a few steps to take to work out a proper repayment plan.  This type of plan has been time tested and is proven to work.  It is the fastest repayment plan I have ever seen.

Sit down with your spouse and plan on spending an hour or two on this.  You want your spouse with you because this plan will affect the both of you.  Start working through these steps:

1- Although you may have already done this when you were going through the financial hardship you should do this exercise again.  Discuss if there are any things you can cut out of your budget or are there any things you can cut back on.  If you do come up with some dollars that you can cut back on write the total number that you came up with down and put it on the side for now.

2- Have all current credit card statements and any Home Equity Line Of Credit statement out for review.

3- List all of the HELOC and credit card debt out in dollar amount order.  List the dollar amounts from the lowest first to the highest dollar amount.  For example you have three credit cards that have balances of $975, $28,320, and $23,187.  You also have a HELOC total debt of $78,950.  List the lowest debt first ($975, $23,187, $28320, $78,950)

4- What you are going to do is pay the minimum amount on all debts you have listed on the paper.  This holds true for all of them except the lowest payment you have.  You will take any extra money you have for the month (including the extra money you put away in step number one above) and you will send all of the extra dollars you have to the lowest balance credit card.  So let’s say your monthly payment on that $975 credit card debt is $60.00, you found an additional $40.00 per month that you were able to cut back on, you would then send $100.00 to the credit card that has the lowest balance.  You will keep doing this until the lowest balance credit card is paid off.

5- Now you have an additional $100.00 to apply to the next lowest credit card balance you have.  You will keep doing this until all of your debt is gone.  Once you get started it is a snowball effect.  The start is slow but the plan will start picking up steam and eventually it will get going very quickly.

Getting in debt can take full and total control of a family’s finances.  Make sure to do what you can to get the money to pay it down.

Strategy Based Profits TIP: - Do what you can to cut expenses, start paying sown the debt and watch the debt start to snowball away.

Robert J. Roy
Money Man

Debt Is An Ugly Word (How To Get Out Of It Quickly)! Part 1

Most people are not fortunate enough to go through life without running into some form of financial troubles.  For some people they lose their jobs for others they have a medical condition that sets in and in some cases there is a death in the family.  All of these things and many others could cause some form of financial hardship on an individual or family.

When this happens there are limited choices of how to keep a roof over your family’s head and food on the table.  You do what you can but the bills tend to pile up and you can’t seem to get your head above the water. First let’s discuss the places you might be able to get your hands on the finances you will need to work through the hard times.

Family and Friends – I didn’t say you would like the choices but you must consider your family and possibly a friend or two to help you through these trying times.

Personal Loan – If you have good credit you may be able to get the money from the bank or other financial institution.

Retirement Plan – You may be eligible to use the money that is in your retirement plans for personal hardship.  Check with your tax advisor on the rules for these.

Home Equity Line Of Credit – This is also known as a HELOC.  Although this is a choice keep in mind that your debt will now have equity behind it.  What I am referring to is that the bank has an asset to hold against your debt (your home).  This one should be a last resort.

Credit Card – Credit cards are the vehicle that many individuals and families wind up using to help get them through the rough patches.  There is no wonder that as a country we are in so much trouble with this type of debt.

In Part #2 we will discuss how to reduce the debt that the hardship has brought you.

Children And Savings (The Top 3 Strategies For Teaching Kids About Saving Money)

Historically parents have not done a good job on teaching their children about money or saving money.  Parents send their children to school and they feel that the school and the teachers in the school will teach the kids about money.  WRONG, that couldn’t be further from the truth.

I am asked over and over again when is a good time to get started?  How early should I start teaching my children about saving?  Many parents believe that they should wait until he child is a little older (teenagers) before they teach them about money and savings.

I teach parents to start teaching their children around the age of three or four.  Yes, you heard me right, start teaching them around three or four.  You are not going to beat them over the head about savings but you should start teaching them about money.

Here are three of the top strategies for teaching kids about saving money:

1) What Is Money And How Does It Work – Start teaching your children early.  Don’t wait on this, this is a critical step.  Teach your children what real money is worth, use coins and bills in the educational process.  Explain how much each coin is worth.  Show them one and five dollar bills, teach them how to read each bill.

2) Set Up A Savings Plan – Historically parents use various methods for savings.  Although some are better than others the important thing is that you are doing something.  There are three methods that you can use, here they are:

A) The Piggy Bank – When using a piggy bank allow your children to put the money in the bank themselves.  What you are doing is you are getting them used to putting their money in the bank.  Psychologically you are getting them used to savings because they are placing the money in the bank themselves.

B) A Savings Account – Placing the money in a savings account is a great way to save money for your children.  It is not a good way for your children to learn about saving money for themselves.  I am not against putting money into a savings account but what I am in favor of is to have your children go to the bank with you and let them hand their money to the teller.  This gets them used to making deposits at an early age.

C) A Jar System – Using clear plastic containers to save money in is a wonderful idea.  If your child is saving for a particular item that they want to buy, let’s say there is a new doll that they want, you would have a clear jar for them to put the money in.  The visualization of the money in the jar is a very powerful motivator to get them to want to save more.

3) Allowance – Take a few chores around the house or in your business and give it a dollar amount that it is worth.  You could also do this with tasks for your business, your kids could file, do data entry, etc.  This next part is an important psychological step, when you pay them, don’t call it allowance, instead call it commission.  Get them used to getting paid for what they do.

Teaching your children about money and savings is a very important process that parents should teach their children.  Start them off young and you will engrain your kids with this wonderful lesson.

Strategy Based Profits TIP: - Teach them young and remember it is a never ending process!

Robert J. Roy
Money Man

Business Branding (A Must To Online Success)

The internet growing by tens of thousands of sites daily.  The explosive growth we are seeing shows no real signs of slowing down.   That is why today more than ever before it is important to create a presence on the internet that goes beyond putting up a business card type website. 

A business card website is what most companies put on the net these days.  It is the page that introduces them to the internet world.  It gets their name out on the web.  For the most part that is it.  This type of website is still needed but it is not what sells most products or services.

When setting up a marketing plan, creating a brand presence is critical.  Your website needs to stand out from others.  To do this effectively in today’s marketplace there are a few things you will want to consider as you are setting your plan up.

Business Card Website – This is still an important part of setting up your online presence but it is not meant as a sales page.  This type of website will have tabs such as About, Contact, Home, FAQ, etc.

A Blog – The Google’s of the world look for fresh content.  Today this is a big part of their ranking criteria.  Having a blog allows you to easily create constant new content for your business.  A good rule of thumb once your blog is set up is to create two to three new blog posts each day for the first two weeks.  After that two to three blog posts per week.

Get Social – Facebook, Twitter and MySpace are just some of the social media sites that you should consider setting up.  Social Media is one of the hottest marketing tools today.  There are numerous strategies to employ for using them. 

Squeeze Page – A squeeze page is designed to capture your visitor’s information.  For the most part you will want your visitors name and email address.  This information is vital to your future success.  Building a strong list should be job number one.

Sales Page – Once your visitor gives you their information on your squeeze page your sales page will pop up.  This page is meant to deliver your offer to your visitor.  The sales page is will only deliver one offer at a time.  If you are selling 3 different items, you will use 3 different sales pages.

Creating Back Links – Back links are links on other websites that link back to your site.  You should take advantage of all of your sites pointing to your squeeze page.  Remember you will capture your visitor’s information and give you future opportunities to market to them. Your blog will also get quite a few back links if you are regularly adding new content.

Today branding yourself and your business is vital to your marketing success.  Don’t try to mimic General Electric’s marketing strategy.  Their business is much different than the average person trying to market their products online.

Strategy Based Profits TIP: - Set up the various web pages listed above, keep the content fresh an create links back to your site.

Robert J. Roy
Money Man

Getting Your Online Business Off The Ground With A Strong Team!

Ok you’ve got a great idea for an online business; you know it will be a huge smash.  You have been working on this product for as long as you can remember.  You finally got the last detail of it worked out in your head.  So you sit down and start to put pen to paper and you realize you don’t have a clue about setting up an online presence.  You have no idea where to start.

Well don’t let that discourage you; there is an easy solution to this stumbling block.  Here is the good news; you don’t have to be an expert in everything to make this work for you.  You can use experts that specialize in what you need.  It is no different than building a house; you would use a framer, electrician, plumber… (You get the point).

Let’s look at the areas you might need help in.  Some of these will be simple enough for some to do on their own.  When you will need to decide is how much time will it take you verses how much will it cost you to get it done for you?

Buy a Domain Name – There are hundreds, maybe thousands of companies out there that you can buy a domain name from.  This is your website name.  For the most part you will want to get the .com and .net extensions for your site.  You may choose others based on what it is that you are going to be doing.  If the .com is not available then consider another domain name.  You can have a web designer help you with this if you are not sure how to do it.

Create a Website – This one is a little trickier for most.  Hiring a web designer will be the choice of most people.  Interview them before taking them on as a partner in your business.  It is critical that you realize that this person will be an important part of your success so take your time with this one.  Many hosting companies also have website builders; you may want to choose this option.  A good web designer is worth their weight in gold but you don’t need to pay them all of yours.  Some designers are charging five to fifteen thousand dollars (plus) to create a website.  There are many companies out there that are much more reasonable in their pricing so do your research.

Manage Your Website – Once the website is set up there will be regular maintenance to run it.  Keep in mind a website should not sit stagnant unless it is just a business card or you.  If you want to have good rankings with the search engines then constant updates will be needed.  Having a blog on your site is a good way to have fresh content to update the data on the site.  You may choose to do the site maintenance yourself but hiring a web master might be a wise decision for your business.

So there you have it take your idea and build a strong team to help take that idea to the next level.

Strategy Based Profits TIP: - Consider using experts in their field to help you in areas that you are not strong in.  You don’t need to go it alone.

Robert J. Roy
Money Man

Successful Business Have A Plan (You Should Too)

Before the economy went to pot and the stock market fell off of the face of the earth starting a successful business was difficult.  With individuals and business cutting back on spending it has gotten worse.  Today more than ever before it is a tough time to start up a successful business.

It has never been more important than today to have a plan in place for your business.  When people hear the words “Business Plan” there is emotional turmoil present in their facial expressions.  Many individuals are petrified at the thought that they need to sit down and write a business plan.

Believe it or not it is not that bad (once you know what to put into one).  Whether you are just getting started or you have an existing business you will want to make sure that you have a business plan in place.  Every business plan will start off with these things:

A Mission Statement – Is a written statement that defines the purpose of a company.  It will include things such as the organizations goals and a general direction for the company.  Usually mission statements are only a few sentences long.  They are meant to be clear, concise and to the point.

The Companies Description – What will be your legal structure (corporation, LLC, Partnership, etc.)?   What is the company’s history (when and where did they start operating)?  What are your startup plans, when and where will you operate your business?

Your Customer – Who are you trying to market your products to?  What is your market niche (you will need to define it, this is critical)?  It’s easy to say that you want to sell to everyone but you should hone your market in to specific demographics.  It could be by age (25 to 40), sex (female), homeowners (yes), parents of 5 to 12 year olds (yes), that live in a certain part of the country (Atlanta).  Ok you get the idea, you may not have these restrictions or you may have more, it is your business so define what it is going to be.

Your Products – Once you have defined your customer it is time to make sure the produce matches them.  If you are selling senior housing and you are marketing it to people 20 to 40 instead of marketing it to the 55 plus age group you are wasting your money and will probably be out of business shortly.

This list is by no means exhaustive.  There are entire books written to the subject, go to the local library or bookstore and look into some of the.

Strategy Based Profits TIP: - The takeaway here should be that you need a plan and you need it sooner rather than later.

Robert J. Roy
Money Man

Debt Is A Dirty Word! (Or Is It)

As a society we are out of control with debt.  If you think about it we are a now society, we are impatient and we want it NOW!  I want, I want, I want, that is the motto today.  Oh and I don’t have the money to pay for it so I will put it on a credit card with 23% interest and a really low monthly payment.  It is nice of the credit card company to help me out with low payments.

We are so out of control, today’s children are expected to be the first generation ever to not do better than their parents.  Can you imagine that, with the prices of things today how will our children not be in debt, probably serious debt? 

Keep in mind not all debt is bad; yes some debt is worse than others so let’s define the different types of debt.

1-The first type of debt is what I will call (for lack of a better term) “Good Debt”.
2-The next type of debt would be called “OK” debt.  This is debt that you are ok to go into but you would rather not if you could avoid it.
3-The last debt is “Bad Debt”.  This is debt that you should avoid whenever possible.

Good Debt
Buying A Home – This type of debt is called “Secure Debt” there is something that the lender has as collateral.  Buying a home and using a mortgage is good debt because in theory by the time the house is paid off it will be worth more than you paid for it (even with the interest).

OK Debt
School Loans – Paying for your education would be almost impossible for many college students if they had to pay for it each semester.  You will start paying it off after you get out of school. There are usually favorable interest rates attached to these types of loans.

Auto Loan – Having a car for many is the only way to get around so taking a loan out for it is ok if you follow some guidelines.  Remember you don’t need to buy a new car, there are some very nice pre owned vehicles out there at a reasonable price.  Also if you are going to take out a loan for say three to five years plan on keeping the car for at least two years longer than the loan.  Keep making the car payments to yourself and save it for the next car.

Bad Debt
Credit Card Debt – This is a BIG place where we as a society have gone wrong.  I don’t have the money for it right now, just put it on the credit card.  I will pay it later.  The problem is when the bill comes in you don’t have enough to pay it off so you make the minimum payment and this is where the vicious cycle starts.  As a society we keep charging month after month and we keep getting deeper and deeper in debt.

Home Equity Line Of Credit (HELOC) – Home equity debt might be the worst of all (might).  Don’t get me wrong there may be good reasons to use your home equity line of credit but for the most part it is a bad use of debt.  This debt is now secured.  Meaning the lender has an asset they can come after for repayment of the loan (Your Home).  So as you consolidate your debt from your credit cards and put it into a HELOC you took unsecured debt and made it secured

Although debt is classified here as Good, OK and Bad there really is no true good debt.  If it can be avoided then it should be avoided.

Strategy Based Profits TIP: - Try to pay cash if possible and never turn unsecured debt into secure debt.

Robert J. Roy
Money Man

Starting A Successful Home Based Business!

Whether you work full time, part time or you are a homemaker or even retired already if you are looking for a little extra income setting up your own part time business might work for you.

A part time business will allow you to keep your current job while testing the waters with your new venture.  If done right you will make some money along the way.

Many new businesses fail within the first few years of starting up.  To start up a business that has the best chance of being successful there are a few things you need to do to put you on the side of success.

In coaching individuals through the process of setting up a business there is a 5 step process you will need to go through to raise your chances of having a successful business.

1) What Will Your Business Do – The first question to ask is what will your niche be?  This is very (and I mean very) important decision.  Don’t try to be a jack of all trades. Just become a master of one.  You will need to determine what your business will sell, whether product or service it doesn’t matter just hone in on that core area.  You will also need to determine who your target market is.  Who will you be selling to?

2) Have A Plan – Setting up a business plan is crucial to your success.  There is no step more important in the process.  Knowing why you are going to do something, how you are going to do it and when you are going to do it are crucial questions to answer.

3) Follow The Law – Each state has laws and regulations that must be followed.  That means having a formal business structure.  This could be a sole proprietorship, a partnership, an LLC, a corporation or another type of structure.  For more information on this please contact me to discuss your options.

4) Sell, Sell, Sell – Next you need to determine where you will sell your wares or services.  Will you sell in a traditional brick and mortar or will you sell your products online?  Consider this, even if you sell door to door you will want to have an online presence for your business.  I have a list of resources on my blog under the Rolodex section to help you there.

5) Review Your Plan – Your plan is not a stagnant document.  It is a fluid and dynamic work that will forever be evolving.  As your business gets going review and revise your business plan.

Well there you have it a down and dirty 5 step proven plan to get you going.

Strategy Based Profits TIP: - Pick a niche market, create your plan, set up your business, sell your products and rework your plan as needed.

Robert J. Roy
Money Man

Top 3 Financial Mistakes Newlyweds Make! (So Do Married Couples)

Your wedding day is finally here and it is perfect (or as close as possible).  You are off on your honeymoon with your sweetheart and the both of you have a wonderful time.  Over the next few weeks and months the two of you settle in to your new life.

There are conversations related to many topics but one that weighs very heavily on the scale is the topic of money.  As newlyweds there are a multitude of financial decisions to be made.  It would be a list that would take more room than we have here today to discuss.  But there are some topics that rise to the top, some things that should not be put off.

Actually there are three financial mistakes that many newlyweds make.  By the way if you are not a newlywed keep reading because these money mistakes are not only for newlyweds.  There are many married couples that I have worked with that after five, ten, and even twenty years of marriage they have not addressed these issues.

Saving vs. Spending – I know it is very easy to go out with your friends and spend, spend, spend but you need to consider the alternative.  How about saving some of that money for your future?  I can hear the questions forming in your brain as I am typing this “Why would I want to worry about money now, there is plenty of time for that later?  It is very easy to get caught up in “keeping up with the Joneses”.  It can also be a very costly proposition.  Spend, spend. Spend is not a habit you want to get started off with.  Start budgeting early on in your marriage.  There is nothing wrong with going out and having fun.  Just set aside a certain amount every month for play time and once it is spent you are done until next month.

Retirement Savings – Most young people (not just couples) wait too long to start saving for retirement.  If you are working for a company that has a 401k, 503b or any other type of retirement plan where they match a portion of your contribution you should take full advantage of that.  If you have a retirement plan still with a previous employer you should consider taking it out and putting it in your own IRA type plan.  You will not be penalized for this if done properly.  Talk to your tax professional or the brokerage firm you want to move it to and they will tell you what you need to do to avoid penalties and taxes on this money.  If you don’t have a retirement plan at work then you should put as much into an IRA as possible (up to the limits of the law).

Set up a Will – I know we all want to think that we will live forever but the truth is that we won’t.  Wills are fairly inexpensive to do if you use an attorney.  They can also be done online for much less and with the same quality you would get sitting with an attorney in person.  It doesn’t matter how you do it just that you do it.  If you are looking for an online vendor to help you with this send me an email and I will give you a place to go to.

There you have it now go ahead and get started.  If you find you are in need of help with any of these things just send me an email and I will get back to you and we can discuss your options.

Strategy Based Profits TIP: - Start setting money aside for savings, maximize your retirement plan and set up your will sooner rather than later.

Robert J. Roy
Money Man