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The Big Things in Life

Big Things

It’s often the big things in life that lead us to get caught up in financial worry and stress. It is not often that you will hear work colleagues moan that they can’t afford that lunchtime take-away latte for £4 but frequently they can be overheard worrying at the water cooler about how to afford house repairs, buy a new vehicle or pay their debts this month.

Perhaps the phrase count the pennies and the pounds will count themselves falls on deaf ears nowadays? But if you’re one of the few who still believe that pinching in everyday spends make for an easier financial outlook for those big buys then read on.

Credit Schmedit

Wherever possible try to buy everything that you can do outright. This automatically reduces payments as there is no interest on an item bought outright. It also means that you don’t have to pay loan arrangement fees or ongoing bank charges to have accounts with overdrafts attached to them and so on.

Having said that it is sensible to have a standby credit card in case of emergencies. Make sure that your card stays active by buying one thing on it each month and then paying it off in full when the bill comes through.

Sometimes Borrowing is Sensible

Not everything can be bought outright and in these cases borrowing is a must. For example, if you are buying a house the likelihood of being able to pay upfront in cash is slim to none unless you have just won the lottery. (Which I doubt you have or you wouldn’t be reading a penny-pinching blog article.) In these situations, shop around to find the best type of loan for you.

It is important to remember that what suited your best friend may not be the best route for you. Everyone has individual circumstances such as employment, income and disposable cash that makes their loan application unique. So whilst it is good advice to talk to friends and family about your options, don’t let yourself get too caught up in other’s opinions unless they have had a truly awful ordeal.

Penny Wise Pound Foolish

Make sure that your approach to finances is balanced to ensure that you lead a stress free financial existence. It is fine to make packed lunches to save on your food money for the week but this isn’t going to offset the damage of driving around a flashy new car that you are paying extortionate rental rates on.

Think about all of your purchases in the same way and approach all of your buying in the same manner and with the same questions from that take away lunchtime coffee to buying a new house. Do I really need this? If so, is this the best place to get it from? Am I getting the best deal for this product and/or service? Is there another way? What is the budget option here?

Taking a balanced approach across the board will make sure that in the long term he savings stack up.

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External finance for start-up businesses is a bit of a contentious topic. When you’ve worked so hard to grow your business from the ground up, the thought of jeopardising your long term success by seeking external funding is a bit daunting, particularly when you lack experience in commercial financial matters. Well fear not, because our guide to the best sources of finance for business start- ups is here to help.

Friends and family are a common source of funding for start-ups, but mixing your personal and work life can get messy; very messy! So, before you go cap in hand to the bank, here are a few other business finance solutions to consider.

Short-term finance options
Regulating cash flow is one of the main problems faced by start-up businesses. It is essential to maintain a healthy level of cash flow to ensure bills can be paid, stock can be ordered and business opportunities can be taken advantage of as and when they arise.

The benefit of a short-term finance option like www.everline.com is the ability to borrow money as and when you need it. The terms are flexible, allowing you to borrow anything from £3,000 – £50,000, and you can choose a repayment period to suit you. You can also pay off the loan whenever you wish and save on mounting interest charges.

Personal investment
Everyone who starts their own business is passionate about their idea, but some start-up owners will go one step further and back their venture with cold hard cash. Such an approach can make good business sense, as you won’t have to worry about the interest repayments associated with external sources of finance, so it’s essentially free money. On the other hand, it’s your money, and you could lose it all, so think long and hard before pumping your savings into your business.

Bank loans
One of the boons of a bank loan is the opportunity to create a bespoke product which meets the particular needs of your business. Bank loans come in all shapes and sizes with repayment terms which can be negotiated to suit you. There are also overdraft and short term credit facilities available to provide a welcome safety net.

There plenty of well documented negatives associated with bank loans. Firstly, there is no guarantee you’ll be accepted for a loan, and even if you are the interest rates offered to start-ups can be high due to the additional risk they represent. The bank will also require a detailed business plan before agreeing any finance deal, using up valuable time which might be better spent on the day-to-day running of your business.

Grants
Despite there being a wide range of localisation specific grants available from the government and your local authority, receiving a grant is certainly no guarantee of success. The grant application process is often complicated and strict eligibility and criteria must be met. There’s also plenty of competition from other small business for a finite pot of money.

Asset Finance
Asset finance is a method of securing the funds you need to purchase a business asset, such as a company vehicle or a piece of machinery. The loan is structured in such a way that you effectively rent the machinery from the asset provider until such a time when the loan is paid off; only then does the business own the asset.

The advantage of asset finance is the ability to spread the cost of an asset over the duration of its use. On the other hand, asset finance attracts high levels of interest and will require plenty of supporting documentation to prove the significant role the asset will play in the growth of your business before you are accepted.

And that’s it. If there’s anything we’ve left out or something you’d like to contribute from personal experience, we’d love to hear from you, so please leave your comments below.

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To be brief, no-exam life insurance is a viable investment option. Maybe not so much as some other options for life insurance, but certainly still worthy of your consideration. So, you gotta ask yourself: Why is no-exam life insurance even offered?

It’s obvious that in order for an insurer to insure someone’s life, they would logically want to know what shape that person’s health is in. And it just so happens that a physical examination from an accredited physician is the accepted standard for determining that shape.

So why would any insurer agree to insure someone who approaches them with the premise of NOT wishing to undergo a physical examination? Why would a reputable insurance company offer life insurance to those who would be resistant to undergoing a physical examination in order to base fair life insurance premiums on?

There’s only one answer – and it’s not because the insurance agencies have huge, soft, loving hearts either. They do it to make money, same as they do everything else for. You can click here to visit HBF directly & learn more about their life insurance plans online.

So expect to pay higher rates for no-exam life insurance than you would for life insurance that requires an exam. That’s pretty straightforward, right?

Now don’t think that insurance company actuaries are idiots; they’re definitely not. No-exam life insurance means just that: no exam. That doesn’t mean that there won’t be a questionnaire about your state of health and health history.

Further, it does not mean that you can be dishonest on the questionnaire and still expect fair treatment (not that you would of course :)). The point is that if “someone” gets caught being dishonest on their no-exam life insurance application, their policy and any expected benefits would become voided faster than a feline on fire!

In almost every case, no-exam life insurance is a type of “term” life insurance. Term life insurance policies dictate that a specified death benefit will be due if the passing of the insured occurs for unintentional reasons. Term policies can be set up for periods between 5 and 30 years; the longer the term, the more expensive the policy.

There are some solid reasons to choose no-exam life insurance coverage including:

  • For whatever reasons you decide, you need to get some life insurance quick and easy;
  • You simply cannot fathom the imposing thoughts of a physical exam;
  • Uh, that’s about it really…

Let me just finish by saying this: I am a 46 year old man, and sadly, both my parents passed on several years back. Neither had life insurance. That sucked.

Life in America is heavily affected by the amount of life insurance we collect when our loved ones must leave us. No-exam life insurance is a far better gift than nothing. There’s no better way for me to say it than:

You will leave your loved ones someday. Why leave them broke?

Just sayin’…

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What is the Best Way to Invest Money Right Now?

What is the best way to invest money right now? I wish I had a crystal ball and could tell you for certain, but I can’t. However, I can certainly make some educated decisions on where I plan to invest my money over the next year.

In the past, I have been a huge fan of investing my money in certificates of deposit. These accounts can provide a great source of passive income with the guarantee that your money will be safe – no matter what happens in the economy. This security has been important to how my family invests its savings.

As interest rates continue to decline, investing in a certificate of deposit is becoming less attractive compared to other options. I recently decided to move some of our money out of CD’s and into dividend stocks in order to increase my return on investment. I have compared renewing a recently expired CD with investing in a dividend stock below.

5 Year Certificate of Deposit – Renewal

Just over a year ago, I built a CD ladder that included 5 equal investments of $1,200 each. The combined $6,000 investment was built by investing in the following certificate of deposit accounts -

  • 1 Year – 1.50%
  • 2 Year – 1.75%
  • 3 Year – 2.00%
  • 4 Year – 2.25%
  • 5 Year – 2.50%

At the time I opened these accounts, the combined average return on investment was 2.0% per year. This means I was guaranteed $120 of earned interest income for my $6,000 investment. While certainly nothing that will make me rich, a 2.0% guaranteed return in this market was not too bad.

Once the first CD in my ladder expired a few months ago, each of the other accounts moved up one rung on the ladder. The original plan with my expired CD was to reinvest it back into a 5 Yr. account to keep the ladder moving. If I were to have reinvested the initial $1,200 investment back into a new CD, the ladder would have looked like this.

  • 1 Year – 1.75%
  • 2 Year – 2.00%
  • 3 Year – 2.25%
  • 4 Year – 2.50%
  • 5 Year – 1.75%

Even though a new 5 year CD would return less than before, my new average yield would have increased to 2.05%. This is one of the advantages of investing your money into a CD ladder. But is it the best way to invest money right now?

While I could have certainly kept reinvesting my money into my CD ladder, earning under 2% on a 60 month investment seems ridiculous. Instead of continuing to build my ladder, I decided to invest my funds in dividend paying stocks.

CD Ladder vs. Dividend Income Stock

Reinvesting my $1,200 back into my CD ladder would have given me a 1.75% return on my investment. Over the course of 12 months, that would equal about $21 in earned interest on my initial investment. Even thoug the $21 return would have been guaranteed, along with my initial investment ($1,200) – I know I can do better. I am tired of earning such a small return on my money, so I decided to use these funds to invest in dividend paying stocks.

Dividend Income Stocks
I decided in January to take my money out of the CD ladder and invest in a blue chip dividend stock. I used my $1,200 investment to purchase 17 Shares of Conoco Phillips instead. Here are a few highlights of my transaction -

  • Bought 17 shares @ $69.43
  • Total Cost (with commission) – $1,188.26
  • Average Price per Share – $69.90
  • Current Dividend Yield – 3.50%

There are two advantages of investing in dividend stocks compared to a CD in a low interest rate environment.

  1. Capital Gains – A dividend paying stock can provide an investor with capital gains in the event they sell their shares for more than the purchase price. Shares of Conoco Phillips were recently trading at $75.95 per share, which is over $6 more than my purchase price. The increase in share price has resulted in a unrealized gain on my investment of more than $100! While there is no guarantee of capital gains from buying stocks, there is a good chance of it when you buy the best dividend paying companies.
  2. Higher Yield – In a low interest rate environment, dividend stocks can pay a significantly higher yield than a CD. For example, investing my money into a new 60 month CD would provide a 1.75% yield. The current yield for shares of COP are at 3.50%. Since the share price of COP is much higher than what I paid, my yield on cost is actually 3.78%. Again, no yield is guaranteed but there are ways to limit ones risks when investing in dividend paying stocks.

Best Way to Invest Money Now – Dividend Stocks

I recently declared the best source of passive income to be dividend stocks, especially in this economy. While there is certainly no guarantee when investing in dividend stocks, the reward can be much greater than putting your money in a certificate of deposit or savings account. Disciplined income investors use tools like automated investment plans, direct stock purchase plans, and dollar cost averaging to build diversified portfolios of income stocks which limit many risks in the market.

What type of investment would you prefer? A guaranteed 1.75% return on a investment? Or one that could return a yield of 3.5% or higher and the possibility for capital gains over time? What is your favorite way to invest money?

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How to Integrate New Technology Slowly and Save Money

There is no doubt that new technology is exciting.  Way back in the day an answering machine was the latest gadget that people marveled over.  Now, there is an explosion of technology vying for our attention (and money) from iPhones to iPads to Nooks and Kindle devices, just to name a few.  While technology has the benefit of enhancing our lives tremendously, there are also other factors to consider.

Creating an Expensive Dependence

Fifteen years ago, few people had cell phones.  Now, I am hard-pressed to find anyone who does not have a cell phone.  Even some elementary school students have them.  The cell phone comes with expenses such as a monthly plan, which can range from $30 a month to over $100 a month, depending on your use and other factors.

Are cell phones a positive technological advance?  Yes, without a doubt.  Parents can check in with their kids during the day and a spouse can notify his partner he is running late or ask her what she wanted him to pick up at the grocery store, just to name a few conveniences.  With the busy American lifestyle, cell phones seem to be a necessity.  And with that necessity comes a recurring expense.

As a society, we are well beyond simple cell phones.  Now cell phones can help us find our way to a location we have never been, can help us find the closest chain restaurant we are craving and can serve as our portable cameras and video recorders, to name just a few features.  Apple has revolutionized the market with iPhones.  With an iPhone, you have the choice to buy hundreds of apps as well as plenty of accessories for your phone.  The more technological devices you have, the more money you pay, especially if you want to be one of the first ones to try out new products.

As is human nature, once we incorporate a new technology into our lives, we are loathe to let it go.  Look at something as simple as cable television; most people have a very hard time cutting the cord and giving up their cable, even if they rarely watch television.  Likewise, 75% of U.S. households have access to the Internet within the home according to Nielsen, and this number is only growing. Once the Internet is in the home, cutting it is highly unlikely.

Integrate New Technology Slowly

I don’t want you to think I live in the woods in a shack.  My family has limited cable television, the Internet, and a prepaid cell phone.  I would be lying if I didn’t say I was sometimes envious and embarrassed when I am at a meeting and we are scheduling our next meeting and the entire table full of people pull out their smartphones to look at their calendars (and to pass time if the meeting is particularly boring).  Instead, our approach is to integrate technology into our lives slowly.  We added Internet access at home in 2004, later than many, but sooner than the slowest stragglers.  Likewise, the smartphone has been around so long that I plan to buy one in the next year or two.

If you are looking to save money, don’t be afraid to wait out the latest technology craze.  Waiting will allow time for the price and demand to come down.  The key is to tap into the technology after the first wave of hype, when you are sure the technology will improve your life and not hurt your finances.  Once you integrate a certain technological device into your life, you may be loathe to stop using it, committing yourself to the expense for as long as you use the product.

This post was written by staff writer Melissa.

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Beware of Lifestyle Creep When You Are Gazelle Intense

Lifestyle creep is defined as increasing your expenses or standard of living as your income increases rather than keeping your expenses constant and saving the difference as you earn more.  Many people are aware of lifestyle creep as your income increases, but lifestyle creep can also be a real concern when you are generating extra income to pay down debt.  When paying down debt with gazelle intensity, make sure to keep your expenses constant or reduce them, rather than giving in to the temptation of lifestyle creep.

How Lifestyle Creep Occurs When You Are Gazelle Intense

Saying you should keep your expenses constant or lower than they typically are when paying down debt seems obvious, but it isn’t always as easy as it sounds.  If you pick up a side job or two to generate extra income, you may suddenly find that your most precious commodity now is time.  While you have more money, you have less time to do the things you need to do.

Perhaps you no longer have time to clean your house or mow your lawn.  The easiest solution is to hire someone to do those chores because you may make more per hour than you would have to pay those doing the work for you.  However, the situation is not always as clear as this.

How Lifestyle Creep Has Affected Our Gazelle Intensity

My husband and I are attacking our debt with gazelle intensity.  He is working full-time outside the home, and I am working 25 to 30 hours a week from home while also caring for my young children who are not yet school age and maintaining the house.  My freelance work has grown so much that I have hired a babysitter to watch my two youngest kids two mornings a week at a cost of $300 a month.

I do make more per hour than I pay her, and her assistance has allowed me to further grow my freelance business.  I am now making more money, and as a result, I now have to set aside more for taxes as a freelancer.  Between the additional cost for a babysitter and the additional money I have to set aside for taxes, I am not actually taking home that much more money.  Growing my business has resulted in stagnant side income; I am working harder than ever, but not bringing home any extra money.

Are You Still Getting Ahead Financially?

If you are gazelle intense, you can pay your debt down faster by generating extra income.  However, if you are spending so much time generating the extra income, you may inadvertently be working harder but not earning more.  Beyond a certain threshold, giving yourself less time to meet basic household obligations may result in stagnation of income.

If you find that you are outsourcing things like grocery shopping, household cleaning, lawn chores, child care, and menu planning, so that you can make more money to pay down your debt quicker, it may be time to step back and look at your income.  After a certain level of extra work, are you still generating additional money, or are you working harder simply to pay for the chores you are outsourcing and the additional taxes you will need to pay on your increased income?

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How many extra income sources does your family have (besides your job)? Do any of them demand your physical presence throughout the year? Are any of these extra income sources tied to a specific country, state, or geographic region?

I believe it is critical for any family to have a diversified set of income sources. Financial advisers recommend diversifying your investments (i.e. stocks) and I believe the same should be done for your income.

I also believe that extra income sources should be built to be location independent. For example, let’s say you decide to start a lawn care business in your town. What happens if the economy tanks in your town and you lose all your clients? Since your income source is tied to a specific region, there are no other clients to take their place.

What is Location Independence?

Location independence is a lifestyle where you are free of most geographical commitments. This means that you do not need to live in a particular city or state for work or school.

Tools like the internet, video conferencing, and virtual offices, have opened up many opportunities to complete most work or school related tasks from anywhere in the world.

5 Location Independent Income Streams

Here are a few examples of extra income streams that could be considered location independent.

  1. Certificate of Deposit – There is no geographical requirement when you invest in a certificate of deposit or savings account. Even with low interest rates, CD’s are still a safe and reliable investment that can produce income – no matter where you choose to live.
  2. Dividend Paying Stocks – In my opinion, dividend paying stocks are the best source for passive income. Owning dividend stocks is also location independent, meaning I can live anywhere and still collect my dividends. It doesn’t matter if I live in New York City, California, or the Florida Keys – I can still collect my McDonald’s (MCD) dividend every quarter.
  3. Real Estate Investment Trusts – Thinking of buying a rental unit as a way to generate monthly cash flow? You may want to reconsider if your goal is location independence. Owning a rental unit requires physical commitments of the owner, unless a management company is hired. An alternative to investing in the real estate market are REITs, which have no geographical commitment to the owner.
  4. Online Store – While you may need actual physical space to run an online store, it doesn’t have to be location specific. In theory, I could setup an online store today in one state and move to another state in a month and still operate the store. I may need to physically move my inventory to my new location, but the online storefront can remain the same.
  5. Blog or Website – A blog or website that produces income does not have any geographical commitments. For example, I could run and manage Passive Family Income from almost anywhere in the world. As long as I have internet access and a computer, I can continue to run this site and earn side income along the way.

It is important to note that while the examples above can be considered location independent in most cases, there may be specific state or country laws that prohibit it. For example, I cannot earn affiliate income through Amazon.com based on the state in which my LLC is incorporated.

What other location independent income streams can you suggest?

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