Small Business Investment Opportunities That Aren’t Risky

There are many business investment opportunities that can give you a chance to be your own boss. Being a handyman is one of them and the best part is that your investment and risk are minimal.

Are you tired of working for somebody else? Well, if that is the case it might be the time to put your entrepreneurship skills and ambition to good use. Many would like to start their own business. However, it is easier said than done. Starting a new business demands funds and specific skills. At first, this might sound intimidating but hold on! Don’t give up before you even started. There are some great small business investment opportunities for you. All these suggestions demand minimal investing, which minimizes your business risk.

How To Put Your Handyman Skills to Good Use?

Some people just have a knack for fixing things. So, why would you put those skills to good use? To be an official handyman you might need to obtain a license and you might need to get registered. These types of regulations are largely dictated by the state that you live and work in. Your startup costs would include tools. In addition to tools, you need to be mobile. The best vehicle for a handyman is a pickup truck.

Appliance Repair Specialist

In order to pursue this business investment opportunity, you need to be a handyman with a supplementary set of skills. Therefore, you would need to have knowledge of appliances and their inner functioning and mechanisms.

Appliance Repair Specialist business

To fix appliances you must have a greater understanding of how they work.

Smartphone Repair Expert

We all have smartphones and we drop them, hit them and do all sorts of things that might damage them all the time. Thus, it is no surprise that smartphone repairs are in demand. Investing in a toolset might be all you need if you have the necessary skills. If not, you might need to take a course. Be aware that the demand is there, but so is the competition. Big producers of such hardware, like Apple and Samsung, will be your biggest competition. Still, you can be very successful in this line of business, but you might need to start off with lower prices in order to attract new incoming business.

Smartphone Repair Expert investment opportunity

People have their entire life on their phones, so imagine their panic when it gets broken. The demand for smartphone demand will only continue to grow.

Business Investment Opportunity in Web Development

Many business owners are too busy to work on their business’ websites. Also, some might not have the skills even if they had the time. You would need to write content, make sure the information on the website is up to date and all other activities that are included in website maintenance. To do this you would need to have some sort of background in this or similar field. The great thing about this business option is that you can work from home, which is a pretty great workplace benefit.

Pour Your Creativity into Your Own Blog

If you are a word wizard, becoming a professional blogger is an excellent business investment opportunity for you. You would write a blog about something that you know and something you are passionate about. For example, if you are an expert in all things beauty related, you will not start a blog on digital marketing. You will write about everything related to beauty. The way you will make money is through direct advertising. The more eyeballs you have on your blog, the more advertisers you will attract. This is another great business opportunity that can come to life from the comfort of your home.

Resume Writer

Your resume is the first thing your future employer sees that represents you and your past business ventures. Of course, you want it to be as impressive as possible. In today’s tough and competitive job market, people are willing to pay good money for professional assistance on their resume. To do this, you must have good writing skills and some type of knowledge of editing. It might take you time to build up a client base, but once you get the ball rolling you will have clients coming at you left and right.

SEO Expert

SEO experts are focused on your website’s content and your SEO ranking. The following obligations fall under this popular job description: keyword analysis, Google Analytics, writing content, staying up to date on current SEO trends and strategies, etc. To be able to run this type of business you would need to have related prior experience. Nevertheless, there are classes that you can take, but you will have extra costs related to your additional education. Once your business takes off you will need a website for marketing purposes. The great thing is that you will know how to work on your website’s SEO ranking.

Wedding Planner

Those that have a background in hospitality or event planning might have a bright future as wedding planners. If you top that with great communication skills and a bubbly personality, you are golden. However, be aware that wedding planners are always on the move. You cannot do food tastings and venue research from home. Also, weddings die down during the winter months. Yet, this is not true for cities like Los Angeles and Miami that are warm all year round. Thus, you might want to move if you plan on seriously entering the wedding planning business. For those that need professional and reliable assistance during their relocation visit movingkings.com.

Wedding planning for small business investment

Put your communication skills to good use and start a wedding planning business.

Professional Photographer

You can be a general photographer, but you can also specialize in something. For instance, you can be a wedding photographer or a fashion photographer. For those that want to dive into this business investment opportunity, but they do not have relevant experience, they can start off as an assistant to a more experienced photographer. Professional equipment can be expensive, but once you invest in it, you will be covered for quite some time. Investing in this type of equipment would be a great way to spend your last bonus check.

Do You Have An Idea on How To Turn Your Skills into Cash?

As you can see there are many small business investment opportunities that do not carry a big risk. It is important to realize that every investment carries a certain amount of risk, so you always need to think twice before diving into a business opportunity. It doesn’t matter how small or big it is, always keep your eyes wide open.

There is no doubt that you will pick the best possible business venture to dedicate yourself too. Make sure you are dedicated, determined, persistent and patient because every business will demand these qualities out of its business owner. Happy investing!

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What Is A Personal Line Of Credit & How Does It Work?

A personal credit line can be seen as a loan from the bank that functions like a credit card system. This means that you will have a particular amount of money under the loan, just like the limit of a credit card. You can then use this money for anything that you want.

It is quite easy to secure a personal credit line, as all you will need is proof that you are the kind of person who repays a debt on time. You will also need a credit score of 700 and above to qualify for this service.

Personal line of credit

The Uses of A Personal Line of Credit

There is no limit to what you can use a personal line of credit for. However, the failure to repay a loan at the specified time can result in complicated financial issues.

A personal credit line can be used to tackle your needs at home. However, there are various scenarios that make taking it worth considering, for example, its flexible repayment and interest rate options.

Here are a few ways to use a personal credit line:

Funding Projects with Challenges: Getting funds for projects can be challenging to anyone, especially when an unforeseen project that needs urgent attention comes up. For example, while planning the wedding of your daughter, your roof suddenly needs replacing. You can easily fix these situations with a personal line of credit.

Irregular Incomes: This is for those who have no means of determining the exact amount they earn within a given time. The type of people that usually fall into this category are people who work on commission and those who are self-employed. They can easily pay monthly bills by using a personal credit line as they wait for the next paycheck to arrive.

Emergency Scenarios: Everyone gets into situations that they cannot control. We are all victims of emergency scenarios at some point in time. For example, you were about to pay your son’s college tuition when the credit card and tax bills come up at the same time. A personal credit line can help to boost my credit and consolidate debt.

Advantages of A Personal Credit Line Over A Credit Card

Here are a few benefits that a personal line of credit has above a credit card system.

·         A personal line of credit is a better alternative to the credit card system because it offers a lower rate of interest than the credit card does.

·         It also affords different access to cash instead of a loan for a single purpose or lump sum.

·         If the credit line remains open, you can take loans in increments, pay them back, and then borrow again.

·         It is quite different from a regular loan because you only pay interest on the borrowed balance instead of repaying in fixed installments.

Personal line of credit different from a regular loan

Challenges with A Personal Credit Line

Everything with an advantage has a disadvantage, and a personal line of credit is not exempt.

·         Getting your request approved and the interest rate that banks charge are the two greatest challenges.

·         Banks take a huge risk when giving out loans because all they have from the client is a good credit repayment history. This makes getting one very difficult for those who have a poor credit repayment score.

The bottom line is that a personal credit line often comes handy in emergency situations. If you are in urgent need of some funds and have no idea where to get them fund, a line of credit is a great means to do so.

However, as stated earlier, there are a few setbacks that you may need to consider. Defaulting in payment can have a negative impact on your credit. It is possible that you lose any collateral used in securing the line of credit in the first place.

If you are struggling to gain financial stability, easy access to funds can be a challenge in the long run. Hence, it is important that you develop a payment strategy before securing the credit line.

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Should You Invest in Single or Multi-Family Rental Property?

Choosing the right investment property is a very personal endeavor—and one that should not be taken lightly. Is it better to go with a single-family property or is a multi-family rental a better option? It is probably the most common question that long-term buy and hold investors ask.

And there is no straightforward, easy answer.

When you are looking for the right place to invest your hard-earned money, you have to carefully consider all the choices available to you. There are advantages and disadvantages to each. Because of this, each investor should approach the matter systematically weighing the benefits based on their own needs, portfolio, and financial goals.

Single-Family vs. Multi-Family Rentals

Single-family properties are not only stand-alone homes. They can also include condos and townhomes as well. A single unit is purchased or owned, and there is just one tenant (individual or family) living in it. By contrast, a multi-family rental is a residential property consisting of multiple units that are purchased or owned together. One tenant or family lives in each unit, but because there are various units, there are also multiple families in a single structure or property.

Single-Family vs. Multi-Family Rentals

Management of each type of property is often dramatically different. Often investors will hire a property management company to handle most issues, including maintenance, rent collection, tenant issues, and property rental. The investor would need to consider financing, financial goals, and cash flow. However, selecting the right property for your portfolio could prove to be quite lucrative and work to your advantage.

Advantages of A Single-Family Property

When you have multiple families living under one roof, there are bound to be conflicts. Single-family properties remove the tenant-tenant conflict issue because each unit is separate. Maintenance is a very important aspect of any property. A well-maintained property will yield a higher return.

On the one hand, single-family properties are often easier to maintain because there are usually no common areas. However, maintenance on multi-family properties allows you to make extensive repairs in a single blow, such as repairing the roof. Contrast repairing the roof on multiple single-family properties to repairing the roof on a multi-family property where the repair covers several units at once.

From a financial standpoint, investing in single-family properties allows you to diversify your portfolio across various neighborhoods, cities, or real estate markets. The liquidity of single-family homes is much higher than a multi-family property.

Advantages of A Multi-Family Property

For the most part, multi-family properties are, overall, easier to manage. All the units are under one roof which means, maintenance, repairs, and renovations can be done at a single site in one shot instead of having to travel to multiple units that may not even be in the same city. For instance, painting one multi-family property is less expensive and time-consuming than painting several units located in various parts of the city or state.

Advantages of A Multi-Family Property

Rental income is typically higher for multi-family properties simply because there are several units under a single roof. Instead of collecting rent on one or two single-family units, you collect rent from 10 or 20 units, give or take a few depending on the size of the property. That can be a significant boost to your financial profile. This also offers some protection against the risk of not getting any income for a month or even several months.

Should You Consider Investing in Real Estate?

You have to weigh the pros and cons of each property while examining your own financial goals to determine which type of real estate investment is right for you. Several areas to consider:

  • What type of financing are you able to get? Or do you have savings that you want to invest? If so, how much can you afford for a down payment? What can you afford in monthly payments even if it takes some time before you receive rental payments from tenants?
  • How much rental income do you want to receive each month? Can you manage financially if you don’t receive rent for a month or more?
  • Do you plan to maintain the property or properties yourself, or will you hire an individual or company? What about managing the properties?
  • Do you plan to sell the property at some point, or will you buy and hold?

Investing in single-family or multi-family homes can be quite rewarding for your long-term financial goals if you take the time to choose your property wisely.

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What is Bad Debt Expense in Business?

Finding your way through the ins and outs of owning your own business can be difficult, but extremely rewarding! Along the way, you will not only find new and interesting ways to create profits, but you also learn a lot about business expenses and debt. Bad debt expense in business is one of those things that can hurt your business, but you may not have any idea what it is until it is too late!

So what exactly is bad debt expense? Much like learning how to calculate the cost of debt, or even learning how to file your taxes properly, bad debt expense is a part of doing business. In order to make that clear to you, here is a breakdown of examples, as well as steps you can take as a business owner to avoid it!

Defining Bad Debt Expense

Unless you’re an accountant or have been in business for years, defining bad debt expense can sound intimidating. However, once you understand exactly what it is, and how it can affect your business, then it’s quite simple!

Defining Bad Debt Expenses

Your company’s accounts receivable will be where you should be looking for bad debts expense. It can also be called “doubtful accounts expense”, or even “uncollectable accounts expense”. This means that your business has provided goods or services to a customer on credit. Unfortunately, when the time came to collect on that credit, the customer did not pay what was owed.

However, this doesn’t mean you get to just go after the customer for the amount owed legally. Bad debt expense is basically when the customer is no longer able to pay. This is generally due to things like bankruptcy, going out of business, or other unfortunate issues.

How Do You Account for Bad Debt Expense?

Finding how to both report, file and account for bad debt expense in your business finances doesn’t have to be tricky. They are typically sorted as either general administrative expenses, or even as a sales expense. However, bad debt expense does create an obvious obstacle for your accounts receivable!

In addition to losing goods and/or services, your accounts receivable will also be out of balance. Although businesses can always retain the right to collect the amount due if the customer’s financial situation changes, your business is in the red for that account for now.

Two Main Ways to Recognize Bad Debt Expense

Within your company’s financial records, there are two primary ways to acknowledge bad debt expense:

  • Allowance Method: This means that your company will take steps to predict this type of expense before it happens. The losses can be calculated into expected income for the year. Therefore, a company can avoid an account overstatement. This can be calculated from previous losses of this kind from the company, as well as from other companies in the same field.
  • Direct Write-Off: This is a method of dealing with bad debt expense that is extremely straight forward. Instead of calculating the non-payments into their overall budgets, businesses can write off the expense. All in all, this means that uncollectible funds are written off as a base expense by the business. However, this method can lead to more difficult accounting in the future for many different reasons.

Within your business, how you deal with bad debt expense is completely up to you. Not to mention what is best for the company as a whole.

write-off debt

Avoidance and Modern Business

All things considered, it’s extremely difficult to avoid bad debt expense in the modern business world. When dealing with many different clients, or even different companies, it’s extremely difficult to predict their successes or failures. That being said, there are a few ways to avoid this expense altogether.

As bad debt expense only occurs when dealing with credit for customers, you can simply avoid this expense by not dealing in credit. Simply allow for payments to be made upon receipt of services, or goods.

Because businesses allow customers to receive goods or services on credit, they run the risk of this debt becoming uncollectable! However, this isn’t always a black and white, clear picture kind of decision to make. There are a lot of reasons why you may allow a customer to receive credit from your business, as well as whether or not you aggressively collect those debts.  

Finding Your Way Through Bad Debt Expense

Altogether, owning a business is filled with many ups and downs. From learning how to deal with people one on one, as well as wading your way through corporate takeovers, finding your way through bad debt expense doesn’t have to be a challenge! You can find great ways to collect debts, to deal with clients, but some expenses can’t be avoided.

Overall, how you deal with your bad debt expense is up to you and your business. Whether you prefer the direct write-off method, the allowance method, or trying your hardest to avoid it altogether, there are a variety of paths! However, you can’t predict how well, or how poorly your customers will do. Bad debt expense is simply one of the many, many costs of doing business in the modern, credit-driven world.

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How to Calculate the Cost of Debt

Trying to calculate the cost of debt?

Being in debt is never easy. Whether you’re struggling with student loans or walking a tight rope with credit cards, being in debt can cost you a LOT. In order to help you make your life a little less stressful, here is a breakdown of how to calculate the cost of debt.

What Exactly IS the Cost of Debt?

There is a cost to being in debt! The cost of debt is the rate at which an individual, or even a company, pays down debt. Basically, taking into account after-tax costs of debt, as well as interest paid. After taxes are taken out, you can determine the interest expenses that are deductible, like valuable above the line deductions!

What Exactly IS the Cost of Debt

Basically, this means that the cost of debt is the return someone has for creditors, as well as debt holders. If someone has lent money to another individual, it is essentially the capital compensated for risks. All in all, it is money owed before taxes, after taxes, and after investments.

Why Calculate the Cost of Debt?

Breaking down the cost of debt for anyone is so much easier than finding out your cost of equity. It is a more straightforward approach to finding out an individual’s worth Essentially, it can show the default risk and the level of interest rates for anyone.

Calculating the cost of debt is also a critical component of determining your WACC. For individuals, it can also mean finding where you can afford to save, invest, as well as dramatically decrease your debt.

Calculating the Cost of Debt: Need to Know Information

There are several factors that go into calculating the cost of debt. However, in order to calculate this number you need two important factors. The marginal tax rate and the effective interest rates paid.

Effective Interest Rates

Finding the effective interest rate that you pay on your debt is simple. You divide the annual interest by the total amount of debt owed and then multiply it by one hundred.

Looking over debt

Marginal Tax Rates

Marginal tax rates are the tax rates people pay for both federal and state combined. Here is a break down of the tax brackets in the US:

  • 10% tax rate means a taxable income of $0 to $9,700
  • 12% tax rate means a taxable income of $9,701 to $39,475
  • 22% tax rate means a taxable income of $39,476 to $84,200
  • 24% tax rate means a taxable income of $84,201 to $160,725
  • 32% tax rate means a taxable income of $160,726 to $204,100
  • 35% tax rate means a taxable income of $204,101 to $510,300
  • 37% tax rate means a taxable income of $510,301 or more

There are of course other stipulations. Taxes owed, as well as deductions can make a difference in your federal tax rate.

State income tax rates vary from state to state. However, they are not typically over 12%.

The cost of debt can then be calculated from these two sets of information! All in all, calculating the cost of debt is essentially multiplying the effective interest rate by the one minus the marginal tax rate.

Example of How to Calculate the Cost of Debt for You!

When it comes to calculating the cost of debt, it is best to put it into simple math. Instead of tracking your net worth, sit down and track your own cost of debt!

If you make $100,000 a year and pay 24% federal taxes, then 5% in state taxes, your marginal tax rate is 29%. Your debt is paid at an effective interest rate of 7%. There fore, your cost of debt is as follows:

Cost of debt = 7% x (1-29%). 0.07 x (1-0.29) = 0.049. This means your personal cost of debt would be 4.9%!

Uses for Cost of Debt

Now that you are aware how to calculate the cost of debt for yourself, WHY it is important to do this, as well as what variables you need to know beforehand you’re able to look into your company’s credit situation.

Once it is clear that your debt is at a minimal percentage against the size of your net worth, you can understand where you stand with creditors and your debt more accurately!

Knowing How to Calculate the Cost of Debt

This information is not only vital to the outward success of your personal finances, but also to your personal success! Now that you know how to calculate your cost of debt, you can successfully create a clear financial picture for your future!

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What Happens to Your Debt When You Die

If you’ve ever been in debt, you know how hard it is to see the light at the end of the tunnel. However, even if you DID find a way to start reasonable payments, your debt still follows you no matter where you go. Even past the grave! So, what happens to your debt when you die?

Can Debt Be Collected After You Die?

All in all, it’s hard to say whether or not your estate will have to pay up once you’ve passed on. As a matter of fact, your debt and debt recovery can indeed follow you past the grave! However, there are lots of laws and policies that regulate how debt is collected when you die.

Can Debt Be Collected After You Die?

Once you’re dead, your estate, or the assets that you’ve left behind, has the responsibility of being in charge of your debt. If you leave your estate to one person, or even several people, they are not responsible for paying off what you owe. This process is called probate.

What is Probate?

There are several things that happen once you are deceased. Your last will and testament will allow for your assets to be distributed as you please. Similarly, if you don’t have a will, then your assets will be allocated to all of your closest relatives. As well as distributed to creditors.

Probate is the legal process for dividing up your property, assets, and even accounts. This is a court-supervised process that includes the following:

  • Authenticating a Last Will and Testament
  • Locating assets
  • Valuing all assets
  • Paying final bills, taxes, as well as debts owed
  • Distributing the rest of the assets to beneficiaries

Is Probate Always What Happens to Your Debt When You Die?

Not all deaths end in a probate, however. Probate is only required when estates are valued above a certain level and are not being automatically transferred to a surviving joint owner. Like if a wife died, and the husband was legally the joint owner of all of their property.

What Can I Do to Help My Family If I Die?

In addition to having a will, there are many other things you can do to make sure your family and close friends aren’t struggling with what happens to your debt when you die. It’s not necessarily difficult to put things in order for your loved ones, however it’s not always the foremost thought in people’s minds.

Write A Will

One thing you can easily do is make certain you have a last will and testament set aside for your beneficiaries. This will not only allow for you to set aside certain assets for certain people, but it can also mean not leaving a financial MESS for your executor.

Will and Testament

Finding An Executor of Your Estate

The person primarily responsible for dealing with your will and your estate after you’ve died is called the executor of your estate. While it can be one person or several, it is always a good idea to name someone that you trust to handle writing checks to your creditors. Together with handling your debt, your executor may also see that all of your accounts, or property, are evenly distributed.

The Importance Of Life Insurance

Life insurance is a great way to make certain that your loved ones don’t have to deal with your debts when you die. Finding the right insurance that will not only cover debts but also the cost of your funeral expenses as well, will be extremely helpful.

Times When Others Are Responsible for Your Debt

There are circumstances where other people may hold the task of dealing with your creditors once you’ve passed. Primarily this only occurs when someone has co-signed for a loan, live in community property states, as well as being a joint account holder.

Laws Against Collectors and Collections

In addition to having only specific people who may have to deal with what happens to your debt when you die, there are lots of laws that protect your assets as well.

Debt collectors are not allowed to contact a dead person’s spouse, parents or guardian, or executor of the estate to talk about the debt. They are also not allowed to lie or trick the family members into believing they are not responsible for the debt.

Creditors cannot go after certain things once you’ve passed. They are not allowed to attempt to collect from life insurance policies or retirement benefits passed onto a beneficiary.

Laws Against Collectors and Collections

What Happens to Your Debt When You Die Can Easily Be Controlled!

If you’re looking into finding solutions for your loved ones NOW, while you’re alive, then there are lots of steps you can take to make sure it doesn’t follow your family. You can have a set will, you can take out a life insurance policy, as well as naming a trustworthy executor of your estate to handle all of your debts for you.

 No matter where you go, your debt follows you. However, that doesn’t mean you have to let it follow you beyond the grave!

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Most Effective Debt Recovery Solutions

Looking for an effective debt recovery solution?

Collecting money from people who are in debt to your company, is never a fun task. Going after the money you are owed can create unnecessary trouble for you and your business. That’s why there are debt recovery solutions available to take the stress out of retrieving the money owed.

You will find this helpful: 4 Interesting Ways to Spend Your Tax Refund

However, the debt you are collecting is indeed owed to YOU. As a creditor, it is legally your right to attempt to collect the debt after a missed payment. Unfortunately, there is only so far you can go before you move from debt collection into debt recovery.

What Is Debt Recovery?

Debt recovery is when a debt has gone unpaid for a long period of time. As soon as the debt has been unpaid for an extended period, the creditor, or company, hires a non-biased third party to recover the money owed.

Debt recovery is different from debt collection. Debt collection is when you as the creditor attempt to contact the consumer. After the loan, or bill has gone unpaid for an extended amount of time, it is time to bring in the professionals!

Effective Debt Recovery Solutions In the Modern Age

If you are a consumer, ignoring your debt, you no longer live in a world where you can rip up the bill and be done. Maybe you fell for a minimum payment plan, or fell on hard times. Regardless, your debt follows you all over the world!

Digital Footprint debt

As digitizing has made credit scores, as well as recent contact information more available, you simply can’t outrun what you owe!

As a creditor, there are several debt recovery solutions that are extremely effective today. Find a debt collection company that will not only include these strategies but also use all of them in order to close the account!

Finding the Debtors

Collecting up-to-date information on the debtors is vital to debt recovery. However, this information isn’t just about physical addresses!

Here are a few things a good company will uncover about consumers:

  • Phone number
  • E-Mail address
  • Most recent address
  • Commercial Information

Being able to locate, as well as contact a debtor attempting to run out on their debts is one of the most practical and necessary debt recovery solutions!

Creating Debt Recovery Solution Priorities

A good debt recovery solution is finding the right amounts, as well as knowing you can collect them! Altogether, this means that if a debt seems to have the potential to be repaid, industry specialists will likely prioritize collecting this debt first.

Technology allows for this to be done not only with by researching consumer patterns, but also experimenting with new collection strategies. Prioritizing certain collectable debts will not only get you your money faster, but it will also keep the debt recovery company in business!

Digital Collection and Virtual Recovery

All in all, the internet and your digital footprint make it easier and easier for debt collectors to find you. This means that if you are a creditor, you will not only WANT digital debt recovery solutions, but you may NEED them.

Debt Recovery Programs

There are a growing number of programs available to different debt recovery companies. These technological advancements will not only allow for your debt to be collected, but will also help to discover if the debtor is in a better place to pay more on their debt!

Using the information that is practically alive on the internet will be an invaluable way to collect the debts you are owned.

debt recovery solutions company

Debt Recovery Platforms

There are also companies that use digital platforms to collect debt, but also allow consumers to negotiate payment plans, pay back their debt in a timely manner, and do it all online! Using available technology to collect, as well as pay off debt!

The Most Effective Debt Recovery Solutions Are Always Fair

When it comes down to the wire, as a creditor, you want to collect the money you are owed, but you should also be able to keep your company’s hard-earned profile. Finding fair, legal, and effective debt recovery solutions will help to not only get your money to you faster but keep your company in consumer’s good graces!

Find a debt recovery company that will incorporate all of these debt recovery solutions. Avoid the burnout and hire a professional! Because you want the best solution so you can be on your way to getting paid!

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Why Creating Systems Trumps Motivation

I vividly remember the first time I saw Rocky as a kid.  Just a lowly local fighter, Rocky Balboa had to go through so much to get ready for his big fight with the champ Apollo.  After watching the iconic training scenes of him running up the steps of the Philadelphia Museum of Art, punching giant slabs of meat until his hands bled and doing those grueling one handed pushups, I was so pumped to try to be like him.

So the obvious next step for me was to start running up stairs and punch things day and night.  I would be the best boxer this world has ever seen. After 2 or 3 days of this rigorous training, I slowly fell back into my normal routine and completely forgot about becoming the best boxer in the world.

But I didn’t just forget.  I simply lost my initial burst of motivation.  That little spark that got me off of my couch was great for those first few days. But there was no structure or foundation behind it so it quickly fizzled out.

If I seriously wanted to become a real boxer, I would have done found a coach and schedule boxing sessions at a gym regularly throughout the week.  Since a strong training foundation was never built, my initial burst of motivation was destined to fail.

Motivation is Finite

This same phenomena can be found in the world of personal finance.  We’ll watch an intense movie about stock picking or read an inspiring post about someone who paid off massive amounts of debt.  This will get our juices flowing and we’ll just go out there and do some things for a short while. But it will usually fizzle out in the end.

Relying solely on motivation is not the way to get ahead financially.  In fact, I would say that getting motivated and failing over and over will simply get you so depressed about your financial situation that you might just give up on improving.

But it can get better.  And the way it can is by having a framework or system in place that will keep you financially secure without having to constantly draw from your finite well of motivation.

It’s important to realize that this is THE ONLY way to get ahead financially.  Whether you’re looking to build the next billion dollar company, want to increase your investment contributions or just track your finances, you need a system that will make it easy to reach your goal.

And there are so many financial goals out there.  Setting up a budget, saving for retirement or college, starting a successful freelance business, getting a world class education to increase your income.  These are all worthy financial goals that require a systematic approach in order to find success.

Just Get Started

As mentioned before, setting up a systematic method of attack is the best way to achieve your financial goals.  And it’s not even that hard. It just takes a few upfront steps and some experimenting to get your system right.

In fact, setting up systems is much easier than relying on brute force motivation to achieve your financial goals.  It gives you a path to follow and you just plug along day after day.

Here are some basic systems everyone should have for various aspects of their financial life.  These are easy for almost everyone to implement so give them a try if you haven’t already:

Automatic Bill Pay:  We all have the same bills to pay.  Electricity, water, rent/mortgage, tuition, daycare etc.  Keeping all of these bills in order and remembering to pay them off month after month can be a chore.  Having a stack of papers and writing checks and mailing letters is not a difficult task, but it takes up precious time.  You increase your chance of missing a payment this way which can incur fees and possibly ruin your credit.

Instead, take some time out to set up automatic bill pay.  Most companies allow this by entering your checking account info on their website.  If they don’t have that capability, almost all checking accounts have an online bill pay feature which allows you to send a check to any address at no cost.  

Set these up to occur at regular intervals and you will never have to worry about keeping your routine monthly bills in order.

Saving and Investing:  Whether it’s investing for retirement or starting a rainy day fund, most people’s strategy is to just throw whatever they have leftover at the end of the month towards savings.  And considering that more than 75% of Americans are living paycheck to paycheck, this is not going to amount to much.

A much more effective way to save is to have a certain amount of money deducted from your checking account into your investment or savings accounts at regular intervals.  This allows you to grow money at a constant rate and will create a sort of “scarcity mentality” that will not allow you to spend money you don’t have.

This can be done a number of ways.  Almost all employers will automatically deduct 401(k) contributions before your check even hits your account, so that one’s pretty easy.  But if you have your own personal investment or savings account you are in charge of, you can easily set up a direct deposit from your checking account at any interval you choose.

Personally, this systematic approach to saving and investing has had a major impact in my life.  I know myself, and I would never consistently put money into my investment accounts if I had to do it manually.  Automatic investing is so easy to set up and is such a game changer I would recommend it to every single person.

Even if you can only start with $20 per month to contribute to your savings account on a regular basis, I would still recommend it.  It’s better to start somewhere than not begin at all. You can always increase your contributions later.

Tracking your Spending:  Gone are the days of balancing your checkbook to make sure you have the right amount of money in your checking account.  You can do almost everything personal finance related online nowadays, and tracking what you spend is certainly no exception.

Instead, I recommend leveraging the power of technology to set up a system to track your spending.There are so many websites and apps out there that allow you to track what’s coming in and what’s going out.  All you have to basically do is connect your accounts (checking, savings, credit card etc.) to the website and they will usually display your transactions on a nice little dashboard. You can then see exactly where your money is going.

I personally prefer Personal Capital.  You can not only track your spending, income and debt accounts, but it gives you a nice detailed look at your investment accounts as well.  You can see in which sectors you may need to invest more in and if you’re paying too much in fees. It’s pretty much a one stop shop for your finances and they are always improving their product.

Investing in Yourself:  While no one is going to directly pay you to do some yoga, investing in yourself is essential to being financially successful.  Self investment can come in so many forms such as exercise, taking classes, reading and meditation.  You have to find the areas that are important to you and your finances and work on them consistently.

Again, you can use technology to set up systems towards your self improvement.  And it doesn’t take much. You can simply set reminders on your calendar when you want to do some reading or exercise.  Or you can block out a certain time of the day to perform your self improvement tasks.

It’s especially important to set up systems for this.  Self improvement tasks fall under the “Non-Urgent but Important” group of tasks.  This makes it easy to justify taking care of the latest “emergency” before you get to your self investment time.  Don’t fall into this trap that and make investing in yourself a priority by setting up a solid and executable plan of action.

Conclusion

I would argue that not setting up systems for your finances is the true reason people don’t reach their goals.  Most people rely solely on willpower and motivation to try to make their situation better, but that really is a limited resource.  

Setting up systems of action is how giants like Oprah, Steve Jobs and Kobe Bryant became wildly successful.  They found a system that worked for them and kept at it until they got what they want.

The vast majority of Americans are living a paycheck to paycheck life because they don’t know where their money is going and they are not saving or investing enough.  These two huge problems can be solved by setting up systems that make personal finance as easy as a late round Rocky comeback.



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The Sharp Bite of COBRA Insurance

So I’m self employed now. I made the change about 6 months ago and am winding down from being an employed optometrist. Working for the man can become tiring.

But one thing working for the man did provide was health insurance at an affordable price. Now that I’m not employed full time, we had to fend for ourselves in the glorious US healthcare system.

Most large companies provide some sort of subsidized health insurance for their employees. You sign up for the plan, and the premium is taken out of your paycheck. Employers will usually foot half the premium while you pay the rest. Not a bad deal AT ALL!

In my case, it was a 50/50 split. I paid about $630 per month and my employer paid $630. The plan was a pretty decent HSA eligible plan so it worked well for us.

Once I left the company, I had 3 options:

-Stay on the current health plan aka COBRA

-Find a plan on the marketplace

-Sign up for some other “alternative” types of insurance such as preferred risk plan and health sharing plans.

The marketplace plans were much too expensive and we didn’t qualify for the health sharing plans since you have to be Christian to join them. And I don’t think they accept fresh converts.

So we decided to go with COBRA. And it has been an experience to say the least. Let me first give you an overview of COBRA insurance.

Premium times two

COBRA stands for Consolidated Omnibus Budget Reconciliation Act. Definitely not as scary sounding as the acronym. It’s a federal law that allows for health benefits to continue for someone who has experienced a job loss or other major life changes.

In my case, by signing up for COBRA we could continue on our current insurance plan without any interruption. Sounds pretty easy right? It is, but it comes with a price.

When I was employed full time, I paid $630 a month and my employer paid $630 a month to cover the monthly premium. But on COBRA, I have to pay the entire $1,260 premium on my own.

The law says I can be charged up to 102% of the premium, which I certainly was. Along with dental insurance which I paid very little for with my employer, my grand total came out to be about $1,400 per month.

The sort of good thing is, I knew this going in and factored it into my decision when becoming self employed. But going from $630 a month to $1,400 a month for health insurance is still taking some getting used to.

So while it was nice to continue my health plan and maintain all the deductibles I had already met, the monthly premium was not so nice.

Silver Linings

Health insurance is an issue for the self employed no doubt about that. Any entrepreneur will tell you that. But its not all bad.

While I do have to pay for health insurance directly from my checking account, the premiums will be an above the line tax deduction. This is pretty much the same as having a pre-tax deduction being employed, so it’s not really an advantage. But it’s nice to know I’ll be getting similar tax savings.

Being able to continue my coverage with COBRA also allowed us to keep our deductibles. We had kind of a busy healthcare year early on so we already met our deductible before I left the job. So it’s nice to have a few months of no more deductible to worry about.

Especially since there is another baby on the way! That’s right, number 3 is around the corner so it’s imperative that we keep those deductibles met for all the hospital bills.

So while health insurance can be a drag for the self employed, there are options. And you need to compare and see what the best option is for you and your family.

Even if it is a snake bite from a COBRA. Which I hope is a covered treatment!

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February is Failed Resolution Month

Make Goals Great Again!

Did you make a New Years resolution for 2019? Most likely it has failed by now. Not that I know you personally or anything. But research tells me so.

It’s estimated that 80% of New Year’s resolutions fail. When they fail can vary, but I would guess around February sounds right since it’s tough for most people to do anything new for a month. Myself included.

Most resolutions are usually health or money related. Not surprisingly, I will focus on how to meet money resolutions. Although health and money are related in many ways.

In any case, here is why I think most money resolutions fail and how we can make resolutions that stick.

SMRT. I mean SMART

Most of us know what SMART goals are. It refers to goals that are Specific, Measurable, Attainable, Realistic and Timely. We’ve all seen this acronym many times.

But as with most things money, knowledge isn’t everything. Execution is where people go wrong. Setting SMART goals is the key but I feel most people just gloss over it or aren’t specific enough.

A big reason why most people don’t adhere to the SMART goal philosophy is that their goals really aren’t attainable. An example is someone who makes a goal to earn $100,000 in 2019. While it’s better than a general goal of “make more money”, this goal still has some flaws.

If this person is used to making $50,000 a year, getting to $100,000 a year is going to be tough. You could break it up even further and say the goal is to make $8,333.33 a month. But if the first few months don’t go right, which is likely since the beginning is always the toughest, then they might abandon the goal.

So what’s the best way to use SMART goals for the New Year? You should still make them specific, measurable and have a timeline. But you need to make the first step ridiculously easy.

Momentum is the key

Let’s say someone made a goal to save 20% of their income in 2019. A worthy goal indeed. But if they are currently saving 5%, it will be pretty tough to crank up the savings rate by 15% and not feel shell shocked.

Make the first step easy. Save 1% more for January. That’s it. It sounds stupidly simple but this is where the battle will be won. By the end of January, they will be saving 6%. Do 1% more for February, and repeat until the end of the year.

The momentum will likely carry this person to their goal. Maybe one month they can save 2%. But June is a tough month and they can’t save any extra. There will be ups and downs but by working on finding ways to save just a little more each month this person will get a crash course in being financially savvy.

After the year is up, they might by at a 16% savings rate. Didn’t quite get to 20%. So is the goal a failure? Absolutely not! Because you can do the same process for the following year and easily get to a 25% savings rate.

All from the first initial easy 1% savings increase. Momentum is a real thing and putting too much pressure on yourself too quickly greatly decreases the chance of hitting your financial resolution

The Big Picture

As humans, we tend to overestimate what we can accomplish in a year. But we also greatly underestimate what we can accomplish in 5 years.

This is essentially the problem with goal setting. We set our sights too high to achieve a short term win. But if we take smaller steps and are okay with stretching our timeline just a little bit, momentum will help carry us to our goals.

Let’s not make February the month where goals come to die for The Broke Professional readers. Just recalibrate them and keep on moving forward.

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