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Starting Your Own Business: How To Make It Work!

Saturday, December 10th, 2011

Should You Start Your Own Business?

Starting your own business can be a great way to earn extra income. This is true, of course, for anyone who can successfully manage a business.

Unfortunately, there are  many businesses that fail every year, making starting your own business a  somewhat risky proposition.

How can you improve your odds of beginning a successful business that can bring in extra income?

Storefront Businesses: Risky Businesses!

Earning Extra Income

A new entrepreneur will probably have the best chance of success by starting off with a small business you can manage part-time.  Keep your day or “regular” job to earn a steady income. While this can detract slightly from focusing only on the new business, a regular income will provide the security necessary to take risks with your new business venture.

Having a dependable paycheck may also allow a business owner to qualify to apply for a business loan if he or she needs to expand the business before it shows a steady profit.

For many people, an online business is a good way to test out ideas while developing a new business.

For retail-based businesses, online stores have very few start-up costs compared to traditional operations, which must pay for rent, utilities, and employees.

Setting up an online store can allow a business owner to reach customers across the globe. In addition, the store can be accessed by the owner from any location at any time. This means a business owner can check on the store while  working at another job needing only a computer and an internet connection. Management of the virtual store can take place after normal business hours.

An online business can also allow a business owner to test out new ideas without committing a lot of money and resources. While a traditional store, for example, must pay money upfront in order to buy, store, and display new merchandise, an online store only has to make a new webpage entry on its website for a new item.

If an item sells well, it can be ordered and shipped fairly quickly. If it doesn’t do well, then the webpage can be removed at little cost to the business owner. Shopping cart tools can even be used to track the sales rates of items. This information can later be used as proof of sales when it is time to apply for a business loan.

Service based online businesses

Service-based businesses such as landscapers or tutors can use a webpage to advertise their services and even sign up new customers online. By starting out small, a service-based business owner can adjust his or her prices and work out scheduling details before expanding to a large customer base.

In summary, using a part-time approach and beginning your business online can improve immensely your chance of entrepreneurial success.

Good Luck!

Reader Questions:

If you started your new business online, what tips do you have for newbies?  What mistakes did you make?

{Photo Credit: Mark_Smith c.c.}

 

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Charitable Giving: A Holiday Primer!

Wednesday, December 7th, 2011

Giving: A great holiday tradition!

Guest post by FDL, BSN

My first trip to Walmart since the holiday season began and there it was:  the tripod, red bucket and bell ringer.  I had to smile as I drove slowly past, watching a mother with a toddler in tow stop to let the child drop some coins into the red container.  The Salvation Army bell ringer is as much a part of the holidays as wreaths on doorways.

The Salvation Army's Bucket and Bells!

I was delighted to read that the Salvation Army test-piloted ‘swipe buckets’ for credit and debit cards in 2010 in two cities, and is bringing them back to 30 cities for 2011.

The giving was up 30percent where the swipe buckets were introduced. Naturally, my little berg is not on the ‘swipe bucket list’ so I’ll have to donate with boring old cash, or drop a chicken in the bucket or something…  And I will.

The SA does plenty of good for the people I serve as a public health nurse and for many others in my community.

Not only does my local SA have a food pantry, they also have monetary funds available for special situations….. such as after a house fire.  I have tremendous regard for this organization and encourage others to remember them with their donations.

December is traditionally a time to give.

In fact, the Red Cross receives 20% of their yearly contributions in the period November to December.  Charitable giving seems to be up this year,  according to a recent Red Cross survey of over a thousand adults.

Why does charitable giving increase during the Holiday season?

A lot of folks offer their opinion on this subject.  Here’s mine:

  • Holiday spirit:  with the focus on giving, how could you not be reminded?  Seeing kids who won’t have a Christmas without your giving is a great motivator.
  • Income tax deductions:  it helps.  We all hate paying taxes, so it’s a win/win.
  • Personal deadlines.  It’s the end of the year,  we’ve been procrastinating, but now it’s time to do or die.

So, you decided to give to a charity, how do you decide who is worthy of your hard earned money or time?

What are the best charities?  There actually are large organizations that hold administrative costs down in order to give to the needy.  The federal government does not come to mind. To help you find these groups, there are websites that run the numbers and post the stats.  Charity Navigator has posted a list of the 10 best charities.  I was surprised who made the list and who didn’t:

  • MAP International
  • Direct Relief International
  • The Carter Center
  • The Rotary Foundation of Rotary International
  • PATH
  • Teach for America
  • Scholarship America
  • National Jewish Health
  • Susan G Komen for the Cure
  • Opportunity International

Charity Navigator lays out the facts and offers the methodology they used to derive their stats.  As they are asking for donations themselves, I guess they aren’t taking kick-backs.

Giving to groups you are familiar with  is another way, besides online research, to determine if a nonprofit is doing its job.  Serve on local boards, visit and volunteer.  Gifts of time can be as valuable and sometimes even more so than monetary gifts.

Charitable giving in any form is important to me.  In fact, one of my all time favorite poems has a passage that describes my feelings precisely.  The poem is Living, author unknown and the line reads:

To have enough to share- to know the joy of giving;

We’re not talking Bernie Madoff money here, whose financial crash sent several non-profits into demise.  Ours is just small stuff, but it’s our stuff.

Having enough to share is important to us, not knowing where our money goes, even one dollar, matters too.

For that reason, we try to keep our charitable gift giving mostly local.  We are able to have much more control over the use and final destination of our giving.

You may have your own passions and areas you love to support, and that’s what makes the world go round.

Just take a few minutes before writing your gifting checks and be sure the money will do what you want it to do.  Decide what you can cheerfully give, then give a little more.

Reader questions:

What is your favorite charity to give to this time of year?  How do you decide what to put towards your giving each year?  Do you budget it, or give as need and your pocketbook allows? What works best for you?  And are you teaching your kids the importance of giving?

Guest post by FDL, BSN.  (FDL is a public health nurse who loves to save and give away money.  She is a frequent contributor to The Millionaire Nurse Blog.)

{photo credit: Monica’s Dad c.c.}

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Cloned Banks: Why That’s Not A Good Idea!

Monday, December 5th, 2011

Banking Regulations and You!

This post is for financial nerds.  I know you guys are out there.

So if you are looking for a lightweight read about frugal Christmas shopping or finding the best credit card today, move along (but check back, I’ll write that one soon, I promise!)

If however you want to learn a little and broaden your horizons about how the financial world operates, and maybe argue with me ’bout my opinion, then read on, sons and daughters, read on.

First a little Bank background.

Banks are required to have a savings stash, known as capital, on hand for emergencies.  The “stress test” that banks had to undergo after the financial crisis  was to insure banks had adequate capital to survive another severe and sudden economic downturn.

FDIC-The Bank Regulator!

Why is this necessary?

Bank failures….When banks are under capitalized, they become susceptible to bank runs.  This means you and I rush to take out our money, afraid it won’t be there when we need it.  If enough people feel the bank is in danger, then failure is inevitable-the domino effect writ large.

Bank failures  have occurred in record numbers in the past few years,  and they always have the potential to take Mom and Pop with ‘em.

Even with insured deposits, bank failures are a calamity for a community, and especially for the bank’s stock and bond holders.

And if you are sitting there thinking, “This ain’t none’a me, cause I don’t own any bank stocks!” Then maybe you need to think a little more.

You may not hold them directly, but your pension fund or one of your 401k mutual funds probably does.  As we found out in the  2008 crisis, and again with the European debacle, it doesn’t take direct ownership of financial or bank stocks for you to be affected.

‘Cause it is likely you and or your employer is already affected directly or indirectly.

Just the threat of these distressed European banks going under has made your retirement fund fall as fast as the request for a Kardashian annulment.

The European crisis has also affected the hiring decisions of that company that was thinking of  expanding and hiring your husband, wife, son or daughter.

The economic growth of our country is being severely affected by this uncertainty in the world’s banking system.

Banking Regulators

Now that you have the background info, the topic of today is banking regulations and regulators (otherwise known as bureaucrats.)  And before your eyes roll back  and your fingers get twitchy to move on, give me just  another minute.

A recent Op-Ed in the Wall Street Journal was enlightening.  (it scared the piss out of me and should you, if you want to know the truth…)

Peter Wallison’s concern was the way new regulations and the regulators enforcing them are virtually guaranteeing a future crisis for the banking world, in the name of prevention.

The next banking debacle is almost inevitable with the supposed “new and improved” system being used to “judge” a bank’s solvency and stability.

Keep in mind banks are regulated and you and I pay the tab, directly or indirectly.  Regulators from different agencies audit banks investments, loans, and capital ratios to make sure banks aren’t in danger of  collapse.

The regs and how they are being interpreted by these  regulators basically require all banks to have the exact same capital requirements-not a bad thing.

More worrisome is requiring that these capital investments be limited to the exact same investment choices as every other bank.  These investment choices are being limited more by the rules interpreter, than the rules themselves.

You may think, well that’s only fair.

The banks in Boston have to have the same capital requirements as the banks in Bainbridge, or Baltimore, or Birmingham. Whether Birmingham is in Alabama or in the British Isles….  “I’m all for everyone  being treated the same and look the same, it just makes sense!” you may be thinking.

Well what Peter (sorry) , Mr Wallison has pointed out, is this effort to stamp out risk, and to be “fair” actually does the opposite.

How?

How bout this banking fairy tale:

Every bank in the world has the exact same capital requirement. That requirement  is gold, lots and lots a gold!

In their vault, banks are required by regulators to hold a certain amount of  physical gold.  Those regulators go from bank to bank to make sure that vault held just the right amount of gold for the size and scope of that bank.

Sounds safe enough, huh.

Now what happens though, when  the goose that lays the golden egg gets discovered then cloned, or the alchemist finally figures out a way to make gold out of thin air, or more realistically,  a huge gold reserve is found (preferentially in my back yard…I know, not very realistic) and the price of gold plummets to nearly nothing.

Every bank that had adequate capital requirements yesterday, are suddenly under capitalized and because the rules were so narrowly interpreted, every bank in the world is in the same boat.  The same regulator that said everything was hunky dory today, is now ready to close you and all your cloned cousins down tomorrow.

I know, I know,  banks aren’t required to hold a certain amount of physical gold. (That was just a story, sheeeshhhh…)

My point is, when the regulators begin making every bank have the exact same type of capital to meet their capital requirements, then all banks will look alike, which is fine, ’till something happens to the value of that capital.

When that value drops it’s not just one bank affected, it’s the whole damn system.  That scares me and should scare you!

Unintended consequences indeed!

I understand the need for doing something!

Many are clamoring for government to do something about the banks.  To punish them for screwing up our lives…. let’s be careful not to throw out the baby with the bathwater.

Regulators should give banks  leeway to make judgments for themselves making their institution more immune to failure. Not give ‘em free range, but at least a little range…Having the banks capital invested just like a clone of the bank next door, or across the pond, is not the answer.

Let’s actually encourage a diversity of investments-this will make banks and the banking system safer.

Safe banks should make you and I feel a little more at ease, and it will help our retirement funds feel a lot better.

Reader questions:

What say you?  You have any thoughts on banking regulations and their enforcement?

Would you rather I write another article about buying your wrapping paper after Christmas to help you save a few pennies????

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Posted in Investing, personal finance | 9 Comments »

9 Money Saving Reasons To Garden!

Thursday, December 1st, 2011

Saving Money Growing Vegetables

Growing your own!

No, I’m not suggesting your new side business be  growing a certain cash crop…..

I’m talking about growing your own vegetables and fruits.

What are the downsides?

  • You need a lotta’ space.
  • Your cost benefit ratio says it just doesn’t pay off, with cheap fresh foods being readily available.

These are good arguments,  and certainly true to a point, but….They leave out several positives that can’t be easily measured in dollars and cents.

What are the hard to measure benefits of gardening?

Space saving garden, yes those are dresser drawers!

  • Your current hobbies can be expensive.  If you’re using spare time to grow food, you aren’t shopping, watching cable, playing golf, or burning gas on the road-all of which cost real money.
  • You know what’s in the end product.  You control fertilizer, pesticide use, and which plants or seeds you buy, so you know what you’re eating, a definite health benefit.
  • With patio gardening techniques you can get a surprising yield out of a small space, and community gardens are increasingly popular.
  • Hand therapy, as any hobby using your own hands is known,  is a recognized stress and anxiety treatment, saving you money on Prozac, alcohol, or expensive therapy sessions.
  • Gardening burns calories-saving you money on weight loss products and maybe even your gym costs. And no more tanning bed sessions.
  • You can sell your extra bounty at the local farmers markets and flea markets, or give them away instead of buying gifts for your friends.  I know I love receiving a bag of tomatoes rather than another tie.
  • Eating food you’ve grown just makes you feel good about yourself.
  • Keeps your kids active and helps them learn self-sufficiency-saving money on baby sitters.
  • You don’t have to spend as much at the “end of the world” stores popping up online.  You are already prepared to feed yourself when the world as we know it ends….

Just because the out of pocket costs of growin’ your own may not seem to be cost-effective, remember these side benefits that can’t be easily plugged into a spread-sheet.

Maybe that garden out back is not such a bad investment idea after all.

So put those needed gardening tools on your Christmas list, or start looking for used on Craig’s List.   Winter can be a good time to begin soil prep (unless it’s frozen.  If you live in North Dakota go have a beer and wait a few more long cold months…)

Don’t buy a $2,000 tiller or spend 5 grand on a gentleman’s tractor, till you’re sure you’ll stick with it.  Remember to start small.  When you are weeding your first garden that 10 x 10 ft plot may seem like 5 acres.

 

{photo credit: mazalatel c.c.}

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Posted in Home Improvement, personal finance, Quality of Life | 13 Comments »

Not Your Usual Tire Pressure Story!

Tuesday, November 29th, 2011

Tire Pressure Facts

My daughter, God bless her, was home for Thanksgiving.  Her mother needed help with a few things including taking her non-driving sister back to Atlanta.

While my daughter was down, we took advantage of her year old Honda Accord to run a few errands rather than making everyone climb up into my pickup.  (Yes, I’m a redneck Doc, with guns and a pick-up.)

Since my truck is greater than 10 years old, it’s missing many of the standard niceties you find on new cars.

I asked my daughter, “Hey Honey, what do these yellow lights under the tachometer mean?”

The Christmas Tree, finished product!

“Oh, they’re a warning that my tire pressure is low.” she replied.

“Cool,” I said, “How long have the lights been on?”  Thinking they probably popped on during her trip down.

“Maybe a couple of weeks or so….”

Yeah my daughter is grown and married, but she will always be my little girl.  And thinking of my little girl in a car wreck ’cause of under-inflated tires bothered me a lot.

Tire Pressure and Gas Mileage

As  a proud, card carrying personal finance blogger, I also know under-inflated tires decreases gas mileage, with most experts saying a 10% pressure loss results in at least a 3% drop in mileage. It adds up quickly at 4 bucks a gallon.  The tires wear out faster, too.

So, the  next morning I grabbed a stack of quarters from the dish on my dresser for the air-pump at the nearby service station, and off we went.

The results were scary.  The tires were OK in the front, but the back were probably 25% under-inflated.  It took two bucks of quarters to get ‘em right.

I might have been a little preachy as we filled up those tires.

Comeuppance on tire safety

The next morning, my daughter and I headed out to pick out a Christmas tree.  She looked at my old pickup and said smart assily, “When have you checked YOUR tires?”

Of course I coulda’ lied and said, just last week. But no, I had to admit it was when I had the truck serviced.  And the older I get, the faster time flies…(you won’t understand this ’till you’re over 40.)

I would’ve said it was 4 weeks ago, but the receipt said it had been 3 months.  I’m sure they just got the date wrong, don’t you think?

After picking out just the right tree and loading it into the truck, we stopped and checked MY tires.

Of course she had to help, having taken 3 semesters of automotive repair in high school.   She said she took those electives ’cause she likes cars, I know she did it ’cause she liked boys!  (not to mention a little rebelliousness)

What did the tire gauge tell us?  You know the answer.

I was at least 30% down in all four tires.  I went through 12 quarters getting ‘em filled.  Had to dig into my console for those last few quarters….

Her Mother did a great job!

Do you know how to tell when you’ve done right by rearing your child?

She did not say one word when we drove out of that service station, not one word.  And no smart-ass smirk on her face, I looked….(she didn’t learn that from her Momma….)

Reader Questions:

When have you checked your tires?  And don’t think it was last week, I promise you it was longer….If you are regular about checking them more often, how do you keep up?

 

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Posted in personal finance, Quality of Life | 19 Comments »

Savings: Are You A Failure?

Tuesday, November 22nd, 2011

Saving Money

Have you ever read anything that made you feel like a failure?  Something that slammed you in your gut, made you want to vomit?

This innocuous looking article on savings rates at Smart Money hit me that way.

The article discusses the savings rate of our country compared to others in the world.  It seems that individuals who are living in the poorest corners of our world are also some of the best savers.

Ring the Bell For Others!

We complain and whine about our inability to get ahead on our income.

  • “How can anybody save money in this economy?”
  • “It costs so much to eat, buy gas-our monthly bills are just too high!”
  • “Momma, I can’t wear those no-names, my friends all wear Uggs.

The super-savers in third-world countries, whose income would be less than 1% of our so-called poverty level,  sometimes making as little as $2 bucks a day, are living on half and saving the rest.

How many of you are saving 50% of your income, or putting 50% of your income against your debt?

The current savings rate of our country is quoted to be around 5%. That means we spend 95% of what we make on average.  At the height of the boom before things crashed in 2008, we were at a negative savings rate.  That meant as a country we were all spending more than we made on an annual basis.

Our government continues to do so at a dizzying pace.

Spending, Can You Do Better?

I know why this got my attention.  We are blessed in this country to have so much in the way of material goods-most of which sits in our homes unused, just to be available if or when we need it.

We have 15 different damn ways to cook a hamburger. From a microwave, to George Forman’s grill, to our stove, to the $1000 BBQ with 5 burners and while you’re cooking- a blender for your margarita-cheers!  Cooking, that’s for losers, let’s go to __________ (insert your favorite burger joint here!)

And don’t forget the pasta maker, the tortilla maker, the bread machine, and the rice cooker.  How many ways can you cook a starch???

I’m not just casting stones here.  I’m looking dead center in the mirror and don’t like what I see.

And my wife and I are laughed at ‘cause our TV is 20 years old and both our cars are more than a decade old!  I know I’m far from the worst spender, and that just makes it even worse.

Why Personal Finance?

Many people ask why I do this. “Why do you teach others about personal finance, as busy as you are at practicing medicine?

The only answer I can give:

I’m called to do it.  I want to help you see how poor, (some would say stupid) choices are ruining your lives.  It seems like fun to buy these new shoes, eat out, I gotta have that new boat, the kids have to go to that private school..….. We borrow money for school when we could be working and paying our own way!

We delude ourselves daily!

It’s so easy to watch TV rather than study and better yourself to improve your income.  It’s easier to have a beer with your buds rather than volunteer at the food bank or ring the bell at Christmas.

It happens so slowly and in the company of so many others, that we don’t realize we’re in Overspending Hell ‘till it’s too late!

Reader Questions:

What do you think?  What is your savings rate?  What would get your attention about your spending?  Do you save 5, 10, 15% of your current income after taxes?

If you are saving more, how do you do it?  How did you get there and what would you suggest others do who say they can’t get by?

{photo credit: Monica’s Dad c.c.}

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Newsletter, for special people, with my special mini-e-course on personal finance and my special  free e-book, at no extra charge-cause that’s the kinda guy I am! Don’t you want to be special?

 

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Posted in debt reduction, personal finance, Planned spending aka budget, Quality of Life | 12 Comments »

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