Are you looking to save money on your taxes? Learn about the nine top tax credits that can maximize your tax savings.
Source CBNNews.com http://bit.ly/2FXVCz4
الثلاثاء، 29 يناير 2019
Medigap Plans Changing In 2020: What Becoming Eligible For Medicare Before or After 2020 Means For First Dollar Coverage Plans
Discover how your options for Medicare plans will differ depending on whether you become eligible for this health insurance before or after January 1, 2020.
Source CBNNews.com http://bit.ly/2HFeiVY
Source CBNNews.com http://bit.ly/2HFeiVY
Wing it for your Super Bowl party: Area chefs offer tips on making party-pleasing wings
Hoping to "wing" big at your Super Bowl party?Whether you're rooting for the New England Patriots or the Los Angeles Rams, local chefs have some suggestions on how to cook the perfect chicken wing. And if you planning on downing a few beers in between touchdowns, local breweries have got football fans covered there, too.Robert Peoplesdorf, head chef at Sarah Street Grill, 550 Quaker Alley, Stroudsburg, says a fried chicken wing generally will taste better than a baked one. [...]
Source Business - poconorecord.com http://bit.ly/2CPs56B
Source Business - poconorecord.com http://bit.ly/2CPs56B
How the Stock Market Works
54% of Americans own stocks, and that translates into tens of millions of people! But how many of those people actually understand how the stock market works?
My guess is only a small percentage. Millions invest in stocks because they’ve proven to be a successful investment, especially over the long term. Since so many are invested, there’s often an assumption that there’s no need to know exactly how it works.
The analogy is similar to computers. Tens of millions of people know how to use them, but only a small sliver actually know how they work.
But if you’re interested to know how the stock market works, and you should have at least a high altitude concept, let’s drill down into the details.
Stock Market Guide
What the Stock Market Does
This is a good place to start, because it explains why the stock market exists in the first place. The stock market is just that – a market. It’s a network where companies offering stocks for sale, and investors purchasing them.
In days of old, this was done strictly in physical exchanges. But today, it largely takes place electronically.
There isn’t even necessarily the need for a brick-and-mortar facility to run a stock exchange.
The shares being offered for sale by the companies are so called because each represents a share of ownership in that company.
Why Companies Issue Stock
Why do companies issue stock, rather than just getting bank loans or selling bonds? Selling stock is a way for a corporation to gain access to a large amount of capital.
For example, the company may need a large amount of money to roll out a new product, expand operations, or acquire another company. That may be more money than they can get from a bank loan.
Meanwhile, both bank loans and bonds require the payment of interest on a regular basis. This is a direct expense to the issuing company. What’s more, the loan or the bonds will eventually need to be repaid.
However, when it issues stock, they may or may not pay dividends on that stock.
And even if they do, they can lower or eliminate the dividend payment should that become necessary. And at least as important, the company doesn’t have to repay the capital raised from the sale of stock.
It will have the effect of spreading ownership of the company out across more shareholders. But the company may be willing to accept that outcome, in favor of an improved cash position that comes with not having to pay interest or make loan payments.
Why Investors Invest in Stocks
Investors buy the shares in the hope of taking advantage of the issuing company’s income stream or future growth. Or both.
The income Stream on Stock is Dividends
This works similar to interest on bonds and certificates of deposit. From an investor standpoint, the main difference is that while interest is a contractual obligation of the company, dividends are not. Dividends can be increased, decreased, or even eliminated completely by the issuing company.
Still, there are a large number of companies that have a long history of paying dividends consistently. There are also some with a long history of increasing their dividends annually.
These stocks are referred to as Dividend Aristocrats, and there are more than 50 of them.
They must be in the S&P 500, have increased dividends consistently for at least 25 years, and meet size and liquidity requirements.
The Other Attraction for Investors Is Price Appreciation
That’s usually driven by increases in company revenues, profits, and dividends. The hope is a $10 stock that will turn into a $100 stock in just a few years. That’s more of the fantasy than a reality, but a portfolio of growth stocks can provide impressive returns nonetheless.
But to illustrate the point of the value of portfolio investing, the average annual rate of return on the S&P 500 – the 500 companies with the largest stock market capitalization – since 1928 has been about 10%.
At least two-thirds of that return has been price appreciation, with the rest from dividends. For the average investor, capital gains are more important than dividends when investing in stocks for the long-term.
How the Stock Market Came to Be
History of the Stock Market
The origins of the stock market are somewhat fuzzy. The first evidence of at least an informal stock market may have begun in Venice during the 14th century. Brokers began trading government debt, but companies also began issuing ownership shares.
The first formal stock exchange opened in 1611, in Amsterdam. The Dutch East India Company became the first company to issue bonds and shares of stock to the general public.
The London Stock Exchange began in 1698. The founding of the New York Stock Exchange, currently the world’s largest by a wide margin, happened in 1792.
Today there is a stock exchange operating in virtually every major economy in the world.
Despite the fact that people – even seasoned investors – often refer to it in the singular the stock market, there are actually many stock markets. At any given time, a well-diversified portfolio will be invested in stock in several markets.
The Stock Market Today
There are at least 20 major stock exchanges in the world. The largest are (with recent market capitalization):
- New York Stock Exchange: $24.22 trillion
- NASDAQ: $11.86 trillion
- Japan Exchange Group (Tokyo): $6.288 trillion
- Shanghai Stock Exchange: $5.02 trillion
- Euronext (European Union): $4.65 trillion
- London Stock Exchange Group: $4.6 trillion
- Hong Kong Stock Exchange: $4.44 trillion
- Shenzhen Stock Market (China): $3.55 trillion
- Deutsche Borse (Frankfurt, Germany): $2.34 trillion
- Bombay Stock Exchange (India): $2.3 trillion
How the Stock Market Works
Despite the numerous legal, financial and logistical technicalities in bringing a company selling its stock together with investors, the process flows effortlessly and even in real time.
That’s the benefit of technology, and especially of the Internet. Where the process was once brokers and dealers face-to-face in a dedicated building, today it all takes place electronically.
As an investor, you can buy and sell stocks on just about any exchange in the world through an online investment broker.
But just as there are numerous stock markets, there are also different kinds of stock. The two primary types are as follows:
Common stock
This is the most common type of stock, and the one most people invest in. Common stock represents ownership in the company, as well as a claim on a portion of profits.
The investor gets one vote for each share of stock in the company he or she owns. That vote enables the investor to elect board members, who oversee the operation of the company.
While common stock is typically the main beneficiary of capital appreciation, it also comes with some risk. For example, upon bankruptcy or liquidation, owners of common stock are considered to be general creditors. That means they won’t be paid until after creditors, bondholders, and preferred stockholders are paid.
Preferred stock
This type of stock floats somewhere between common stock and bonds. The owner of preferred stock is often guaranteed a fixed dividend.
And in the event of a bankruptcy liquidation, preferred stockholders will be paid ahead of common stockholders. However, preferred stockholders typically have limited voting rights, if they have any voting rights at all.
Stock Buy Backs
We’re not going to spend much time on this topic, but we’ll go over it briefly because you’ve undoubtedly heard about it.
While most stock is held by investors, companies often buy back their own shares. Stock buybacks have become very common in recent years.
By buying their own shares, a company reduces the number of shares outstanding. This increases the earnings per share of stock and often causes the value of the stock to increase.
Stocks vs. Bonds
Two other terms that are often used interchangeably are stocks and bonds. That may be because a balanced portfolio contains both types of securities. But how much do they actually have in common?
In reality, very little. A bond is a debt of the issuer. When a corporation issues bonds, they must pay interest on the securities each year at regular intervals. The bonds are issued for a specific term, generally 20 years. At the end of that term, the company must pay back the bonds. Within that arrangement, the company is acting as a guarantor of the debt.
Investors primarily buy bonds to earn interest income. But since principle repayment is guaranteed by the company, bonds are considered to be less risky than stocks.
This is why a diversified portfolio holds both stocks and bonds. While stocks can rise and fall in value, bonds are guaranteed, at least if held until maturity.
By contrast, stocks have no guarantee of value, or of payment of dividends. The investor is purchasing the stock with the expectation that either the value of the stock will increase, or the company’s dividend will steadily increase.
But for any number of reasons, including a decline in revenues or profits, as well as regulatory changes and international instability, the value of a stock can fall, and even fall a lot.
This is particularly true if the company experiences a sudden or consistent decline in revenues or profits, or is forced to either reduce or eliminate its dividend.
Bonds and Interest Rate Risk
Now there is the risk of losing investment value even with bonds. Long-term bonds are subject to interest rate risk. That’s the risk of rising interest rates. If interest rates rise above what the bond is paying, the value of the bond will fall in value.
For example, if you purchase $10,000 of company bonds paying 4% (or $400), and interest rates rise to 5%, the market value of the bonds may fall to $8,000.
This is because at $8,000, the $400 in interest the company pays will produce 5% yield. If you sell the bonds at that point, you’ll suffer a $20,00 capital loss.
But the opposite is also true. If you make the same bond purchase, but with a 5% (or $500) interest rate, and rates fall to 4%, the value of the bond will rise to $12,500.
The $500 annual interest payment will be a 4% yield on the bonds at that value, and you’ll have a $2,500 capital gain if you sell the bonds.
Why You Need to Invest in the Stock Market
Despite all the risks involved in owning stock, holding it is practically a necessity. There are several reasons why this is true:
Investing in Wealth Generation
Bonds and CDs may pay steady interest, but it’s very difficult to seriously increase your investments in interest-bearing securities alone. Since stock represents ownership in companies that provide products and services, they hold the potential to seriously increase your wealth.
By buying stock, you’re investing in the means of production.
The capital appreciation gain from investing in strong growth companies is one of the best ways to build wealth over the long term.
Stocks Improve Portfolio Performance
Let’s say you invest $100,000 in a bond paying 3%. In 20 years, it will grow to $134,392. If you invest the same money in the S&P 500, at 10% per year, you’ll have $672,750 in 20 years.
Retirement planning
You’ll need a lot of money in retirement. Based on the example above, the only way to get where you need to be is by investing heavily in stocks.
You shouldn’t have 100% of your money in stocks – at least some should be in bonds. But most of your retirement savings should be in stocks, particularly when you’re young.
Inflation
Since 1990 the US inflation rate has been averaging about 3% per year. If you invest strictly in bonds, the best you’ll do is keep up with inflation.
But with stocks, you can earn a healthy return above the inflation rate. That will enable your money to grow in real terms. All of the above make a strong case to invest in stocks, even if you have a very low risk tolerance.
How to Invest in the Stock Market
How Investors Traditionally Approached The Stock Market
Now we’re at the most important part of this discussion. Since you know what stocks are, and why you need to invest in them, let’s turn to how to invest in stocks.
Traditionally, investors took part in the stock market by buying individual stocks. This was often stocks in blue-chip companies.
These were large companies, with well-established patterns of rising income and profits, and often paid high dividends. They tended to perform well in rising markets, and resist falling markets.
But in today’s more complicated economic environment, as well as rapid evolution in technology, holding a small number of stock in individual companies isn’t necessarily the best strategy. As well, investing in individual companies is not recommended for new investors.
The better way is to invest in stock portfolios. This can include mutual funds or exchange-traded funds (ETFs).
How to Invest in the Stock Market Today
Mutual funds are typically actively managed, which means they attempt to outperform the market by investing in the best-performing companies. ETFs are index-based, which means they invest in broad markets.
For example, a common ETF is one that invests in the S&P 500. That means it holds a portfolio that’s representative of every stock in that index. ETFs match the market but don’t outperform it.
Interestingly, ETFs tend to outperform mutual funds over the long term, because the vast majority of mutual funds fail to beat the market.
If you’re new to stock market investing, or you have a very small amount of money to invest, your best strategy is to do it through funds.
You can eventually begin trading individual stocks as your portfolio gets larger, and your investment in knowledge and confidence grows.
Where to Invest in the Stock Market
If you decide to invest in funds, where can you do that? If you feel comfortable selecting the funds you want to invest in – and you want to have the option to eventually begin trading individual stocks – the best place to invest is with a diversified investment broker.
Here are some of the top brokers you can work with:
If you don’t feel comfortable selecting your funds, the better option is to go with what are known as robo-advisors. Robo-advisors are automated investment platforms, that provide professional investment management, an extremely low cost.
They create a diversified investment portfolio, including stocks and bonds at a minimum, but sometimes also real estate, sector funds, and alternative investments.
Once your portfolio has been created, it’s managed for you continuously. This includes periodic rebalancing to keep the asset allocations on target, as well as reinvesting of dividends.
Bottom Line
When you invest with a robo-advisor, all you need to do is fund your account. The robo-advisor does all the work, and you don’t need to concern yourself with any of the details.
Robo advisors worth investing with include Betterment and M1 Finance. Robo advisors have another big advantage. You can begin investing with little or no money. And with even a few dollars, a robo-advisor can create a fully diversified portfolio for you.
Now you have all you need to know about how the stock market works. You also know the benefits of investing in the stock market, and why you need to do it. And finally, you have recommendations for where to begin investing.
So what are you waiting for???
Open an account with Betterment today>>
The post How the Stock Market Works appeared first on Good Financial Cents®.
Source Good Financial Cents® http://bit.ly/2FSRYGw
UltraFICO vs. Experian Boost: Two New Ways to Build Credit
Two recent credit announcements are attracting the attention of consumers and financial institutions alike. That’s because for many years, your credit scores were 100% reliant on the information in your credit reports as reported by your current and former lenders. That’s not necessarily the case any longer — at least not for consumers who choose to allow unprecedented access to their bank account information.
Let me be one of the first to introduce you to both UltraFICO and Experian Boost.
What Is UltraFICO?
UltraFICO is a new credit score first announced in a joint press release from FICO, Experian, and Finicity late in 2018. The free offering gives you the option to have your deposit account data possibly considered in your credit score.
The premise, according to FICO, is that adding this information will help many consumers who exhibit responsible management of their deposit accounts. In layman’s terms, if you use your checking and savings accounts responsibly — for example, without bouncing checks or incurring overdraft fees — then it might result in a slightly higher credit score.
UltraFICO is a notable departure from how credit scoring has worked for the past three decades. Prior to UltraFICO, every credit bureau score, including both FICO and VantageScore, was based on your credit reports. Nothing else has mattered from a scoring perspective.
The new scoring model will, for the first time, allow your credit scores to be influenced by information found outside of your credit reports themselves. This will be optional, meaning that if you’re not interested or willing to allow Experian or FICO to have access to your deposit information, then you can simply ignore the new service.
What Is Experian Boost?
On the heels of the UltraFICO announcement, Experian announced a new service of its own, Experian Boost. Here’s how it will work: If you grant Experian Boost permission to search your online banking information for utility bills and telecommunications payment data, that information would then be added to your Experian credit report — making it fair game for both FICO and VantageScore credit scores to consider during their scoring process.
This means that consumers who don’t have a credit card or other traditional means of building credit can nonetheless add some positive data to their credit profile if they have a solid track record of paying utility and phone bills on time.
Experian Boost is also groundbreaking in another way. Traditionally, the information on your credit reports comes from outside sources (e.g. banks, creditors, collection agencies, etc.). This will be the first time YOU will be able to add scorable information to your own credit report.
UltraFICO vs. Experian Boost: Similarities and Differences
UltraFICO and Experian Boost could both potentially raise credit scores for millions of consumers, especially those with thin or limited credit files. Here’s a side by side comparison to help you understand the similarities and differences between the two promising platforms.
| UltraFICO | Experian Boost |
 Influences Experian-based credit scores only. |
Influences Experian-based credit scores only. |
| Consumer opt-in required. |
Consumer opt-in required. |
| Uses Finicity to access your bank account data. |
Uses Finicity to access your bank account data. |
| Considers your deposit account data itself (historical balances and account history). |
 Does not consider your deposit account data itself. |
| Does not specifically consider utility and telecom payment data. |
Considers utility and telecom payment data. |
| Does not add information to your Experian credit report. |
Adds information directly to your Experian credit report. |
| Works with FICO 8 and FICO 9 credit scores at Experian. |
Work with ANY Experian-based credit score that considers utility style data, including those built by FICO and VantageScore. |
Be Patient and Realistic
The fact that UltraFICO and Experian Boost have been designed to give consumers more control over their credit scores is encouraging. Having said that, keep in mind that with either option, you’re going to have to give access to your banking account data, which includes giving away your user name and online banking password.
Of the two options, I like Experian Boost more because it will allow you to actually add something to your Experian credit report. With UltraFICO, your deposit account information isn’t added to your credit report, but it is considered.
More by John Ulzheimer:
- What Your Credit Report Says About You Behind Your Back
- Credit FAQ: When Does a Late Payment Show Up on My Credit Report?
- Three Legitimate Ways to Raise Your Credit Score Fast
John Ulzheimer is an expert on credit reporting, credit scoring, and identity theft. The author of four books on the subject, Ulzheimer has been featured thousands of times over the past decade in media outlets including the Wall Street Journal, NBC Nightly News, The Los Angeles Times, CNBC, and countless others. With professional experience at both Equifax and FICO, Ulzheimer is the only credit expert who actually comes from the credit industry. He has been an expert witness in over 230 credit related lawsuits and has been qualified to testify in both federal and state courts on the topic of consumer credit.
The post UltraFICO vs. Experian Boost: Two New Ways to Build Credit appeared first on The Simple Dollar.
Source The Simple Dollar http://bit.ly/2Ro1LWD
How to Start an Online Store That Drives Sales in 2019
There’s a bunch of steps that go into starting an online store.
What tool do you build your store with?
What do you name your company and how do you get a domain?
Do you dropship or not?
How do you deal with taxes?
All of these are important decisions. For now, one thing matters more than anything else to get your first sale.
What’s that one thing?
Your marketing.
That’s right, how you choose to market your store completely determines how much money you’ll make. Get the marketing right, everything else falls into place. Get it wrong or neglect it, you’ll spend years on your store without selling a single item.
Before you open your online store, you want to pick your marketing strategy.
Most online stores use one of three strategies:
- SEO
- Paid marketing
- Platform marketing
Let’s go through each.
SEO for Online Stores
This marketing strategy is pretty simple: find keywords for products that you want to offer, then get your site to rank in Google for those keywords.
If you get this to work, you can make a lot of money with your online store. SEO has a few benefits that are ideal for a businesses:
- The traffic streams are very dependable, which means dependable revenue for your business.
- Search traffic usually has the highest volume of traffic of any traffic source.
- Even at scale, search traffic can be enormously profitable.
Dependable, high volume, and profitable. It’s everything you could want.
There is one major downside: SEO takes a lot of time and effort. Even if you’re pursuing a product category without any competitors, it can still take a good 3–6 months to see your site appear on the first or second page of search results for a keyword. The traffic volume will be pretty small until you get your page into the top 1–3 rankings on a keyword. If your category is even modestly competitive, it can take years of effort to get to that point.
If you go this route, you’ll focus on three things:
- Optimizing your product pages for product keywords.
- Building useful and engaging content for non-product keywords that are also in your category. This helps your product pages rank.
- Making your content so good that people will link to at as a resource.
When playing the SEO game, there are only two things that matter: content and links. So that’s where you’ll spend the bulk of your time.
Paid Marketing for Online Stores
Some online stores do exceptionally well with paid marketing.
My general rule of thumb: paid marketing is a great option if your product is the type of thing that could be featured in a mall.
Why?
The biggest paid marketing channels right now are Facebook and Instagram. Instagram in particular has gotten very popular for online stores in the last few years.
But think of the frame of mind that someone has while scrolling through a Facebook or Instagram feed. They’re relaxing for a few minutes, laughing at a few photos, and leaving quick messages for a few friends. They’re enjoying themselves. It’s a lot like how people shop at a mall. Sometimes, people are looking for a particular item, but a lot of people go to the mall to enjoy themselves. Malls have known this for a long time and stores have optimized around this browsing experience.
So products that sell effectively in a mall are also likely to do well with a paid ad in Facebook or Instagram. They’re typically:
- Consumer products. Business products have a much harder time in these channels.
- Highly visual and eye-catching. This is why apparel companies do so well in malls and why apparel companies have been really aggressive on Instagram the last few years.
- Simple to understand — the offer needs to be understood within 3 seconds. If you have a more complicated sales process that requires more explanation, people will have scrolled past your ad long before you have a chance to make the sale.
- A price point that works with an impulse purchase. If the price is too high that people need to carefully think through the decision, they’ll skip your ad and quickly forget it.
If your product meets all these criteria, you should seriously consider going the paid marketing route.
Google Ads (formerly AdWords) is one exception to this. Since you’re bidding on keywords within Google, you put your ad in front of people who are already actively searching for that type of product. As long as the keyword has enough search volume and the ad bids aren’t too competitive, it’ll work very nicely.
The biggest downside to paid marketing is that you’ll have to invest a bunch of money up front before you know whether or not you can turn a profit. Many of us don’t have those thousands of dollars to invest without a reliable chance of getting it back.
Most paid campaigns don’t turn a profit initially; they usually take a lot of iteration and work before they start making a profit. Most professional paid marketers need 3–6 months before their campaigns become profitable. So be careful and make sure you don’t invest more than you can afford to lose here. If cash is too tight for you, choose one of the other marketing options.
Platform Marketing for Online Stores
This is a completely different direction than the two methods above. Instead of creating your own store and using a type of marketing to acquire traffic, you’ll leverage one of the main ecommerce platforms:
- Amazon
- Etsy
- eBay
It’s definitely possible to be successful at any of these three. We recommend that most folks go after Amazon. Amazon’s audience is much larger which gives you more upside and just about every product niche already exists on Amazon.
The main exception is if you’re doing a craft business of some kind, like making your own bookends to sell to people. In that case, Etsy is a better fit since the audience expects more craft-oriented products.
eBay is still great if you’re doing a bunch of buying and reselling. But if you’re producing the same types of items consistently, the potential on Amazon is much higher.
You treat whichever platform you choose as your marketing channel. First you’ll create your store on that platform and list all your products. Second, you’ll optimize your store to the best of your ability so the platform wants to feature your products. This usually involves focusing on two areas:
- Targeting your product pages to specific terms searched for within the platform
- Getting as many 5-star reviews on your products as possible
As you improve your search terms and reviews, more people will see your products on that platform, which will produce more sales for you.
How to Choose the Best Type of Online Store for You
Again, there are three types of online stores you can open:
- SEO
- Paid marketing
- Existing platforms like Amazon, Etsy, and eBay
I strongly recommend that you pick ONE of these and build your entire business around it. That’s right, just one.
“Why can’t we do more than one? Wouldn’t we want to use multiple marketing channels for our store? More marketing means more sales right?”
I’ve made this exact mistake so many times myself. After a decade working in online marketing alongside some of the most well-respected marketers out there, I’ve noticed one overwhelming trend: folks that are good at one type of marketing are generally pretty bad at the others.
Why would this be?
A couple of reasons:
- Every marketing channel is completely unique. While some marketing principles apply across all channels, you’ll have to learn all the tactics from the ground up. Constantly trying to learn new channels really slows you down.
- Online marketing channels constantly change. What works right now won’t work in 12 months. Even though I’ve spent a decade doing SEO, I still feel like I’m relearning it every year. If you’re focused on a single marketing channel, you’ll have a much easier time keeping up.
- Online marketing channels are power laws. That means the majority of the profits go to a few big players — everyone else fights for scraps. If you’re not one of the winners, you won’t be making much.
If you stick with one marketing channel, you’ll get through the learning curve a lot faster. The faster you unlock your marketing channel, the sooner you’ll be making real money with your online store.
Step 1: Find the Right Product Niche
After choosing your marketing strategy, picking your product niche is the most important decision that you’ll make. Slow down and take your time to do some genuine research here.
A huge mistake that I’ve made in the past was jumping into hobby categories. Yes, being personally interested in the category really helps with building the business. But it’s also a common trap for picking a category that won’t support a thriving business. If there isn’t much demand in my niche, it doesn’t matter how great of a job I do, I’m doomed to fail from the beginning.
There are a few things I look for in a good product category for an online store.
First, avoid picking a category that’s too unique.
A common best practice in marketing is to differentiate yourself. And this is powerful advice — it’s a huge advantage when you have it.
It’s also tricky to find a genuine way to differentiate yourself that the market is willing to pay for. There are countless ways to differentiate any given product, but only 1–2 actually matter.
Does the top-rated toothbrush holder on Amazon need to do something wacky and unique? Not at all. It needs to be simple, easy to use, reliable, have a good price, and have a ton of reviews on Amazon. That’s it.
Instead of trying to differentiate yourself from every other product in your category, find a category with competitors that aren’t dominating their marketing channel. Are the Amazon reviews low for all the top products? Are the SEO results low quality? Are there no companies putting serious ad dollars behind a product? If the answer is yes, there’s an opportunity for you to out-compete them with your marketing.
A moderate price is also key.
Avoiding product categories with a low price makes a lot of sense. After all, if you only earn $1 in profit for each sale, you’ll have to sell 100,000 products every year to support yourself. After taxes and overhead, that’ll give you about $50–60K per year to live on.
Selling 100,000 of anything is a lot of work. No easy task.
Now let’s assume that you’re selling something for $80 and making $40 in profit on each sale. To make $100,000 per year, you’ll only need to sell 2,500 items. That’s much more manageable.
However, you also want to avoid selling something with a price that’s too high. As price goes up, so does buying behavior. Prospects demand more proof. They may even demand a completely different buying process. How many people buy cars without test driving them at a dealership? Most don’t. They want to see the car and talk to a real person before making a purchase that big. Cars require a lot of extra work and sales skill to sell effectively because of their higher price point.
We recommend finding a product that you can sell between $50 and $100 dollars. It’s high enough that sales will add up quickly for you. It’s also low enough that the buying process will be straightforward.
Lastly, make sure there’s demand.
You can usually tell if there’s demand by doing some category research on your marketing channel. For SEO, Google Ads (formerly AdWords) has a Keyword Planner that tells you how many times something is searched in Google every month. If the keyword for your product gets less than 1,000 searches per month, it’s probably too small to build a business on.
Same thing with Amazon, if you have trouble finding products in your category with more than 100 reviews, it’s probably too small.
These days, I’d much rather pick a category that I have zero experience in but has genuine demand. That’s much better than realizing that a passion category of mine has zero demand later on.
Step 2: Pick a Name for Your Brand
The bad news: everyone hates this step.
Trying to find a good name that’s not already taken gets really annoying. The websites are taken, the best names have been trademarked, and you’ll feel like you’re hitting dead-end after dead-end.
Good names are tricky to find.
Whenever I look for a new name, I feel a temptation to cut corners. After several full days of brainstorming names and hitting dead-ends, all I want to do is pick a less-than-ideal name just so I can move on to the next step.
I have to tell myself that it’s worth the effort to keep looking. It’ll pay off if I keep going and it always does.
Here’s the naming checklist I use:
- Easy to spell. I never want any friction when people are trying to find my site.
- 3 words or fewer. I like to keep it at short as possible so it’s easier to remember. 1 or 2 words is ideal, 3 is still good.
- Pass the Bar Test. I should be able to say the name in a noisy bar without repeating it. That’s a great sign that it’s easy to understand. This is huge for word-of-mouth marketing later.
- Can get the .com domain. Every online story needs a .com. It’s become too much of a standard. Some folks use weird domains like company.online or company.io. In my opinion, this causes problems later because whoever owns company.com will know how valuable it is once you try to buy it. I either buy the domain early or find one that’s instantly available.
- Relevance to your category. Make sure the name relates to your product category in some way.
- No trademark conflicts. Any corporate law firm can do a quick check for you on this. Since legal time is expensive, find 3–5 name options that check all the above items. Then have an attorney check for the trademarks all at the same time. It’s rare to not have at least one of them work.
We have an in-depth guide on how to pick and buy a domain name here.
Once you have your name picked, grab the domain using your domain registrar. Or if you’re buying the domain from someone, get it transferred into the domain registrar that you want to use for the long term.
Step 3: Open Your Online Store
If you’re pursuing an SEO or paid marketing strategy, this is a super important step. The quality of your site has a huge impact on how much of your traffic will turn into buyers.
First, we strongly recommend Shopify for building your site.
There are other tools out there like Magento and Bigcommerce — none of them compare to Shopify. It’s super easy to use, has all the features that you’d ever want, and has a very reasonable price.
The one exception to this is if you’ve already built out a blog with a large audience and want to add a small online store to it in order to sell a few items. In this case, adding WooCommerce to your WordPress is a good option.
Otherwise, always go with Shopify.
We’ve put together a detailed guide on creating an ecommerce website here.
And if you’ve picked one of the platforms like Amazon, treat your company and product pages with great care. Make the copy as compelling as possible. Use every feature that they give you. Get the highest quality photos that you can. Do everything. Really make your pages stand out.
Step 4: Do a 60-day Marketing Burst
All of our stores start from scratch.
When we’re just getting started, any bit of momentum goes a long way.
That first review, that first page that ranks in Google, that first purchase using a paid ad — it’s life changing.
At this stage of the process, I never worry about systems, scalability, or trying to do things in an efficient way. I’m looking for momentum any way that I can get it, no matter how much outreach or personal work I have to do.
The goal at this stage is to put in a huge burst of personal effort and get some momentum. Even if you have to do things that you know aren’t sustainable over the long term.
Here are a few examples:
- I might tap my personal network to see if anyone is willing to do an interview with me and publish it on their own site. This will help me get a few initial links to my site.
- I could ask personal friends and relatives to leave the first couple Amazon reviews.
- I’d try spending some of my own cash on paid ads to test if the offer produces revenue at all.
I’m looking for any marketing idea that involves my time but also allows me to quickly get my first few wins.
At this stage, do some research on your marketing channel and come up with a list of 50 ideas that you could personally do yourself. Then prioritize them and plan a 60-day Marketing Burst. Ship as many of those ideas that you can within those 60 days. Work long hours, drink too much coffee, and really push yourself during that period.
By the end of the 60-day Marketing Burst, some of your marketing ideas will have worked and you’ll have your first couple sales. You’ll also have a small but steady stream of sales coming in because you’ve focused on a single marketing channel. That steady stream is enough to start building your marketing flywheel on.
Step 5: Build Your Marketing Flywheel
Once you have some initial momentum, it’s time to start building the marketing machine that will grow your business around the clock without you having to personally accomplish every task.
In the early days on Amazon, you’ll need to personally ask for a lot of your first product reviews. But that’s not sustainable.
Instead, look for marketing tactics that help create Amazon reviews for you without you asking for them.
Here’s an example.
A popular tactic on Amazon is to ask customers to leave a review. Some will even promise a discount code on the next purchase if a review is published.
You can automate that tactic. Have an assistant send the same templated email to every new customer, asking for a review and promising a discount code on their next order. All the platforms allow you to message customers personally through the platform. So while you can’t email blast all your customers at once, you can have an assistant send messages out one-by-one every week on your behalf. That’s a repeatable flywheel that doesn’t take up your time.
A quick side note on this review tactic: Before you try something like this, make sure to check the guidelines and policies of the platform you’re on. There are always rules about these sorts of things and every platform is slightly different. Be careful to not push things too far, putting your store in danger of getting removed entirely.
Look for as many of these repeatable marketing flywheels as you can.
Instead of creating content yourself, can you pay someone for content? If you did the keyword research, made a list of requirements that you want on each piece of content, and hired someone else to write the post itself, you could create a lot more content to help you win with an SEO marketing strategy. That’s a flywheel.
Instead of optimizing your paid ads yourself, can you delegate that? If your conversion rates are consistently improving and your cost to acquire a customer is going down, that lets you buy more customers with the same amount of capital. That accelerates your business without your personal effort. Another flywheel.
Focus on your core marketing channel and then build a marketing flywheel that will keep your online store growing without effort from you. This is the key to opening an online store, generating sales quickly, and accelerating its growth.
Source Quick Sprout http://bit.ly/2HCLlK9
E-file Review
As someone who is economically active, filing your tax return is an activity that may seem daunting. Because of the costs involved, you may not view the services of a tax professional to be a viable option. You may also not have the confidence and experience to prepare and file your tax return yourself.
Tax software solves this problem for a lot of people. There are many products available to choose from, and you should consider your tax situation carefully before selecting the one that’s right for you.
This review takes an in-depth look at E-file, its features, versions, and some of the software’s benefits and drawbacks.
Despite being one of the lower-cost tax software solutions available, E-file is user-friendly and suitable for a wide range of tax situations.
Do not confuse E-file, the tax software we are reviewing today, with IRS e-filing, the general online tax filing process.
How it Works
To prepare your tax return, E-file adopts an approach that combines the interview-style with DIY facets. The interface is straightforward and doesn’t feature all the bells and whistles that one can expect to find with some of the other top tax software interfaces.
When you prepare your return with E-file, you have to complete several sections. There is, for example, one section for income, one section for expenses, and so forth.
Each section has its own subsections. Before you start completing a section, you have to answer some questions about your personal and financial situation.
After answering the questions, the software will guide you toward completing the relevant forms and schedules for your unique situation. If you already know which forms apply to you, feel free to skip the interview at the beginning of each section.
Features
Pay with your Refund
If you use E-file for tax return preparation and filing, you can pay for their services with your tax refund. The reason many people prefer to do so is that they don’t have to enter their credit card information and make an upfront payment. You will, however, have to pay $19 to use this option.
Return Importing and Filing
If you are using E-file for the second year in a row, you can import your tax return from the prior year directly to the return of this year.
If you used the prep and filing services of a competitor platform, however, you will not be able to import your return, which is a feature that many other software solutions have available.
With E-file, you can also file returns from the previous year. If you didn’t file your return last year, you could do so at no additional costs.
Help Sidebar
E-file’s help sidebar is a helpful tool, especially to new tax filers. The sidebar provides tax information on the sections and subsections that you are currently working on. This tool also directs you through the process of preparing and filing your return.
As you complete your information, the sidebar is automatically updated to provide you with information that is unique to your tax situation.
Audit Assistance
This high-value feature includes audit assistance at no additional costs. If you selected this add-on feature and received an audit notification from the IRS, E-file will communicate with the IRS on your behalf and provide you with all the information you need.
Versions
Free Basic
If you have a basic tax situation and you are free to file a 1040EZ, this version will be suitable for your tax preparation and filing. Federal tax filing is entirely free, and state tax filing has a service cost of $19.95.
If you select one of E-file’s paid plans and the software detects that you are eligible for the Free Basic plan, they will automatically downgrade your account and you won’t have to pay to file your return.
Unlike its competitors, E-file doesn’t charge you per state return.
Even if you have to file multiple returns, you will only have to pay the standard fee of $19.95. If you have to file in more than one state, E-file may, therefore, be the most affordable option for you.
Check out E-File’s Free Basic Filing>>
Deluxe
With the Deluxe plan, you will have to pay to file a federal return while the cost of state return filing is the same as the Free Basic version.
The Deluxe plan offers all the features that you receive with the Free Basic. Also, this version is suitable for single tax filers and joint filers who have dependents.
If you are eligible to file your taxes with Form 1040A, the Deluxe plan may also be your best option.
Premium
If you earn investment income, income from rental properties, or income from a small business, the Premium version from E-file can accommodate your tax situation.
If you selected the Deluxe version and the software picks up that your tax situation is moderate to complex, it will suggest that you upgrade to Premium version.
Likewise, if you purchased the Premium plan but you are, say, eligible to file with Form 1040A, the software will downgrade your account, and you will not have to pay the higher fee.
E-file Costs
The costs of state tax return filing are the same for all three plans. Whether you have one or more state tax returns to file, you will also have to pay the standard fee, which is currently $19.95. The cost per federal tax return that file differs from plan to plan.
With the Free Basic plan, filing a federal tax return is completely free. If you selected the Deluxe plan, you would have to pay $24.95 per tax return.
Filing a federal return with the Premium plan costs $34.95 and, although this is the most expensive plan that this software has to offer, it is one of the most affordable programs available for people with complex tax situations.
The prices listed above are subject to change. To find out what the current fee of a plan is, head over to E-file’s website.
Pros
Affordability
E-file offers pricing that is more affordable than its competitors. The costs of E-file’s services are also known to decrease over time.
If you are eligible for 1040EZ filing, you can file your taxes without paying a cent, and if you have to submit multiple state returns, this software may also be the most affordable solution available to you.
Straightforward Interface
The interface has a simple appearance, and you won’t have to click through a lot of screens to prepare your tax return.
After completing a section, even inexperienced tax filers will have no difficulty knowing where to click to move forward with the process.
Excellent Security
E-file has some pretty strict account and password requirements, and the software times out after ten minutes, so you can rest assured that your information and privacy are protected.
Cons
No Free State Returns
E-file doesn’t offer free state filing like some of their competitors, which might lead some tax filers to look elsewhere. Even if your tax situation is relatively simple, you will have to pay if you live in a state with income taxes.
Lacking Customer Support
E-file offers no customer support via live chat or phone. If you need help, you need to fill out the support ticket. As you fill out the contact form, the interface will constantly try to direct you to their FAQ section.
For tax filers looking for more hands-on advice as they work through the process, E-File might not be the best choice.
Bottom Line
E-file is an affordable, straightforward, and secure option for filers with both simple and complex tax issues. Once you’ve worked with E-file once, the software becomes even more beneficial, allowing you to easily import last year’s returns.
Their audit support is also top of the line, ensuring you get the assistance you need when you’re facing an IRS audit. Whatever your tax filing situation, E-file can help you to file without a headache and confusion this year. You can also take a look at our federal income tax guide to help you along the way.
Start filing with E-file today>>
The post E-file Review appeared first on Good Financial Cents®.
Source Good Financial Cents® http://bit.ly/2FYFflC
Help! I want to retire but I haven’t paid off my mortgage
We all want to pay off our mortgages as soon as we can and certainly before we retire and stop earning. However, for growing numbers of borrowers that won’t be a reality.
People are taking longer to get on to the property ladder, plus lifestyle changes, including divorce, mean more people need to keep their loan going for longer. Others may have taken out an interest-only mortgage and now don’t have enough savings to repay their outstanding loan.
Borrowing in your 50s or older hasn’t always been straightforward, with age and security of income not always in your favour. However, as demand grows, more lenders are recognising the need for a more flexible approach.
Age matters
Lenders would often refuse to give a new mortgage to anyone aged over 65. But, in recent years, many have increased their maximum lending ages.
With life expectancy rising and more people working longer, banks, and more commonly building societies, have recognised that previous cut-off ages are outdated. Even where borrowers have retired, many will still have sufficient income to repay a mortgage.
“Larger high-street lenders have extended criteria to accommodate a broader range of homeowners,” says David Hollingworth, associate director of communications at mortgage broker London & Country (L&C) Mortgages. “Halifax now lends up to the age of 80 and Nationwide lends up to age 85 for borrowers who are already retired.
“However, it’s still the smaller mutual lenders, such as Family Building Society, and specialist lenders, such as Hodge Lifetime, that can lend into a borrower’s 90s. Aldermore allows homeowners to hold one of its mortgages until they are 99. The maximum age new borrowers can apply for a mortgage is 85.”
The Family Building Society takes a common-sense approach to lending. It will consider earned income up to age 70 and has recently extended the maximum age at the end of the mortgage to 95. Meanwhile, Hodge Lifetime offers a 55+ Mortgage which is a fixed-term interest only loan. Anyone aged 55 to 85 can apply and it runs to a maximum age of 95.
Peter Fowler and his civil partner, Chris Beer were facing having to sell their home when their bank refused to lend to them into retirement.
The couple have lived in their three-storey, five-bedroom Victorian home in Cardiff for 14 years. They spent years renovating it and it’s in an area of the Welsh capital they love.
Peter, a retired lecturer, and Chris, who still works as a benefits adviser and software specialist, had an interest-only mortgage with a high-street bank. Around 18 months ago, it came to the end of its term and the bank demanded the balance – around £350,000 – to be paid.
“We spoke to our bank,” says Peter, 68, “We explained we wanted to stay in our home and that we could pay off some of the balance with the proceeds of a buy-to-let property we owned. But it was formulaic in its approach and simply told us it had no product that met our needs.”
Resigned to moving, the pair planned to sell their home to repay the loan and relocate to their rental property.
“We didn’t think we had much choice until a friend put us in touch with their mortgage broker who managed to help,” says Peter.
The broker, Nigel Grice Associates in Oxford, found them a mortgage with Family Building Society that enabled them to stay in their own home. Peter and Chris signed up to a three-year discount at 3.09% with a 17-year term.
Peter says: “It was such a huge relief we didn’t have to move. We sold the other house and took out a mortgage for £150,000 on a loan that expires when we’re in our 80s.”
Should you raid your pension?
For those who only have a small outstanding mortgage, the solution could be found through your pension. The pension freedoms now allow people with defined contribution pensions to access them from age 55.
It is estimated that around 300,000 homeowners aged between 51 and 65 are planning to use pension savings to pay off their mortgages, according to retirement income specialist, Just.
However, only 25% of your pot can be taken tax free – so to clear a larger debt of, say, £100,000, you would need a total pot of £400,000 to avoid paying any tax on your withdrawal. Take more than 25% and you’ll have to pay income tax on anything above that level.
To take your tax-free cash in one go, you would also need to move the rest of your pot into flexi-access drawdown – if you left your pension where it is (accessing your money under uncrystallised fund pension lump sum rules), you would only get the first 25% tax free and would have to pay income tax at your highest rate on the remainder.
Interest-only mortgages
Nearly one in five mortgage customers has an interest-only mortgage, according to the Financial Conduct Authority (FCA), and over the next few years increasing numbers will require repayment.
With an interest-only mortgage, you only pay interest to your lender every month. You don’t pay off any of the capital – the amount you actually borrowed to buy the property – until your mortgage ends. People who take these mortgages have to find a way of paying back the capital by setting up a separate repayment plan.
It was common to pay into an investment called an endowment that was designed to mature at the same time the mortgage runs out and use that to clear the loan. However, many of these endowments failed to deliver the expected returns.
David and Pat Thomas found themselves with a £90,000 shortfall in 2017 when their endowment didn’t provide the cash needed to clear their £80,000 mortgage.
The couple moved into their home in Crawley, West Sussex, 10 years ago to be closer to family. They had no intention of moving, but feared they might need to.
David, 72, who worked in aviation security before his retirement, says: “We tried a few lenders but were turned away because of our age. Luckily, our financial adviser came up with a solution through Family Building Society.”
The couple signed up to a five-year discount rate at 3.34% with a 17-year term.
Nearly one in five customers’ mortgages are on an interest-only basis
Retirement interest-only mortgages
A recent relaxation in rules by the FCA has also enabled lenders to be more flexible when lending to older people.
Unlike conventional mortgages, new ‘retirement interest-only mortgages’ have no fixed end date. Older homeowners are able to make monthly interest payments until they die or go into long-term care, with the capital only being repaid when the property is sold.
Mr Hollingworth says: “The market is still relatively new. However, there’s a growing range of options at lenders, such as Tipton & Coseley Building Society, Bath Building Society and Hodge Lifetime.
The minimum amount of equity you must have in your home is 35%, with The Hanley offering a 1.7% discount for the term, giving it a current rate of 3.74%. Better rates are available if you have 50% equity, with Penrith Building Society leading the way at 2.59% (a 2.16% discount for two years).
| Lender | Rate | Scheme | Max LTV | Fee | ERC | Notes |
|---|---|---|---|---|---|---|
| Mansfield BS | 2.99% | 2.76% discount for five years | 40% | £999 | None | Drawdown facility |
| Penrith BS | 2.59% | 2.16% discount for two years | 50% | £699 | For two years | Free valuation and legal work |
| Leeds BS | 3.34% | Fixed to 31 March 2021 | 55% | £999 | Until 31 March 2021 | Free valuation |
| Buckinghamshire BS | 3.39% | 1.85% discount for five years | 60% | £999 | None | |
| Hodge Lifetime | 3.59% | Fixed for two years | 60% | £995 | For two years | Free valuation and legal work |
| Tipton & Coseley BS | 3.65% | Fixed to 30/04/24 | 60% | £999 | Until 30 April 2024 | Free valuation and legal work |
| Hanley Economic BS | 3.74% | 1.7% discount for term | 65% | £250 | None | Rate reduced to 3.24% with Lasting Power of Attorney in place |
Source: L&C – 0800 373300/Landc.co.uk, January 2019
Equity release
Another option is equity release: a loan taken against the value of your home and it is becoming increasingly popular among homeowners who cannot otherwise find the money to repay the mortgage.
A total of 38,912 households unlocked some of their property wealth during the first half of 2018 – up 25% from 31,158 in the first half of 2017, according to research from financial services firm One Family.
The same research also shows that 40% of lifetime mortgages are taken to clear an existing mortgage, with loans for this type of customer averaging £110,000.
The most popular kind of equity release is a lifetime mortgage. Like a mainstream mortgage, interest is charged on the amount borrowed. But instead of being repaid each month, it rolls up and is paid off when the property is sold.
Kenny and Fay May took out a lifetime mortgage in August to pay off the £100,000 capital on their interest-only mortgage.
The couple, who live in Wickham Market, Suffolk, had been planning to sell a house they bought for Fay’s mother to repay the bank.
Fay, 58 and a retired resource manager, says: “Mother is still healthy and living at home at the age of 88.
“But this left us worrying about how to pay back our own mortgage. We asked the bank for another loan but it only offered us a repayment mortgage we couldn’t afford.”
A loan taken against the value of your home is becoming more popular
Kenny, 69, a postman due to retire this year, and Fay have a financial adviser who recommended an equity release plan with Premier Equity Release.
The couple paid £42,000 of the mortgage from savings and the rest came through the lifetime mortgage with Premier.
“It means that we no longer have monthly mortgage repayments. When we do come to sell mother’s house, we’ll repay the loan.”
Fay adds: “We’re so relieved that we can enjoy retirement without worrying about money so much.”
It’s important to seek advice if you’re considering equity release. Although you will never owe more than the value of the property, interest charges could potentially wipe out your equity.
Talk to a financial adviser who can help run through the options. Alternatively, One Family has launched a new advice service, covering all lifetime mortgages across the market for a fixed fee of £500.
The good news is there is a record number of equity release deals to choose from. Over the past two years, the number has more than doubled from 58 in August 2016 to 139 in August 2018, according to the Equity Release Council.
Even better, average interest rates have also fallen over the period from 5.76% in 2016 to 5.09% in August 2018, according to comparison site Moneyfacts.
“I pay a high interest rate but hope to remortgage in the future”
Gail Coelho, a 71-year-old former deputy head teacher and grandmother-of-two was hoping to have paid off her mortgage by now. But Gail had to buy out her husband when they divorced 20 years ago. To do so, she took out a new mortgage on a two-bedroom apartment in a listed building in Chester.
She took an interest-only loan, as it was all she could afford at the time. As the end of the mortgage approached, Gail decided it was time to move to a retirement village.
Gail says: “I have always owned property and would feel vulnerable renting at my age. But my bank wouldn’t be able to lend because of my age and the type of flat I wanted to buy – one in a retirement complex.”
Another challenge for Gail was the fact that she has a County Court Judgment (CCJ) on her credit file from credit card she built up when supporting her son when he encountered financial difficulties.
Gail says: “The combination of the three factors meant getting a mortgage seemed impossible. But some friends told me about a lender which had helped them – called Together. I got in touch and sure enough it was able to help. It was such a relief.”
Together approved a 10-year mortgage of £61,000 for the £155,000 flat. Gail signed up to a five-year fixed rate at 7.12%.
Gail adds: “I know the rate is far higher than I would get on the high street, but I didn’t have any other way to buy the home I wanted to live in. And when my CCJ falls away, I hope to remortgage to a retirement interest-only loan.”
How to find a mortgage broker
An independent mortgage broker can help to identify the best mortgage for your needs and access deals that you could not otherwise find.
Crucially, a good broker will know the different lenders and their criteria inside out and can use this knowledge to help with your application.
Different brokers have different charging structures. Some are free, but take commission from lenders; others charge a flat fee of anything from £300 to £600 or a percentage of the loan. Always make sure you understand charges before you go ahead.
- Search for a broker in your area using Unbiased.co.uk or Vouchedfor.co.uk.
Section
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Workflow
Published
Source Moneywise http://bit.ly/2ScPj07
7 Personal Finance Lessons from the Government Shutdown
The government shutdown is over. Government workers have returned to their jobs and backpay should be arriving soon (if it hasn’t already). Things are back to normal… for now.
However, it’s the “for now” part that should leave many people concerned going forward.
In truth, the last month has been an incredibly valuable moment for learning for all of us. It’s exposed some difficult truths about our government, but more than that, it’s also exposed the fragile nature of the financial and professional lives of many, many Americans. Hundreds of thousands of government employees and many more contractors have seen their lives thrown into chaos when they previously perceived their employment as incredibly stable.
This experience has provided all of us with a great opportunity to step back and look at the reality of our own financial and professional worlds. It’s pointed at a few things we should all keep in mind as we move forward.
Here are seven key personal finance lessons I’ve taken away from the government shutdown.
There Is No Truly “Stable” Job
Part of what caught many government employees by surprise during the shutdown is the belief that their job was supremely stable and that they could rely on that paycheck every two weeks like absolute clockwork. Clearly, that’s not 100% true.
Of course, many people tend to believe in the stability of their job – many state and local government employees and employees of private businesses tend to fall into that same mindset, even though there’s less evidence of stability there, especially in the private sector. I’ve even known some small business owners who believed that their business was so stable that they could take the income for granted.
Here’s the truth: no job is perfectly stable. It doesn’t matter who is employing you or what the arrangement is. Employers can run into all sorts of unexpected problems, even ones as big as the federal government. Unexpected events can happen to any employee, too, transforming a stable job into a pink slip at the blink of an eye.
Never, ever lull yourself into complacency and believe that the job you have now will always be there and will always be stable. You should never act as if your next paycheck is a guarantee, because even if you have what seems like the safest job in the world, it’s not a guarantee.
Rather, you should always take steps to ensure that your life remains secure even if the next paycheck doesn’t arrive. Let’s start with the big one.
You Need an Emergency Fund. Period.
This is the first and absolute most fundamental step that everyone should take in their personal finance journey. You should have at least a month’s worth of living expenses sitting in a savings account at all times in case of job loss or other emergencies. If you don’t have that sitting there waiting on you, you’re begging to be blindsided during the next big unexpected event.
Think about it: if every federal employee had a month’s worth of emergency savings, the government shutdown would have been much less of an issue in terms of how ordinary people were affected. People would not have been panicking. People could have made rational decisions regarding their income and their future livelihood.
Note that I’m talking cash here, not credit. Your credit card is not an emergency fund. It won’t be there for you during a natural disaster. It won’t be there for you if your identity is stolen. It won’t be there for you if you have credit issues. Cash is king. Cash solves problems. Cash is safe. Cash is the form you want your emergency fund to take.
You should make it a very high priority in your life to save up a month’s worth of living expenses and stow it away in a savings account. Do it any way you can. My personal recommendation is to set up an automatic transfer from your checking account where $20 (or more) is moved every week from checking to savings automatically. Then, supplement that with whatever you can until your savings account has at least a month’s worth of living expenses in it… but never turn off the automatic transfer. Leave it there, so that the fund automatically fills and when you tap it, you’re not scrambling to refill it.
If you’re wondering how on earth you could possibly save up a month’s worth of living expenses, keep reading.
If You Can’t Do This, You’re Living Far Beyond Your Means
This is the stark truth that many people don’t want to hear about their finances, but it’s true: if you can’t save up for an emergency fund in any sort of reasonable amount of time and you can’t make any progress on your debts beyond minimum payments, you are living far beyond your means. You are constructing a house of cards that will eventually collapse, and when it does, it will hurt.
If you look around your life and think that it is “impossible” to spend less than you earn, that it’s “impossible” to build up an emergency fund, that it’s “impossible” to pay down your debts in any reasonable timeframe, the hard truth is that you’re living beyond your means. If you ever want anything to be different in your life, you have to change something significant about either your income or your spending. If you don’t want to eventually suffer a financial meltdown, you have to change something significant about either your income or your spending – or both.
Much of the rest of the article focuses on career steps, but right here and now, we’re going to talk about spending. If you struggle to make ends meet, you have to change something about your spending. You need to cut back significantly on the frivolous spending, meaning things that don’t involve the most basic of food, shelter, clothing, and transport to work. All of the extra stuff might feel important, but it’s setting you up for disaster.
There are essentially two ways to make a serious difference in your spending. You can either modify the small, frequently repeated expenses, in which a change that saves $0.10 or $0.25 or $0.50 or $1 can add up to a lot over the course of a year, or you can make a major move that in a single action saves hundreds.
Small moves (that save a little at a time but build up through repetition) include simply eating all of your meals at home unless there’s a strong reason to do so (and planning those meals out in advance so you can shop for groceries with a list), doing energy improvements to your home like air-sealing the windows and installing weatherstrips, installing LED bulbs in each socket where you don’t have one, making your own household supplies like laundry detergent, buying store brand everything, and so on.
Big moves (that you can do once or maybe twice but save a lot each time) include moving to a less expensive place, shopping around for better auto and homeowners insurance, eliminating a car and relying on mass transit, shopping around for a better cell phone plan, cutting cable and relying only on Netflix and over the air signals, and so on.
If you are in a situation where something as simple as paying down your credit cards or building up an emergency fund will take years, you have to start making changes in your spending or else you are begging to be blindsided hard by any sort of uncertainty in your life, and as we’ve established, no job is completely secure.
Don’t let your life be as fragile as a house of cards. Get your spending under control, spend less than you earn, and start patching up that ship now. Build up an emergency fund, start whacking that debt (starting with the high interest stuff), and start saving for retirement, too, especially if your employer matches your contributions. If you can’t afford to do that, you’re standing on a very tall ladder on a very gusty day.
Let’s move on to some career advice.
Don’t Think of Your Current Job as Permanent; Instead, Think Big (and Small)
As we’ve established, there is no such thing as a truly stable job, so stop thinking of your job as a permanent state of affairs. It’s not.
Rather, think of your current job as a temporary but mutually beneficial arrangement that will continue until it’s not mutually beneficial any more. When your employment ceases to be beneficial to you – meaning you could make more money elsewhere or be in a more enjoyable situation elsewhere or you could retire – you’ll quit. The same is true for the employer – if your performance isn’t up to snuff or they can’t afford to continue your position, they’ll downsize you.
With that mindset, start thinking about what your ideal professional situation would be. Would it involve more income? Would it involve more meaningful work? Would it involve less stressful work? Would it involve less personal interruption? It might even involve a different location or a different field entirely.
You might think of your current job as something pretty close to that – I know I do. In that situation, you should work to make sure that your current position is as permanent as you can make it. You want to shore up your current position and make yourself as valuable as possible.
If your current job isn’t anything close to that, you should work to make sure that you’re getting ready for that next job or your career switch or whatever the next step is. Do not feel bad about using your current job as a springboard to your next career. If you’re doing your current job but your focus is on saving money and preparing for a career change, that’s fine as long as you’re fulfilling expectations.
In both cases, many of the same principles apply. You should have your financial bases well covered, with an emergency fund and a routine of spending less than you earn, for starters.
Beyond that, there are three things you should always have on your mind at work.
There Is Immense Value in Having a Strong Professional Network, So Start Cultivating One
You need to have as many strong professional relationships in your field as you can cultivate, both inside your own workplace and outside of it. The more relationships you have, the more likely it will be that you can tap one to make the next step in your career, whether it’s a step you take by your own choice or a step forced on you by an unstable employer.
The first thing you can do is be a reliable coworker that your fellow workers can depend on. Few things cause poison in the workplace than someone who is not doing their part and can’t be relied on. Do your job to the best of your ability and try to avoid letting others down. If you have to let someone else down, be very clear with them on what you can’t take on, with as much notice as possible.
You should avoid negative talk about coworkers and others in your field whenever possible. While this might help you cultivate a very small network of strength, it burns a lot of bridges and damages your reputation. It’s impossible to cultivate a strong network if you’ve burnt a lot of bridges and people don’t trust you.
Take every opportunity you can to go to meetings, conferences, and conventions related to your field. Meet lots of people, then take the time to follow up with many of the people you meet with further contact later on. Collect a bunch of contact information and business cards and follow up with all of them.
Touch base with the people in your office regularly and the people in your professional network regularly. Try to avoid eating lunch alone. Know a thing or two about each person and use that as a source of conversation. If you find that any of those people need help, particularly if it’s the kind of help you can offer with relatively little effort compared to the benefit to that other person, do it without question and without wondering what you get in return.
If you do this consistently when things are good and stable, you’re going to find that when you have a professional need, there will be a lot of people able to help and a lot of surprising doors open to you. Thus, these efforts should be a consistent part of your professional life.
You Should Always Keep an Eye on Improving Your Own Marketability and Transferable Skills
Another important part of your professional stability is your skill set. Not only do you need to have the skills necessary to do your job as it sits right now, you also should be cultivating the skills needed to do the next job you want to do and the skills you’ll need for your current job in the future.
There are many ways to go about this, and they vary widely. Some careers rely on self-education. Others rely on certifications. Still others rely on on-the-job learning. Whatever it takes, you should be devoting some of your time to adding new skills to your repertoire related to the career path you see yourself following going forward.
One good way of doing this is by looking at what skills are required and what skills are desired for the job that you want to have. Go look at job listings for the job you wish to have and then use that as a checklist for the skills you should be cultivating.
Another approach is to sit down with your supervisor and talk about a plan for you that will lead to a raise or a promotion. Almost always, the skills cultivated during that process are ones that improve your value in the professional marketplace as well, plus it strengthens your relationship with your boss as you’re moving through the steps.
Of course, you need to promote this fresh marketability…
Your Resume Should Always Be Ready to Go
Make sure that your resume is ready to send at all times. Review it monthly, if not more often, and keep all of your skills up to date there.
You should, at the very least, maintain a resume that’s ready to mail in a document on your computer or in the cloud (I use a Google Doc), as well as updating your resume in a few places that can easily be found online, such as LinkedIn. An updated resume that you have in hand makes it easy to quickly send one off if needed, and having an updated resume online makes it easy for others to find you with potential offers and enables others to share your resume on your behalf, something that happens sometimes when you have a strong professional network.
You should literally pencil this in as a monthly reminder or to-do. The time it takes to make sure that your resume document is updated and in an easy to find place plus the time it takes to update your resume at sites like LinkedIn is minimal; you can do it in just a few minutes.
Yet it’s that regular updating that keeps the window open for opportunities to come in. People will find your resume online and may contact you with offers. Professional associates may suggest your resume to others for potential job offers or other opportunities. Keep it updated and those doors remain open for you.
Final Thoughts
The key lesson of the government shutdown is that no job is permanent. No matter how reliable or trustworthy your employer seems to be or how wonderfully you perform at your job, things can always happen. You can be an employee of the federal government, which is about as stable as you can get, and still be a month late in receiving your pay. Pink slips can happen. Unexpected corporate bankruptcies can happen.
Things happen. Be ready. If you’re not, someone else will be.
Good luck.
The post 7 Personal Finance Lessons from the Government Shutdown appeared first on The Simple Dollar.
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10 Things to Make and Sell From Home
Deciding the right things to make and sell online depends on your goals as well as your situation. Let me explain. If you’re a one-person show, you’ll want to choose something that you know you can handle creating alone. If you have a small business or people who work for you, you might be able […]
The post 10 Things to Make and Sell From Home appeared first on The Work at Home Woman.
Source The Work at Home Woman http://bit.ly/2CSNEmU
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