Wow, this was a very busy week and I’m glad the weekend is finally here. Lately these past few weeks, I’ve been so busy I’ve fallen behind on calculating this months net worth so hopefully I’ll get that done tomorrow. But anyway, I wanted to leave guys with some general finance tips you can carry over this weekend.

• Save the pennies and the dollars will save themselves. The small amounts really do add up.
• Make the effort to educate yourself about personal finance. Go around and find some financial magazines and books.
• Don’t forget to budget! Operating without a budget is like driving a car without a steering wheel, you have no control.
• Start taking savings out of your paychecks before you even see it. After a while, you will get used to planning your spendings around your lower amount and at the same time your savings will grow.
• Be smart and not cheap. You don’t want to buy cheap items that don’t last.
• Be aware of your debt and don’t let your spending get out of control. If you notice yourself headed for trouble, act quickly before you ruin your credit.

Keep these tips in mind while you start your weekend and remember, millionaires are just average people who practice good habits. You could be one of them.

[photo]

So today I decided to take a look at my Money Market account, which I usually try to check only once a month, and saw that the interest rate went from 5.30% to 4.90%. I was surprised that my initial reaction wasn’t disappointment but rather quite passive. There was a point in time where I used to think that every one hundredth of a percent counted and mattered and that I would find the best money market account accordingly. But the truth is, unless you have a nice amount of money, say a million dollars, it really doesn’t matter too much.

I think people who are new to finance and just started saving have this same problem just as I did. People are always looking to get the highest percentage rate on their interest, but the thing is, the percentage rate really doesn’t matter unless you’re dealing with substantial amount of money. Instead of concentrating on trying to find an account that offers a percent higher than the current one you’re considering, you should put that energy into concentrating on how to stay saving for more than 3 months. Most Americans fall short on their savings goals, I don’t have a percentage rate to offer you but I’m sure its quite high. The personal savings rate in the United States is a negative number, but majority of Americans think of themselves as people who “always look for ways to save money“.

So back to the money market account, lets do a quick example to demonstrate what I’m talking about.

For the sake of my story, lets use my interest rate(in case you were wondering, my account is with Gmacbank) at 4.90%, which used to be at 5.30%. We’ll say account 1 has $5,000 and account 2 has $500,000. Lets crunch some numbers.

Account 1($5,000):
In one year, at 4.90%, this would make $245/year ($20.42/month).
Now at 5.30%, we get $265/year ($22.08/month).
So not a huge difference eh? Just 20 more bucks a year or $1.66 a month. I somehow doubt I’ll even notice this small difference. Now account 2 on the other hand…

Account 2($500,000):
In one year with 4.90%, this account would make $24,500/year ($2,041.66/month).
At 5.30%, this account would be $26,500/year ($2,208.33/month).
Now in this case, the difference is quite notable. This account dropping by as little as .4% makes a difference of $2,000/year and $166.67. If I was in this case, my reaction most probably would have been quite different than that of today.

The point I’m trying to make is don’t worry about the percentages now and focus more on getting our accounts to $500,000. Lets continue saving and worry about the minor details later. Chances are, you don’t have $500,000 so percentage rate is not going to help you become rich, well at least not now. The idea of saving on the other hand is a complete different story.

Quick note: If you are looking for a place to put your money into for savings and also concerned with not having to worry about commitment, then you should really consider looking into getting a money market account. I strongly suggest going with Gmacbank. I’m not saying this because they’re paying me or anything like that but just from my personal experience, they really have it well together. They are really helpful each time I call and all my calls end with the feeling of satisfaction. For more information, you can go here.

[Photo]

Instead of closing your account just leave it open, it doesn’t hurt. If you’re never going to use that credit card again, pay off the credit card or transfer your balance to a card with a lower interest rate and cut it up. You can cancel the credit card once you’ve decided that you’re not going to be needing a loan anytime soon.

[Photo Credit]

Lately, I’ve been listening to this audio book called the “Automatic Millionaire” by David Bach, and let me tell you that it’s awesome. I recommend this audio book to everyone, it’s a great read/listen, whichever you prefer. So while I was listening to it, I noticed some cool things that I thought I wanted to share with you.

When it comes down to it there are 6 approaches to wealth. Here they are.

1. Win it. For example, the lottery. Did you know that over 500 Billion dollars have gone into the lottery business since the early 70′s when the lottery was first started? Imagine if all that money was put into an investment account, there would be over trillions of dollars right now. This is not a realistic approach but it happens to the very few. Do you know anyone who has won the lottery? Probably not, so I wouldn’t recommend waiting around for this one.
2. Marry it. Wouldn’t it be great to marry your self into wealth? But lets face it, it’s not that easy to marry for money. Not only is it not easy to marry for money but “when you marry for money you pay for it for the rest of your life”. Good luck with this one.
3. Inherit it. Now inheritance is actually a real approach to gaining wealth. Within the next 15 years, we’re going to see over 15 trillion dollars transfer from one generation to the next. But I mean, who wants to rely on their parents to past away so that they can get their money. No one I know, hopefully no one you know either. If you are fortunate enough to have your parents or family members leave you something after they pass, you can be grateful but don’t depend on it. Not a good way to live and you don’t want to rely on this for your retirement.
4. Sue for it. Why work when you live in a country that pulls in 90% of all lawsuits made in the world? Just sue your way into wealth, right? Wrong. Again, you don’t want to rely on something like suing someone to get rich. This is not a real approach to wealth.
5. Save for it. For all the little things we spend our money on like fast food and starbucks, this alone over a long period of time could end up to be a considerable amount. Say you spend on average roughly $10 for lunch and starbucks. Over a year it’s $3,650 and over thirty years it comes to 109,500! Now imagine you put this money away in the stock market in some kind of an index fund, which historically averages about a 10% return. Using this compound interest calculator, you would end up with 660,443.50! Isn’t this amazing? So yes, your daily fast food and starbucks is costing you over half a million dollars. This is also known as the Latte factor.
6. Earn it. Yes, you can earn your way into wealth. Although the automatic millionaire has many great tips on how to accumulate wealth, the main concept of the audio is to pay your self first. What does it mean to pay your self first? It means that when you get your paycheck, before you pay anything or anyone, including the government, you make sure to pay your self first. When you automate this process electronically, it’s very easy to do because you don’t have to do it manually and the great thing is it doesn’t require motivation or work once its all set up. This is why out of all the 6 approaches, this is the most promising. As Bach mentions in the audio, you can start paying yourself as low as 1% of your gross income. Then over time, slowly start to increase your percentage and you won’t even notice it.

Just to let you know, I’m not getting sponsored or getting paid for saying any of this, I just want to share with you how much this program works.

So ever since I started listening to this audio, I made everything automatic and so far it’s doing great. As of now, I am automatically paying myself 20% of my gross income each paycheck. I stated out with 10% but then realized that I can afford to do 20%.

Having this process automated is the main key. Since it’s automated, you don’t have to worry about keeping your self motivated and that’s a huge factor, especially for me. Lets face it, it’s really hard to stay motivated 24/7 and thinking about finance day in and out. Another thing is when you have this process automated, once you have everything setup, you don’t have to work at it. Everything is automatic! It’s working for you while you’re not thinking about it.

The thing is, most of us know the concept of paying yourself first, but no one ever executes them. In his book, he pays down solid principles and honestly tells you that it’s not a get rich scheme. That it takes years for it to work. But its a solid plan that I think is guaranteed to work. What I like about the book is that it’s really simple to understand and easy to follow. If you have the chance, go check the book out for your self. It’s definitely worth the investment.

• If you own two cars, alternate your use of each car from month to month.
• If you have children under the age of 18, you can hire them at fully deductible wages and owe no social security or federal employment taxes if your company is a sole proprietorship or partnership in which both partners are parents of the children. However, don’t cheat, make sure that they perform actual work for your business.
• You may remember that dry cleaning and laundry expenses during a business trips are deductible. Did you know that you can also deduct your first dry-cleaning bill after returning home. However, this only applies for the clothes dirtied while you were traveling.

Life’s full of many hacks, always try to find ways to get around things. Hope these tips help.

From Wiki, “Whether in the form of the consumer attempting to defraud the telephone company, the telephone company attempting to defraud the consumer, or a third party attempting to defraud either of them, fraud has been a part of the telephone system almost from the beginning.” Wikipedia has a nice section on phone fraud that you should check out. They break it down into fraud against users and fraud against phone companies. Very informative and very important stuff.

The thing is, many entrepreneurs think that they are too small to worry about fighting phone fraud but the truth is that they are the ones who gets caught in the fire. It’s better to be careful and watch out for these things because when it happens to you, its gonna seriously cost you.

Make sure that you’re aware of how it works:

• Using default passwords programmed by the manufacturer is not a good idea. “Phone Hackers” can easily break into unused voice mail boxes and rack up thousands of dollars in toll charges. You want to make sure that all phone extensions are password protected, whether it’s in use or not.
• Be careful when using long distance prepaid calling cards. There are thieves known as “shoulder surfers” who observe callers as they punch in their card account numbers in public and can steal your valuable minutes.
• The best way to protect your business from phone fraud is to analyze your bills as soon as they arrive. You want to check for unusual calling patterns and be on alert to calls to the 809 area code in the Caribbeans.

It’s always better to be on the safer side then to get scammed and have to deal with a big loss.

[Photo Credit]

I have a friend who has been keeping his receipts for as long as I can remember. I guess you can say that he’s a receipt freak. He keeps them to enter into his money tracking system to keep track of his budget.

This is all very understandable and some what commendable for being so organized but I asked him, “why not just use your debt card like I do and keep track of your spending that way”. He replied ” because I like paper and I like to organize them!”

Apparently, he keep them filed away in a very organized folder on a monthly basis. I was amazed.

What did I learn? I guess there are people who just likes to keep their receipts and hold on to them.

So for all you receipt lovers out there, here are some tips I want to share with you on proper receipts handling skills:

1. Establish a simple routine for dealing with your receipts as soon as it comes into your hands and stay consistent. You can for example leave a space in your wallet or purse just for receipts and every time you purchase something. When you get back home, immediately put the receipts into an organized folder. This way, you don’t have to think about where you put your receipt and don’t have to waste time looking for them.
2. As soon as you receive your receipt, look for missing or faded information and fill in that spot immediately. There’s nothing more frustrating then trying to read the receipts’ date or price long after the fact when you’ve finally gotten around to putting into your data entry.
3. For those of you who likes to fold your receipts, fold it so that the printed side is uppermost. This way, it will be easier to find the receipt if you ever have to look for it. When you fold a receipt so that the printed side is hidden, all receipts look alike and you’ll have to unfold them all to find what you’re looking for.
4. Don’t let the data entry pile up. It’s a good habit to schedule a time every week to do the necessary data entry and make sure to stick to that schedule. If you don’t, you’ll find your self just putting it off and your piles of receipts will become even more ugly.

I hope these tips can help you out some way or another. Keeping track of your receipts is really nice and handy, but the trick is to being able to keep them organized. Good luck, I think I’ll stay with the online statements

[Photo Credit]

In today’s society, it is really easy for employees to sue their employers and whats worse is that many employers do not realize until after they are sued that a lawsuit could have been prevented. Although “good intentions” goes a long way, they are in many cases not enough when it comes to a lawsuit.

So the key is to combine good intentions with the necessary legal/management skills and you will experience increased productivity, happier employees and a thriving workplace. Follow these 5 tips for protecting yourself from employee lawsuits:

1. Hire carefully. You should look for people with strong work ethics and avoid hiring those who feel life owes them something.
2. Keep good records on employee mistakes, even when they’re not firing offenses. Document your own actions and the reasons behind your employment decisions.
3. Consider buying an employment practices liability insurance (EPLI).
4. Do not discriminate in hiring, or permit sexual harassment.
5. Have strong employment policies. Communicate them clearly to employees and enforce them.

Also, you want to listen very carefully and patiently to what the employee has to say, especially when dealing with any complaints that they may have. Last thing you want to do is to argue with them. Just simply say that you are sorry for not coming to an agreement. It’s better to let down your pride for a minute than to lose your business.

[Photo Credit]

One day, if someone you don’t know wants to pay you by check but wants you to wire some of the money back, be careful, it might be a scam that could cost you thousand of dollars. You want to protect your self by following these tips:

1.) Make sure you store your checks in a secure place.

2.) You want to track check numbers so you will notice missing checks.

3.) It’s a good idea to add security features to your checks. For instance, your checks should indicate that they are protected and you should inform your bank of the security measures that you have taken so far. This way, if the bank pays a check that doesn’t include your security features, you are not held responsible for the loss.

4.) It’s not the most fun thing to do but you must reconcile your bank statements as soon as possible.

5.) Make sure to evaluate your check issuing process and conduct a full audit to detect any risk areas.

Statistics show that there are more than one million bad checks that enter the banking system each day. Hopefully you won’t have to worry about yours being a part of the that count.

[Photo Credit]

So then you ask, “should I put my money in a CD or a Money Market”?

Good question. In order to make the right decision, you have to define your goals and needs. Getting it wrong the first time is all it takes for it to cost you the big bucks so you want to make sure that you do your homework first.

For those who do not know, Certificate of Deposit or simply CD, are debt instruments issued by banks and other financial institutions to investors. In exchange for lending the institution money for a predetermined length of time, the investor is paid a set rate of interest.

While on the other hand, Money Market offers many of the same benefits as CD’s but with the added features of a checking account. As far as the interest rates go, they are fairly close. Last I checked, CD’s were running at 4.90% and Money Market at 4.80%.

Here are a short Pros and Cons of Money Market and CD’s.

Money Market:

Pros: Depositing money in a money market is as easy as depositing cash into a savings or checking account. Cash is immediately available for alternative investments so you’re a lot more flexible with Money Market.

Cons: Money Market’s interest rate is not fixed. The rate of interest is directly proportional to the investor’s level of deposited assets, not to maturity as is the case with certificates of deposit. Hence, money markets are disproportionately beneficial to wealthier investors.

Certificate of Deposit (CD):

Pros: The investor can calculate his expected earnings at the outset of the investment since the interest rate is fixed. Certificates of deposited are FDIC insured for up to $100,000 and offer an easy solution for the elderly who desire only to maintain their capital for the remainder of their life.

Cons: Not as flexible as Money Market and will be penalized for withdrawing before it reaches maturity. If the investor opts for a longer maturity and, thus, higher rate of interest, he will lose access to his funds and forgo alternative uses of his capital.

Final Analysis: So if you are absolutely certain that you will not be needing that $10,000 for the next year or so, then I say go for the CD, but if you are not sure, then Money Market is the way to go.

[photo credit]