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December 5, 2008

Personal Finance – Three Quick

Personal Finance
Joel Teo asked:


Many Americans and people in countries where ready credit is available find themselves in greater debt then ever before and this makes you wonder whether you are working for yourself or for your creditors. This ends up being a problem of financial spending & control and if you take a short moment to reconsider your own financial health, you might be able to correct your financial situation today.

You will find that many people today are living from paycheck to paycheck and running from payday loan provider to another. This article suggests three simple & quick ways to improve your personal finances.

Firstly, you might want to draw up a Cash flow statement for yourself. This is quite simple to do actually. Just take a blank sheet of paper and draw a line in the middle and consider how much money you are earning each month and list all the sources on the left and total it up at the bottom. Next on the right column figure out how much money you are spending each month, including how much interest and debt you need to repay. Take your credit card statements out and use it to work through this section. Once you figure this out, then you will be better able to manage your own finances or at least have a better idea about your spending habits.

Secondly, budget to save before you spend. This idea is taken from many millionaires who recommend that you use auto-transfer each month a sum of your money and either save it or invest it into some thing like real estate. My personal favourite idea is to take a sum of money each month and use it to purchase my favourite Exchange Traded Fund which works like a mutual fund only that it just buys up the entire index of stocks. This way you do not need to work about over performing or underperforming the market and the management fees for these funds are really low.

Finally, now that you know how much money you have left to spend each month, budget how much you want to spend each month. As terrible as it may seem, try to pay for things with cash and with a debt card so that you are kept in touch with how much you are actually spending. Its so easy to flash a credit card and then lose sense of reality and you only get hit with it at the end of the month when the bill arrives. So try to remind yourself constantly about the need to avoid spending exuberance.

In conclusion, doing a simple cash flow statement ever so often helps to keep yourself reminded of how your spending and investing patterns are each month. Budgeting to save before you spend will ensure that you will retire quite well off and budgeting before you spend will help you figure out how you want to use your available funds each month. Remember that the more credit you use on consumer products which drop in value really fast, the most the credit card companies are going to make from you and the less you will have to spend in the longer term. Take control of your finances today and you will find your life starting to look brighter and happier.

Copyright © 2006 Joel Teo. All rights reserved. (You may publish this article in its entirety with the following author’s information with live links only.)

August 20, 2008

Understanding and Unleashing the Transformative Powers of Education (learning How to Learn)

Education
Dr. Mario Barrett asked:


As a child, my parents always impressed upon me the importance of getting a good education. My father in particular, always told my siblings and I that we should strive to be number one in our studies. Because of the strict nature of my father, getting good grades was the rule, while getting low grades resulted in punishment. Needless to say, my siblings and I achieved honor role status throughout our K through middle school years. However, as I hit high school things began to change for me. I was no longer that little boy that followed my father’s every wish out of fear. By now, I had been hardened by the tough streets of Brooklyn and questioned whether getting a good (formal) education could take me out of this environment.
You see, in my community, I knew of few high school graduates, much less college graduates. My parents had limited education and struggled to provide for my siblings and I. Like many that grew up in poor communities, I experienced my fair share of pain and struggles. Like many of today’s youth that are dropping out of high school in record numbers, I too doubted the transformative powers of formal education touted by my parents and teachers. I did not believe that formal education alone could transform my socio-economic situation. As a result, I began to devalue formal education and withdrew (cutting classes regularly). Luckily, I began to realize the error in my thinking brought about by the intervention of a high school guidance counselor. I struggled to graduate high school, needing to attend summer school two years in a row in addition to night school. Nevertheless, I did graduate-But what next!?
Today, we hear news reports about the high dropout rates for inner city high school kids across America. I believe that this high dropout rate stems from the inability of the youth to understand and witness the transformative power of education within their communities. As a 34 year old man with a PhD, I can now attest to the transformative powers of getting a good education, but not just one that is formal. I have seen examples of education’s transformative powers in the lives of my colleagues, as well as in my own life. However, most people wont get a PhD, or even a college degree. Does this mean that they are doomed to a life of suffering and pain because of their socio-economic situation? Well not necessarily, as a significant percentage of millionaires in America did not graduate from college.
Still, statistics do show that one’s level of formal education directly correlates to one’s income (the higher the degree, the higher the income) and employability (the higher the degree, the higher the level of employability). So, it is safe to say that formal education does have transformative power in regards to one’s socio-economic situation. But, is simply graduating from high school and getting a college degree the answer to unlocking education’s transformative powers?
Let us take a look at the essence of education. Education is all about learning basic skills such as reading, writing, and mathematics, and then building on these skills with more complex fields of study such as science, history, and economics. What you are doing as you master and broaden your intellectual skills is teaching your brain how to learn.
What ways do I learn best? What topics interest me most? What topics do I find easiest to learn? What topics will help me transform my life?What topics will help me realize my life’s vision?
These are questions that you should be asking yourself as you learn how to learn (education). The truth is that formal education is beneficial to a point, but after that point it is not necessary for everyone. The reason for this is that once you learn the basics as previously described, you can take the initiative to go to libraries, museums, art galleries, plays, as well as surf the Internet to learn about anything you deem useful. Many successful people such as former President Abraham Lincoln were self-taught. But do keep in mind that because many of us do not have the discipline or desire to learn just for the sake of learning, K-12, trade schools, colleges, and universities put together formal curriculums designed to legitimize our educational experiences with a diploma, certificate of completion, or degree. The degree in particular, became popular with American employers in the 1960s, as America moved out of the Industrial Age to the Information Age. Prior to this shift, one could graduate high school and get a good middle class job at the same factory your father worked in. However, as industrial jobs disappear by the thousands because of outsourcing and globalization, a college degree has become essential for anyone looking to ascend in today’s new work world (the corporate world).
But, is the opportunity to transform one’s socio-economic situation utilizing formal education truly available to all? While formal education (K-12) is now available to all in America, getting a good formal education still comes at a premium. For example, inner city (K-12) public schools have historically underperformed when compared to their suburban public or private school counterparts. Therefore, socio-economics seems to be a factor in who has access to quality formal education. Another example of this is in the higher education arena, where the cost of attending a four-year institution is outpacing inflation, making attending college a dream for some and a burden for others finding it difficult to repay huge student loans after they graduate. What is someone who wants to transform his/her life utilizing formal education to do?
Well first, one has to assess his/her future goals.What are you interested in doing with your life?Reach out to guidance counselors, teachers/faculty in your schools. Maybe they can find outside educational programs that you can participate in that will increase your learning if your school is not providing you with enough rigor. Seek out educational programs within as well as outside of your community. Ask yourself questions such as-Do I need to go to an expensive college and be burdened with huge student loans when I graduate in order to achieve my goals? Or could I attend a less expensive school and learn how to learn what I need to know to get where I want to go?
Parents, participate in your child’s education. Get involved with the faculty and other parents. Keep abreast of political matters and then vote in the best interest of your child. And of greatest importance, seek out and provide examples of the transformative powers of education for your child. Be sure that they understand that the essence of education is not about getting a prestigious diploma or degree and saying “now pay me” to some employer.
The essence of education is about learning how to learn so that you can learn what you deem necessary for transforming your life.
Dropping out of high school does not help your cause. Going to a prestigious school just to be burdened with huge student loan debt that you will have difficulty repaying does not help your cause. Obtaining a particular degree that is not in alignment with your life’s vision, simply because it is easier to acquire then the degree you really need does not help your cause. There is no doubt that education (learning how to learn) has transformative power, but in order to unleash that transformative power one has to understand the essence of education and then use it strategically.

August 19, 2008

August 17, 2008

What Is Online Banking And How You Can Benefit From It

Banking
Joseph Kenny asked:


The internet has become an important part of our lives. There are many of us who rely on the internet to communicate with our friends and family. Online shopping is also making buying new and used merchandise easier. If you enjoy using the internet to communicate with those that you know or to shop, you may also enjoy banking online. Online banking is rapidly increasing in popularity. If you do not already participate in some form of online banking, it is likely that you will in the future.

When it comes to online banking, there is often some confusion. Many individuals, maybe even yourself included, feel that online banking involves a bank that does not have a physical branch location. There is such a thing as an online bank, also sometimes referred to as a virtual bank, but that is not all that online banking is about. You can also participate in online banking with your local bank. In fact, this is the most popular type of online banking.

If you are interested in participating in online banking, you will first have to determine whether or not your bank offers the service. A large number of banks do, but not all of them. You will find that many national or statewide banks offer online banking. Smaller banks, often only consisting of five or so branches, do not always offer the service. Even if you have never heard of online banking being offered at your local financial institution, you are still encouraged to ask about it. You never know, but if enough customers are interested in it, your local bank may decide to start an online banking program.

Online banking means different things to different financial institutions. You may find that different banks offer different online services. Despite the difference in services, you will find a number of common services. These services are likely to include the online paying of bills, the online ordering of a debit card or checks, or the altering of your bank account information. Perhaps, the feature that most enjoy is the ability to pay bills online.

Most banks offer online banking free of charge, but you may find a financial institution that charges you to use this online service. If you have yet to choose a bank to do business with, you may want to keep this potential fee in mind. If your bank will charge you a fee, you may want to consider whether or not online banking is right for you. As with all other services, online banking does have its advantages and disadvantages.

As previously mentioned, the greatest advantage of online banking is being able to do a number of things right from your home. If you are looking for an easier way to pay your bills, you will enjoy online banking. Instead of having to pay for postage or write a check, you can simply use the click of a mouse to pay your bills. There are also banks that offer online calendars. Combined with quickly being able to pay your bills, you may find that an online calendar will help to eliminate any late payments.

The biggest disadvantage of online banking is having your information online. There are many individuals, maybe even yourself included, who are concerned with the security of the internet. As long as your bank’s website is hosted on a secure website, which most are, you should experience no trouble at all. Aside from getting over the issue of trust, there are very few, if any, disadvantages to banking online.

Before making a decision as to whether or not you want to participate in online banking, you are encouraged to speak with a bank representative. You may be surprised just how convenient and easy it to use the internet to do your banking.

Should I Get Help From a Career Counselor?

Careers
Kelli Smith asked:


Most people would probably rather get a root canal than hunt for a new job. Whether a person has been downsized, is changing careers, or just wants to find a better opportunity, hunting for a job can be frustrating and intimidating. And since more than 230,000 people have lost their jobs this year, the competition for employment is likely to be fierce. People who want to increase their odds for getting hired may want to consider finding a career counselor. What Career Counselors DoCareer counselors can help people evaluate their skills and abilities to find a job that fits their goals and interests. They serve as coaches, teachers, and mentors to people with all different types of job experience. A qualified counselor should be able to assess a client’s traits and abilities to help direct them to an appropriate position. They also should be good listeners who can communicate well with people who may be dealing with a lot of stress and uncertainty about their job situation–and life in general.
Some career counselors may have a degree in counseling or a related field, but others may have experience in a particular field that gives them the expertise to help others. A master career counselor usually has the highest level of expertise in career counseling and has met other qualifications, such as being licensed by a state board.
Who Should Consider Counseling?Not everyone looking to change jobs needs to see a career counselor. But people who aren’t sure where they’re headed in their careers and need help focusing may benefit from working with a coach. Workers who are thinking about getting help with their career should ask themselves:
1. Am I satisfied with my current job?2. What do I like or dislike about my current job?3. How can I improve my current job?4. Do I have the work-life balance I want?5. What are my short- and long-term goals for my career?6. What other jobs can I qualify for with my skills?
Downsized in AmericaPeople who haven’t had to look for a job in many years may be ill-equipped for their search and may be perfect candidates for career counseling. Companies all across America are cutting jobs, forcing many workers to dust off outdated resumes. A qualified counselor can help put together a resume, practice interviewing techniques, administer assessment tests, or evaluate new career paths. The right coach can help a person evaluate jobs they’ve never considered that may allow them to use their current skills.
Changing CareersFor people who are looking for a whole new career, a counselor can help them decide whether they have the necessary skills or need to continue their education. Some people may find that the type of work they’ve been doing has become obsolete. Many unskilled workers have found themselves forced out of jobs that can be done by a computer or a machine. A good career counselor should listen to workers’ needs and assess their strengths and weaknesses to help them transition to a new career. That may mean directing clients to places they can learn about new technology or employment trends in fields that interest them.
Getting EncouragementRichard Nelson Bolles writes in What Color Is Your Parachute? 2008: A Practical Manual for Job-hunters and Career-Changers that “Researchers discovered some years ago that while the typical job-hunt lasted around fifteen to nineteen weeks, depending on the economy, one-third to one-half of all job-hunters simply give up by the second month of their job-hunt.” Having the support of a career counselor may help some people stay focused on their job search and not become easily discouraged. The right coach can also redirect job-hunting efforts that have stalled or become unproductive.
Moving to the Next LevelAlways being passed over for promotions is like going to a spring fling and never being asked to dance. It’s no fun! Workers who are having trouble advancing in their career may need some help figuring out exactly what they need to do differently to get noticed by higher ups. For some people it may be as simple as taking a few courses to learn necessary skills. Others may need advice from a career coach on how to dress, talk, or act more professionally.
Setting Career GoalsCounselors can also be helpful if people just want to make sure they are setting the right goals for their career. They may not be looking to change companies, but may be more concerned about protecting their future job security. A person who hasn’t bothered to keep abreast of changes in their industry, learn new skills, or network with influential peers are more likely to fall under the downsizing axe than someone who has worked to remain competitive.
Choosing the Right CounselorIt’s important for people to find a career counselor that fits their goals and is reputable. A good counselor should:
1. Disclose the terms of their service and fees upfront2. Provide a copy of their ethical guidelines3. Charge only for services provided4. Let clients choose the services they want5. Not make unrealistic promises.
They should also discuss what type of time commitment clients should expect to make to their counseling sessions and job-hunting strategies.
While career counselors can be helpful they may not have all the answers. They can help individuals assess their strengths and weaknesses to choose a career that fits their unique goals and needs. Like any other counseling relationship, it may take more than one try to find the right person. People looking for a career coach can check with their former employer, local job centers, universities, alumni groups, churches, and other organizations for recommendations.

July 27, 2008

Investment Corner – Part 1

Investing
Joe Ficalora asked:


These articles are written as a series because the topic is fairly large and investment information seems to abound everywhere these days.

As what I like to call a “seasoned” investor, I thought it would be fun to share some of what I

have picked up over the years. By the way – “seasoned” shows up at www.Dictionary.com as

“competent through trial and experience, or to accustom or to harden”. The old saying in the

investment world is everyone gets “a large dollar amount education” in the stock markets. Let’s

just say then I have an advanced degree …

Investing is considered to be a science, so don’t be fooled by anyone telling you it’s an art.

Perhaps at the pinnacle of investing knowledge it may be an art form, but for the most part it’s a

science. As our first foray, let’s consider what knowledge you should have and where to obtain it.

The knowledge you will need is quite fundamental and not too complicated. The first half of the

knowledge comes from you, while the second half comes from the investment community.

About YOU

The primary things you should know about yourself before making an investment are:

What is my investment objective?

What is my risk tolerance?

These are important questions you need to answer for yourself. All investment comes with some

degree of risk. Without knowing your objectives, it is hard to assess your risk tolerance.

I. Investment Objective: Your investment objective should be a tangible result, with a specific date.

The two primary examples of investment objectives are:

Saving for a child’s college education, with the date of college entrance

Saving for retirement, with your planned retirement date

The first is a huge change in expenses, while the second involves a large change in income. Both

will have a large change in your cash flow so planning ahead can mitigate these two events and

make them less stressful and less burdensome on your monthly cash management. The planning

portion for either of these involves saving money in advance and then placing those savings in the

right investment vehicle for your goals.

“We all work hard for our money, we should make certain what we saved works just as hard for

us!” – Often attributed to AL Williams.

II. Risk tolerance: Risk and Reward tend to go hand in hand. Only you can answer how much

risk you are willing to take. Even fixed return investments like bonds or savings accounts have

some risk.

On your risk tolerance – ask yourself some challenging questions:

How much risk would I tolerate to get a 24% average return on investment?

Would I be willing to:

Risk losing all of it,

Risk losing half of it,

Risk losing 10% of it.

Or even give my savings to a new start-up business?

Now ask the same question for a 10% return on investment, and for a 5% return on investment.

At each point stop and consider the implications – your money doubles roughly every 7 years at

10%. And it doubles nearly every 3 years at 24%. While at 5%, it doubles every 15 years. In

general, if you have time on your side then you can live with more risk and potentially higher

returns. See Table 1. If you are less than 5 years from your goal, you may need safer, less

volatile and lower return investment choices.

Table 1

Value of a $1000 savings account with $100/month added at annual returns of:

Year 3% 6% 9% 12% 15% 18%

0 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000

1 $2,230 $2,260 $2,290 $2,320 $2,350 $2,380

2 $3,497 $3,596 $3,696 $3,798 $3,903 $4,008

3 $4,802 $5,011 $5,229 $5,454 $5,688 $5,930

4 $6,146 $6,512 $6,899 $7,309 $7,741 $8,197

5 $7,530 $8,103 $8,720 $9,386 $10,102 $10,873

6 $8,956 $9,789 $10,705 $11,712 $12,818 $14,030

7 $10,425 $11,576 $12,869 $14,317 $15,940 $17,755

8 $11,938 $13,471 $15,227 $17,236 $19,531 $22,151

9 $13,496 $15,479 $17,797 $20,504 $23,661 $27,338

10 $15,101 $17,608 $20,599 $24,164 $28,410 $33,459

11 $16,754 $19,864 $23,653 $28,264 $33,872 $40,682

12 $18,456 $22,256 $26,982 $32,856 $40,152 $49,205

13 $20,210 $24,791 $30,610 $37,998 $47,375 $59,262

14 $22,016 $27,479 $34,565 $43,758 $55,681 $71,129

15 $23,877 $30,328 $38,876 $50,209 $65,234 $85,132

About Investing:

“No risk – no return, there is no such thing as a sure-thing investment!”

We all have the same desire, get the largest return on investment with the least amount of risk.

Unfortunately, you cannot have one without the other. Stocks can offer very high returns, but

there are no guarantees, and you can lose money quickly should a company have any impropriety

or go bankrupt. Bonds offer fixed return rates, which are typically lower, but with less risk. If

inflation should suddenly increase, a fixed return may actually lose value! Mutual funds seek to diversify investments across several stocks or bonds or sometimes a combination.

Balancing Risk and Returns:

The most common way of balancing risks and returns are by making investment choices and the

diversity of those choices. Investment choices are what fixed assets or stocks or bonds or mutual

funds you buy. Investment choices have the largest impacts on your return. Diversity choices

are how many different items of each investment type you buy to lower risk, but which in turn

also lower returns.

Investment choices fall into two broad categories, I call them ownership and “loanership”. Ownership means owning a fixed asset, like a diamond, or a piece of a publicly traded company through some stock purchase vehicle, either directly or indirectly through a mutual fund. “Loanership” means owning a piece of a loan through a bond purchase or bond fund. While a stock’s value rises and falls as the value of the company rises or falls, a bond’s value is less volatile. Bonds are generally funding a loan to an institution, so they are typically fixed rates of return, but their value also changes a small amount as interest rates change.

Most financial planners will in general advise you to increase the bonds in your portfolio as you

get closer to your goal and can tolerate less uncertainty in the return rate. Typically this is within 5 years of your savings objective. And conversely, to increase the amount of stocks or stock purchase vehicles if you are very far away, say 10 or more years away from your goal.

Having a savings objective with a fixed date can be very motivational. As long as you are

realistic, it can even be fun to set down a plan and stick to it. If you are having trouble getting

started – write a few financial objectives down and talk them over with your spouse or a close

friend. Most of all, don’t worry about these things, just do something about them!

Self-Study:

Some great resources to begin your journey are located on the web.

Try visiting these sites:

http://www.nasd.com/Investor/Education/Teachers/basics_unit1_less1.asp

http://www.aaii.com/invbas/index.shtml

Or read these well known authors and books:

Suze Orman: The Road to Wealth, The 9 steps to Financial Freedom.

Jane Bryant Quinn – Everyone’s Money Book

Next time – Stocks and bonds vs. Mutual Funds…

Additional info may be found at:

http://www.sbtionline.com

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