Friday, July 30, 2010

Cutting your Utility Bill

An icon from the Crystal icon theme.Image via Wikipedia
Few things suck worse than high utility bills. So, what can you do to cut energy costs?

Obviously, the best way to cut your utility bill is to go with a non-utility company source of energy. Solar power can be used to warm your house, while geothermal can be used to cool and heat the home. While these are great choices, there are other simple steps you can take to cut that monstrous utility bill.

Vent Covers – In most homes, there are rooms that rarely get used. A very simple and very cheap way to cut your heating costs is to isolate those rooms from the rest of your home. To do this, you should close the vents in the room. The vents, however, rarely close well. To make the strategy effective, you should buy vent covers and place them over the vents. The covers are a form of plastic and keep heat from coming out of the vents. Next, close the door to the room in question and leave it. By using this strategy, you can effectively make your home smaller by excluding the square footage that has to be heated. The smaller the area, the smaller the amount of money to heat the home.

Windows – Windows are the single biggest energy wasters in your home. Your windows must seal tightly. If they don’t, heat will escape out of them causing your heater to fire up over and over. If you make sure your window fit tightly into the frame when closed, you can significantly cut the utility bill. It sounds like a small thing, but it really adds up over the course of a month/year.

Programmable Thermostat – Heating your home accounts for fifty percent of your utility bill. While a warm home is necessary for basic living in the winter, the home doesn’t need to be heated all of the time. If there are periods during the day where nobody is home because of work or school, a programmable thermostat can be used to slash your heating costs. Simply program the thermostat to turn off during the relevant time and turn back on before anyone gets home. Cutting four to eight hours off of your heating needs each day will add up quickly on your utility bill.

If your utility bills are completely out of control, there is something fundamentally wrong with your home. You need to go ahead and get an Energy Audit. An auditor will come out and inspect your home. They can then identify the problem, what should be done and provide other tips to slash your bill. Depending on how bad your situation is, an energy audit can cut your utility bill by 50 percent or more.

Power costs are high and expected to continue to increase for the foreseeable future. Take steps to cut your utility bill now and you’ll reap the benefits for years.


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Friday, July 16, 2010

Common Money mistakes . . .

NEW YORK - MAY 20:  In this photo illustration...Image by Getty Images via @daylife
If you feel as though you keep making the same mistakes when it comes to money, there's good news.

By making a few small, practical changes in your behavior, you can often correct financial mistakes and make some positive changes that are likely to last. Here are four examples.

Eliminate emotional spending: Before you head off to the mall, take a minute to note what you are feeling. In a recent study by moneycentral.msn.com, people who had just watched a sad movie clip were willing to spend more than those who had just watched other types of movies.

Remember, if you are feeling sad or frustrated, there are ways other than shopping to make yourself feel better.

Pay off credit card debt as soon as possible: Take a long look at how much you are paying to borrow money from your creditors. Think about consolidating debt with a single loan that has a lower interest rate that's fixed.

Start planning for retirement now: If you are not saving money for retirement, you should be. A recent study in USA Today showed that currently, 53 percent of people in the workforce have no pension and 32 percent have nothing set aside for retirement. If you're planning on relying just on Social Security, you probably should think again. The current average payout is just $955, or $11,460 annually-and could be even less, depending on your work history. You should consider working with a financial professional and completing a personalized financial profile. This can help determine how much you need to start saving in order to reach your financial goals, such as retirement, education savings for your children and other goals.

Prepare for the unexpected: Don't use the "it would never happen to me" excuse when dealing with something as critical as your family's financial future. Sudden accidents or unexpected critical health problems happen every day to those who least expect it. If you are the breadwinner of a young family, according to the experts at Kiplinger's, life insurance protection of eight to 12 times your annual income is recommended. Most experts agree that the most affordable form of insurance is term insurance. According to Kiplinger's, "Dollar for dollar, term life insurance gives you the most protection for your money. Period."
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Tuesday, July 13, 2010

Five Penny Pinching Tips

Penny pinchingImage by shainelee via Flickr
So many people dream of being a millionaire and retiring with a healthy bank account, but how many people will actually achieve it? Very very few. This is mostly due to lack of discipline in building up their retirement fund and poor spending habits. While building a retirement fund requires time, you can accelerate the process by making incremental but positive changes in your spending habits. Here are fice ways that you can change your daily lifestyle for more positive results in your spending habits:

1. Have you ever noticed how much time you spend sitting in front of the television?  Besides, the time you free up can be used for more useful tasks such as teaching your kids or learning a new skill. Turn the television off and unplug it when you aren't using it. In fact, all household appliances should be unplugged when they aren't in use. Its the best way to keep your electric bill low and save energy.

2. If you are an avid reader, use the public library whenever possible. There is no need to buy the latest books from bookstores like Borders unless it is in a category that does not fit into a public library. The public library will usually acquire popular titles after some times. Learn to be patient. If you aren't into the public library, try an online merchant that has used books available for literally pennies on the dollar, like Biblio.com.

3. Use a bicycle if the destination is within 30 minutes by car. If you can reach your destination within ten minutes by car, consider leaving the car behind and walk instead. You will save money on gasoline and parking fees. This can easily add up to a few thousand dollars a year. Obviously one of the other benefits of this is health and fitness! This helps promote blood circulation in your body and also reduces environmental pollution. You can also save on gasoline and parking fees.

4. Dine at home more frequently. You can experiment with different recipes and save some money at the same time. In addition, you are honing your cooking skills and this could be very useful for the home dining experience. Remember, the money you spend eating out daily adds up over time. If you eat out 2-3 times a day at $7 or so per meal, you'll spending $14-$21 PER DAY! Can you afford it?

5. How much does your daily coffee at Starbucks cost? Bring your own coffee to office. Many people like to drop by a Starbucks or similar coffee outlet and end up spending a few dollars or more on a cup of coffee. You can potentially save many dollars each week just by making your own coffee at home and bringing it to your work place in a Thermos. Besides, who knows, it may taste better than the coffee from Starbucks! If you really cannot live without Starbucks coffee, consider getting a Starbucks rebate card. You can use the rebates to redeem free Starbucks coffee after you have accumulated enough points.

These five ways are a good start for changing unhealthy spending habits. However, you should continue to research and incorporate more healthy habits that contribute to the building of your retirement fund. By re-investing the money saved from using these tips, you will be many steps ahead of your peers and closer to your retirement goals.


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Monday, July 12, 2010

How to set up an Emergency Fund

$347Image by Myles! via Flickr
None of us have the ability to foresee the future or predict the obstacles/hurdles ahead. This makes building an emergency fund an absolute necessity. Building an emergency fund is healthy for your financial well being, since you’re rarely given advance notice of a setback or an accident which will keep you out of work for an extended period. It is also a safety net that can save you from bankruptcy or severe financial hardships in the event of your expenses or income quickly shifting in the wrong direction.

Housing a small rainy day fund should be an essential component of an individual’s financial goals. This is of high importance if you don’t already have readily available funds in your account for covering any unanticipated expenses. They provide financial security because they give you funds to fall back on if you become ill, or if you or your spouse loses their job, you incur large medical bills, or have an unexpected large bill such as a major car or home repair. You do not want to end up in a situation where you have to buy daily necessities on credit and end up payments on groceries you bought two years back on credit, with a further 10-18% interest on it.

Saving your money in a small account for emergencies is definitely a better alternative to taking a loan or cashing in your long-term investments. If you take a loan, there is the additional burden of paying interest. Liquidation of your investments before maturity means not only will you lose out the interest, but also some part of the original investment. This will also be a major setback in your overall financial plan.

Successfully building an emergency fund depends on the consistency of your saving habits, and resisting the urge to dip into this rainy day fund for non-emergencies. This money should be kept separate from the general savings account. Otherwise you will be tempted to dip into these monies even if you simply run over your budget at a certain point. A substantial part of this emergency fund account should be invested in low risk funds. This ensures that your investment does not lose its value in case you need the money. Also, it should be extremely liquid, to give you access to the cash easily and quickly if you need it.

The size of the special savings account will depend on your personal situation. People often keep three to six months’ salary in the reserve. But you will have to decide on an appropriate amount based factors such as your dependents and fixed monthly expenses.

If you are single with no obligations, and have a reliable support system of friends or relatives during a financial crisis, you might not need a substantial amount stashed in this fund. This is opposed to someone who needs to pay nursing costs for his aging parents and supporting a young family. The more people you support, the more likely you are to have unexpected or unplanned costs. This doesn't mean that you shouldn't have that rainy day stash. You're just afforded a little more than others.

While making a decision about an emergency fund, you should also take into account the degree of difficulty you'd have in finding a new job if you lost the present one. In case of a two-income household, the contribution of both parties should be weighed while calculating how much you should keep aside.

You may not be able to gather your emergency fund money together at once. Treat it as a financial goal and add to it over time. If you get a tax refund, put it in your special rainy day account. Maybe a part of the bonus at work! That may sound foreign to many of you, people view that as extra spending money, but in order to achieve financial goals and stability it takes discipline and tough decisions.


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Friday, July 9, 2010

Watch your Spending Costs closely

Canned foods, in the grocery store for the non...Image via Wikipedia
Have you ever noticed that the things you buy every week at the grocery and hardware stores go up a few cents between shopping trips from time to time? Not by much…just by a little each week, But they continue to creep up and up.

All it takes for the price to jump up by a lot is a little hiccup in the world wide market, note the price of gasoline as it relates to world affairs.

There is a way that we can keep these price increases from impacting our personal finances so much and that is by buying in quantity and finding the best possible prices for the things we use and will continue to use everyday… things that will keep just as well on the shelves in our homes as it does on the shelves at the grocery store or hardware store.

For instance, dog food and cat food costs about 10% less when bought by the case than it does when bought at the single can price and if you wait for close out prices you save a lot more than that.

Set aside some space in your home and make a list of things that you use regularly which will not spoil. Any grain or grain products will need to be stored in airtight containers that rats can’t get into so keep that in mind.

Then set out to find the best prices you can get on quantity purchases of such things as bathroom items and dry and canned food.

You will be surprised at how much you can save by buying a twenty pound bag of rice as opposed to a one pound bag but don’t forget that it must be kept in a rat proof container.

You can buy some clothing items such as men’s socks and underwear because those styles don’t change, avoid buying children’s and women’s clothing, those styles change and sizes change too drastically.
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Thursday, July 8, 2010

Why is making a Budget so important?

Obverse of the Series 2006 $20 billImage via Wikipedia
Yesterday I introduced the basics of a budget, today I discuss why you should absolutely make one. You say you know where your money goes and you don’t need it all written down to keep up with it? I issue you this challenge. Keep track of every penny you spend for one month and I do mean every penny.
You will be shocked at what the tiniest of expenses add up to. Take the total you spent on just one unnecessary item for the month, multiply it by 12 for months in a year and multiply the result by 5 to represent 5 years.

That is how much you could have saved AND drawn interest on in just five years. That, my friend, is the very reason all of us need a budget.

If we can get control of the small expenses that really don’t matter to the overall scheme of our lives, we can enjoy financial success.

The little things really do count. Cutting what you spend on lunch from five dollars a day to three dollars a day on every work day in a five day work week saves $10 a week… $40 a month… $480 a year… $2400 in five years….plus interest.

See what I mean… it really is the little things. You still get to eat lunch everyday and that was only one place to save money in your daily living without doing without one thing you really need. There are a lot of other places to cut expenses if you look for them. Distinguishing

Set some specific long term and short term goals. There are no wrong answers here. If it’s important to you, then it’s important period. This is your money, your life, YOU need to be in control. Don't be at the mercy of your spending habits.

If you want to be able to make a down payment on a house, start a college fund for your kids, buy a new car, take a vacation… anything… then that is your goal and your reason to get a handle on your financial situation now.
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Wednesday, July 7, 2010

The Budget; Essential Financial Tool

A carpenter uses a set of house plans to build a house. If he didn’t the something important, like a bathroom or closet may get overlooked.

Engineers would never begin construction on a jet or plane without a detailed set of design specifications. Yet most of us go out into the world without any idea about or understanding of finances and without any plan at all.

Not very smart of us, is it?

A money plan is called a budget and it is crucial to get us to our desired financial goals.

Without a plan we will drift without direction and end up lost without a clue and digging ourselves into hole after hole.

If you have a spouse or a significant other, you should make this budget together. Sit down and figure out what your joint financial goals are…long term and short term.

Then plan your route to get to those goals. Every journey begins with one step and the first step to attaining your goals is to make a realistic budget that both of you can live with.

A budget should never be a financial starvation diet. That won’t work for the long haul. Make reasonable allocations for food, clothing, shelter, utilities and insurance and set aside a reasonable amount for entertainment and the occasional luxury item. Savings should always come first before any spending.

Even a small amount saved will help you reach your long term and short term financial goals. You can find many budget forms on the internet. Simply google “free budget forms”.

You’ll get lots of hits. Print one out and work on it with your spouse or significant other. Both of you will need to be happy with the final result and feel like it’s something you can stick to.

Monday, July 5, 2010

Management and Leadership: Keys to Starting a Small Business

Leading or following?

When we think of leadership, we usually think of two things. Doing the leading or doing the following. If you are starting up your own small business, the leadership qualities you contain or obtain will be very crucial to the success of your small business. Personally I don't feel that anything will last long or succeed without strong leadership.

Why should I be concerned with leadership style?

When leading employees within your small business, your hope is eventually turning the leadership qualities, which you have passed onto your employees into future sales. This is very important and can be the difference between failing and succeeding.

Where do I begin?

You must conquer the small disciples of your leadership abilities. You have to become intone with yourself and your leadership qualities. Start out small while savoring the moments of your triumphs and as you gain momentum, you can partake into even larger projects. You will be a shining example to not only your employees but to those around you. In leadership, it is important that you show as opposed to simply telling. Do your job effectively and gain credibility and reverence from those that are following.

Leadership is not taught, leadership is caught. You can follow some great leadership techniques of some past mentors or you can read books or even search the internet with the keyword “leadership skills”. All of these combined will contain great tips for you to implement into your leadership style, which should be ever growing and evolving.

Life does throw some huge challenges to every one at one point but if you have not paid attention to the basics you won’t stand a chance with the bigger obstacles you will face. Whether it’s staring your own small business or otherwise. Embrace your ideas and talent and realize what your weaknesses are. In order to be overall successful, you must realize what your weak points are. You must come to the pinnacle of realizing what you can do to work through your weaknesses while overcoming these challenges. Surrounding yourself with people that complement your knowledge and skill set is one of the most important principles to practice in business.

Be open to learn

Your goal should be to develop new skills. Always be open to new, creative and innovating modern techniques. This will in return prove beneficial in running your small business as well as future income. Some business owners forget that the quality of their business will never exceed their personal development. Make sure you concentrate on both of these aspects. As a leader/manager, you must accept responsibility whether bad or good for your personal development. When your employees or others around you view this, they very well might notice new ways of t thinking or ways they handle your customers. As a leader, you should always strive to be better while setting great leadership examples for leading your employees.

Leading vs. management

Leading is all about strategy while focusing on the overall picture. As a leader, you are leading your employees into the future. Management is more of a tactical technique. Management consists of how you and your business will operate on a daily basis while producing great products or services. Consistent growth of small business is about development great management skills.

Management skills should be created through a process for achieving the services and products you want consumers to purchase. Ensure that your employees can flourish with your small business. Give them incentives, which will in return improve the morale of your employees and statistically speaking, happy employees perform much better within the workplace. Create a positive and team oriented environment and make sure your employees understand their importance to the company.

Focus on the hiring process

You need to write how you will create this process for your small business. You do not want the doors to become a revolving door for a rotation of ever changing employees. You should invest some time in managing the hiring process for your small business. Create job descriptions with high expectations along with strategies to implement the job descriptions and this will lead to having a successful small business.
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Active vs. Passive Investing: Which is best for me?

When it comes to comparing active vs. passive investing and determining which investment method is best, the answer isn’t as clearly cut as you might imagine.

Everyone has very different risk tolerance levels, so it’s important to understand your own preferences and investing goals before you choose between active and passive investing strategies.

Active vs. Passive Investing Definitions

Actively managed investments, such as mutual funds, try to beat the market performance of a benchmark index, like the S&P 500, by choosing the best 100 or so performing stocks. The best performing stocks are chosen based on the likelihood of receiving a good return.

A passively managed investment will simply accept that market performance is what it is and invest in all 500 stocks on the index.

Which is Better – Active or Passive?

Many investors wonder what the better option is for their own investing goals. Once again, it does come down to the individual investor’s personal levels of risk tolerance.

The level of risk you’re willing to take with your hard-earned money can often determine how you’re willing to spend and invest. After all, higher risks can often yield higher returns. Unfortunately higher risks can also compound losses too.

Low risk might equate to lower returns, but it’s commonly believed that a low guaranteed gain is far better than a risky bet on a higher risk return that you may never cash out on.

Active Investing

An active investor understands that not all stock prices move at the same rate or even in the same direction as the entire market as a whole. They will actively try to single out individual stocks that have the likelihood of out-performing the index.

In most cases, actively managed mutual funds carry higher costs. This is partly associated with the higher trading costs, time costs involved with researching likely stock picks and management costs. Simply put, more work is put in, the costs increase as the effort increases.

For those investors who wish to take on their active investing activities themselves rather than trust their money to a fund manager, then day trading on the stock market is a very similar tactic. You spend the time researching stocks that are likely to outperform the index and you manage your portfolio personally, buying and selling as you try to capture profits and minimize losses. Don't allow this approach to intimidate you, as nobody should or will care about your money more than you do.

Passive Investing

A passive investor will understand that as the market index moves up or down, then having a passively managed fund that is broadly diversified across almost all the available stocks on that index is likely to return average returns that are somewhat in line with the returns shown by that index.

Passively managed funds often carry lower fees and may tend to offer lower returns. However, those lower returns are often favored by investors who believe that receiving a low return is better than risking the chance of receiving no return at all. I tend to agree. Its more of a slow and steady wins the race, long term type of approach.

For investors who once again don’t wish to trust their money to a fund manager, then your passive investing option is to develop a broadly diversified stock portfolio that you hold for the long term. You have the choice of allowing your stocks to simply sit in your portfolio and collecting the dividend or you can reinvest your dividend earnings back into your portfolio to buy more stocks.
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Friday, July 2, 2010

Basics of The Stock Market

Often times, new investors jump into the stock market based on hearing loads of hype of how they can make great money investing this way. They may have heard of a friend who made a bundle with day trading or an associate who has a hot stock tip and so they figure they’ll jump into the market too.

Before you begin investing, it’s important to understand at least the basics of the stock market.

While investing in stocks can help you to build a great investment portfolio, if you’re not careful about your strategies, you could also find it can be a great way to lose a lot of money too. Risk is certainly involved and while you shouldn't allow it to intimidate you, you should be aware of it.

There are two sections to the stock market. The primary market is where shares are created by companies and generally offered to the public via an IPO (Initial Public Offering). The secondary market is where established stocks are exchanged and traded among investors without the involvement of the company issuing the stocks.

When people think about investing on the stock market, they tend to be talking about the secondary market.

Basics of Stock Market Shares

Shares, or stocks, are individual pieces of ownership of much larger companies. When companies need to raise capital, then sell off little portions of the company so that investors may become partial owners of that company. Each time you buy a stock, it represents a share of ownership in a publicly listed company. You become a shareholder. As you increase the number of stocks you have in one particular company, you increase the percentage of ownership you have.

As a shareholder, you are entitled to your share of the company’s earnings. These are usually paid as dividends, although not all companies offer dividend payments. You’re also entitled to exercise any of the voting rights that might be attached to that stock, however you don’t have a say in the daily operational running of that business.

Basics of Stock Market Pricing

There are several factors that can affect the price of stocks and you might notice that the price of stocks changes every day. While the price can be partially dictated by supply and demand, there are also other factors that can affect the overall price too. Economic changes, unemployment or bad management in the company are all individual factors that can also affect the pricing.


The price you see listed on any particular stock is based on the perceived profitability of the company and not the value of the company. This means the stock can often be priced based on what investors believe the stocks are worth. The value of the company is called the market capitalization.

When you see on the news that the market rose or fell by a number of points, it’s important to understand that not every single stock listed on the exchange followed the same movements. The index you see reported is a representation of a number of stocks and presented as a single figure to give a general idea of the market movements as a whole.

However, there will always be individual companies that thrive when the market takes a fall and those that fall when the market is thriving. It’s this contrary movement that day traders watch for, trying to find the next stock pick that will rise in value and gain profits for them.

Basics of Stock Market Investing

There are several types of stock market investment strategies. Day trading is growing in popularity as a way to smaller investors to begin building capital. The basis behind day trading is to buy a stock in the early part of the trading day and hopefully sell it again at a profit before trading closes.

Long term investors tend to purchase many different stocks in a diversified range of companies in various sectors to spread their risk. These investors tend to hold stocks for longer periods of time, allowing the value of their stocks to appreciate. They also receive dividend payments, either in the form of a check or as a dividend reinvestment plan, where the company issues stocks to the value of the dividend payments to the shareholder to add to his portfolio.

Thursday, July 1, 2010

How Do I Start Investing?

Have you ever asked yourself "How do I start investing"? There are many people who would love to invest, but because they don’t know where to start they don’t end up starting at all.

Some people believe that they don’t have enough money to start investing, while others simply don’t know what assets they should begin investing into. After all, there are so many investment types to choose from and so many choices to make that it can be intimidating.

Here are some basic tips for anyone wanting to begin investing with only small amounts of money to get you started.

How do I start Investing with only a small deposit?

Perhaps the easiest option for beginning investors with only a small deposit is to look into investing in mutual funds. There are funds available that allow you to start investing without a lump sum deposit to get you started. They simply ask you to pay an agreed amount using monthly withdrawals from your checking account. You might agree to withdraw $25 or $50 or even $100. Decide how much you want to invest every month and then stick to a figure that is comfortable for your budget.

Each month, the mutual fund managers withdraw your money and invest it for you. Your money forms a part of a much larger pool of money, made up from the cash of lots of investors.

How Do I Choose the Right Investment?

Choosing the right investment platform to suit you is a lot more involved than just sticking your money in the bank and earning interest. While this may give you some return on your money, it’s not exactly a long term investment strategy.

Your investment goals should be tailored to your own specific reasons for wanting to invest in the first place. If you’re trying to find a way to save extra money for a home deposit or to pay for college education, then consider how long you want to hold onto the investment. This can help to determine what type of investment you choose and how long you need to stay with your plan to see the returns you hope for.

Should I Start Investing in the Stock Market?

When you buy shares, you’re buying little pieces of ownership in one company. If that company performs poorly and the value of your stock drops, then you’ve put your investment at risk. Perhaps a less risky option to get started would be stock mutual funds. A stock mutual fund manager will invest the pooled funds from lots of investors into many company stocks, which diversifies the portfolio overall and spreads out the risk significantly. Even if one company performs badly, the total fund may still offer good returns simply because the investment is spread across a diverse selection of stocks.

How Do I Get Started Investing in Mutual Funds?

If you think you’re ready to begin investing, then you should spend some time researching into different types of mutual funds available. There are quite a few websites that offer mutual fund ratings and search-able parameters that can give you results of funds that meet your criteria.

You might search for funds that don’t require an initial investment deposit and will allow you to begin investing using only monthly withdrawals from your checking account. When the database returns your results, you can narrow down your search into further categories, such as how much the administrative fees will cost, the return the fund has posted for the current year and other aspects.