Financial Planning, Retirement Plan, 401k, Investment Blog

Financial Planning, Retirement Plan, 401k, Investment Blog

Misc

Is Now a Good Time to Start a Small Business?

Posted March 18, 2009 by Bernz

Have you ever had a dream of owning your own business and not having to work for a boss anymore? That is the dream of many employees who wish to have more control over their lives and their finances. With the unprecedented current level of employee layoffs, more people than ever are considering following that dream rather than trying to apply for a new job. Is now really the best time to do that?

Perhaps it’s time for a reality check. Starting a business is often considered to be one method of building wealth. The fact is, however, that 80% of small businesses fail in the first five years, and almost 80% of the ones that survive fail within ten years. Those that make it through the first decade have a solid financial and entrepreneurial foundation that is strong enough to see the business through the tough times. But what if you’re trying to start a business during tough times? It is possible and there is help available.

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Posted in Career, Financial Goals, Investing Basics, Investing Strategies, Loans, Misc, Retirement Planning, Wealth Building | No Comments »

Banking on American Banks: Why US Financial Institutions Will Survive the Crisis

Posted March 16, 2009 by Bernz

So far this year, the news has been pretty frightening. Banks have been taking huge bottom line hits on their assets. Some banks have teetered on the edge of financial collapse before receiving a $700 million life line from the federal government. Specters of the Great Depression dominated financial markets and, for the first time in two generations, people started wondering if their money was safe in some of the largest banks in the country.

To understand the banking crisis and why US banks will survive it, you have to understand the sub-prime mortgage fiasco. Most of us know that sub-prime mortgages were home loans made to those who couldn’t qualify for conventional bank mortgage financing, making them high risk. Most of these loans contained a low-interest teaser rate to attract new borrowers, but, buried deep in the fine print of the contract, lurked a much higher rate after the first few months. As the rates went up, so did defaults and the mortgage assets weren’t worth as much to banks. What made the situation worse is that banks and other financial institutions bundled these loans up into packages called mortgage-backed securities and sold them to various investors. Many of these investors were not aware of the risk of the underlying loans. Those securities that sat on banks’ balance sheets rotted away until no one was sure what their true value was, if any. As their assets deteriorated, banks ran into a liquidity crises where their current assets were in danger of not being sufficient to meet their current liabilities. That’s when the federal government stepped in with their bailout.

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Posted in Financial Education, Investing Basics, Loans, Misc, Saving Money, Stock Market Investing, Wealth Building | 1 Comment »

Do You Love Your Job?

Posted March 6, 2009 by Bernz

Being employed is something we aspire to for many reasons: it puts food on the table, it helps us to build experience, and it helps us to develop our social and professional networks. But one question that most of us rarely entertain is “Do I love my job?”

Not everyone can get up in the morning, bounce out of bed, and be excited about another day at work. Although some people can find the joy in anything, I would imagine that many slaughterhouse workers, sanitation engineers and debt collectors are more concerned with the money and not the fulfillment.

But you should love what you do for many reasons. The most important reason is that you’re going to be doing it at least 40 hours a week. You’ll spend more time at your job than eating, sleeping, or playing with your kids. Grinding through 40 hours a week of drudgery and duty can be just as bad as having a continual dental drilling.

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Posted in Career, Misc, Retirement Planning, Saving Money, Wealth Building | No Comments »

How to Find the Right Health Insurance Plan

Posted March 2, 2009 by Bernz

The election campaigns of both the Republicans and Democrats included a lot of discussion of how well the current health care system in the US is working and what needs to be done to fix it. Now that President Obama has been sworn into office, big changes to health care services and delivery methods may be in the works, however, it may still be quite some time before real change is implemented.

In the meantime, it is still important to have a health care plan in place. The choices today can be mind-numbing and there is some evidence that many people simply don’t choose a plan because of the complexity. But not having health care can ruin your financial future. It is estimated that around half of all personal bankruptcies in the United States occur because of medical or health costs. A simple stitched finger can cost over $1,000 and heart surgery can cost hundreds of thousands of dollars. We don’t get to choose when we need emergency health services so getting health insurance in place is a necessity.

Health insurance plans come in all stripes. Some focus on providing for everything from a check up in your doctor’s office to dental and eye care. Some only cover emergency hospital services. As with any other product, the more bells and whistles the plan comes with, the more expensive the premiums are.

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Posted in Estate Planning, Financial Education, Misc, Saving Money | No Comments »

The Cost of a Second Job

Posted February 23, 2009 by Bernz

With jobs disappearing at break-neck speed and personal finances teetering in today’s economy, many families make the difficult decision to bring in a second income while they still can. In many cases, it’s the wife who has stayed home to raise children that now launches herself out into the workforce. It’s a sacrifice happening all over the country, but does it really pay to have a second income?

Let’s take the example of a family who currently brings in only one income. The husband works in the accounting department of a regional utility and makes $50,000 a year. The family is not sure how much longer the husband will have his job as layoffs have already begun. The couple decides that the wife should get a job to bring in more income to pay down debt and save for a possible layoff.

In order to start her new job with a temp agency, the wife has to first buy a wardrobe suitable for the office. This could very conservatively cost $1,000 or more. The couple already has two cars so transportation is covered but the gas to drive to and from the new job will cost about $50 per week. The couple’s two children are too young to be left home alone after school so they are enrolled in an after-school program costing $150 per week. The wife had always made lunches for the kids and the husband, but now that she has less time to spare, she signs the kids up for school lunches at a total cost of $17.50 per week. Her husband takes $5 a day with him to work to buy a sandwich and drink from the office vending machines. She takes frozen microwavable meals to her office at around $3 per day. Dinners more frequently consist of prepared meals from the grocery store than the scratch cooking she used to do.

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Posted in Financial Goals, Misc, Saving Money | No Comments »