Ask Sandra

How do we handle the payment of the credit cards in the Bills Summary Module of the Money Management software? Do you treat credit cards as a regular bill even though the unpaid balance is considered past due on the Money Management System?

Asked by: Lucy A. – Dress Shop Owner

Dear Lucy, Yes, you put in a bill for each credit card in the Bills Summary (the list of bills that are owed to others.)

In the invoice due date cell, you can put the date the payment is going to be due per the credit card statement when it arrives, but credit card debt is always treated as being past due if you cannot pay the whole thing off when the statement is due. Past due credit card debt is included with the other past due bills when allocating to pay past due items.

For the invoice amount you should put the amount you want to try to pay on that card this month. Then each week try to allocate 25% of that invoice amount to the card.

If, for example, you set the invoice amount at $400 for a card, and at the time the bill will be paid you have only managed to come up with $250 to pay on that card, then change the invoice amount to $250 and pay the card that amount so it zeros out and then immediately put in a new bill for the next month for the same card for whatever amount you want to try to pay next month.

Unless of course you have the funds to pay the balance in full, then you would put in the invoice amount for the entire balance due.

Please watch this video for more information on getting out of credit card debt faster 

http://www.youtube.com/watch?v=5wIPcUGP4gA

In the budget module of the Money Management Solutions software, do we put in everything we need to pay and the goals we want to attain?...Because the amount may be big and almost impossible to start with.

Asked by – Martin - Veterinarian

Dr. Martin, yes, absolutely. You put in the line items for the Building Fund, The General Liability Fund, The Emergency fund, the Set aside for the new piece of equipment you are going to need in a couple of years, etc. If you never know how much you really need to make on a weekly basis to achieve your financial goals [Income Planning Target], then you are always targeting to make too little money.

Just the cost of doing business goes up 8 - 12% a year, so you need to budget for those increases as well - your suppliers will raise their prices, your employees will want raises, the utility companies raise prices every year, postage is going up, etc.

The reason that the government typically announces that the cost of living has only gone up around 3% each year is because they have to raise the social security payments by the percent they announce. Well Social Security is broke already and so they lie and say it is only about 3% - when in actuality it is 8 - 12%. I mean really, the cost of groceries alone has gone up 30% in the past 6 months, so who are they trying to kid?

You have to budget for those increases (set your income planning target higher to cover the increases), and raise your prices accordingly too.

And don’t forget, spending money on promotion is MANDATORY not discretionary. If you stop talking to your current and potential customers, your competitors will. And if you haven’t started looking into internet marketing to help you increase sales, you need to.

Read my blog article about how to attract new patients and customers here 

http://moneymgmtsolutions.com/blog/sales/how-to-attract-new-patients-and-customers/
 

Sandra, because of the big amount to make every week (Income Planning Target) can we start filling the buckets of cash on a gradient while we work to pay down past due bills and credit card debt?

Asked by: Robert A. – Construction Company
 

Dear Robert, Yes, you start on a gradient. Even if you can only set aside a half percent (0.5 %) in the Building Fund to start with and $20 a week into the Emergency Fund and nothing for the General Liability Fund, you need to start there and then as you reduce your debts and start to have more cash flow then you can raise what you are setting aside.

I even have my clients that I coach start with setting aside the Emergency Fund before even the Building Fund if they are deeply in debt. The reason for this is that financial emergencies are simple a predictable expense that wasn’t planned for, and the expense will happen. 

For example, you know for sure that your car is going to need 4 new tires some day, or that your computer is going to die and a new one will be needed (predictable expenses) so decide how much you want to accumulate in the emergency fund - say around $2,500 - and start setting aside little bits every week into this fund until it is at $2,500, and THEN start on the Building fund at the 0.05% and work your way out of debt and up to where you can be setting aside the full 10% every week.

It doesn’t matter how much or how little you can set aside in the buckets of cash to start with. The important thing is that you do start. When the little bits of cash start building up, I guarantee you will sleep better at night and worry less about the money just knowing you have that cash there.

Sandra, 1) What is the best industry to make money with today? 2) And how? 3) How can families make more money today

Asked by Eno
 

Dear Eno, You did not include enough specifics about your situation for me to give you a specific answer to your situation, so I will have to be quite general. I am assuming you are an employee, and not a business owner as you asked about families.

As far as an industry is concerned, that depends largely on what your passion is and what your skill set is. If you are looking at starting a business, you should certainly find a way to translate your purpose and passion into something that you can market both online and offline. Internet based businesses are portable and less costly that opening a physical location.

You can create your own products and services, or sell others’ products and services as an affiliate. Affiliate marketing on the internet can be profitable if you choose the right companies to link with, but selling your own products is usually much more profitable.

In today’s economy, with unemployment topping 18% in a lot of places, getting a second job may be difficult as hundreds of people are applying for an available position. Entrepreneurship - starting your own business - can be very rewarding and nobody can fire you. It can be costly so you have to be prepared to invest in your enterprise, find out if what you plan to sell is even wanted by your target audience, and promote like crazy to get the word out to that audience.

It was innovation and entrepreneurship that pulled the United States out of the Great Depression back in the 1930’s, and the same holds true in today’s global economic condition. Small business is the backbone of any country’s economy, and always will be.

To learn more about internet marketing, this is a good resource site http://www.customerfindermarketing.com/

Sandra, Is this true? I got an email from a friend that says that “starting in 2011—next year—the W-2 tax form sent by your employer will be Increased to show the value of whatever health insurance you are provided. It doesn't matter if you're retired. Your gross income WILL go up by the amount of insurance your employer paid for. So you’ll be required to pay taxes on a larger sum of money than you actually received…” Thanks.

Asked by: Sara B.

Dear Sara, I have received the same email from numerous, well-intentioned people who were extremely alarmed by it and passed it on to me.

The information that you will owe taxes on the health care benefits you receive from your employer starting in 2011 is false. However, it may be a pre-cursor to taxing those benefits in the future.

Notice that the email you received also says, “Also, go to Kiplinger's and read about the thirteen (13) tax changes for 2010 that could affect you.” but it fails to point out that in point number 3 of that Kiplinger article it definitely states that, “The amount reported is not considered taxable income.”

You can read that article and another one by Kiplinger at these links:

http://www.kiplinger.com/businessresource/forecast/archive/health-care-reform-tax-hikes-on-the-way.html

http://www.kiplinger.com/columns/washington/archives/no-health-benefits-wont-be-taxed-.html

Sandra, do you have a list of words defined that have to do with this [mortgage and credit] industry. You make it pretty easy and break it down well but there are some words of this industry that get in my way, (ie.sub-prime)and I’m just attempting to pull together a list on these kind of words to get defined and make my study easier in the area of Economics. Thanks.

Asked By: Denise A., DDS

Dear Denise, I don’t have a list of definitions for the credit and mortgage industries I can e-mail to you, but you can always go to http://www.ask.com and type in the search bar “definition of ____” and put in whatever term you are looking for to get good information.

For example, I just did the search on “definition of sub-prime mortgage” and got back this definition which is correct and simple to understand:

A definition of subprime mortgages, which are granted to borrowers with less than perfect credit. … Definition: A subprime mortgage is granted to borrowers whose credit history is not sufficient to get a conventional mortgage. Often these borrowers have impaired or even no credit … Alternate Spellings: sub-prime…

Another great resource on the web is Financial Dictionary at http://financial-dictionary.thefreedictionary.com/

One of the main sources of Financial Dictionary is the financial glossary by Campbell R. Harvey, renowned finance expert and J. Paul Sticht, professor of International Business at Duke University. It provides concise definitions of 8,000 terms with 18,000 useful links. This information comes from the world of banking and investing, providing users with thorough and reliable meanings to all the most common, and even uncommon, financial terms.

Additionally, the financial dictionary includes Investopedia.com. Featuring definitions of more than 5,000 terms, 1000 plus articles, and 500 pages of in-depth tutorials relating to investing, Investopedia.com appeals primarily to users who want to learn the language of investments.

Please note that this information is not intended to be used in place of a consultation or advice of a financial professional.

Sandra, I need to get publicity for my company, but my cash flow is slow and I can't afford to hire a PR firm. Any suggestions?

Asked By: Tom - Victory Landscaping & Nursery

Dear Tom, You are right that getting publicity is as important as promotion. There are a number of ways that you can get some free publicity in your local area, with local media. One great way is to host some kind of charitable event and send a press release to your local newspapers, radio stations and TV stations letting them know about the event and inviting them to it. You can tie it into a familiar event that will resonate with people.

For example, relate to the Kentucky Derby that is always on the 1st Saturday in May. If you can get a great deal on buying small rose bushes from your supplier, you can put on a "Run For The Roses" publicity campaign and invite the people in your area to come in on that weekend and buy a rose bush and let them know that you will donate all of the proceeds from the sale of those rose bushes to your local fire department.

Make sure that you have plenty of other items for them to buy while they are there, and keep them around by giving educational presentations throughout the weekend on "How To" do something that the public would find interesting and valuable to learn about. You could give a presentation on "how To Have The Greenest Lawn In Town" and teach them how to do that with some of the fertilizers you sell. Or teach them how to add interesting color and texture to their plantings using plants that you have in stock they can buy right then. You get the idea.

In addition, here are some places on the internet to get some free publicity, and there are many more than this:

Here's a place to go to get interviewed on internet radio shows that need guests who are experts in specific areas (like gardening and landscaping) http://bit.ly/bHejm4

If you are willing to do a free teleseminar or webinar and teach the listeners about your field of expertise, here is a place to list your Teleseminars & Webinars FREE    http://bit.ly/BrbvO

There are lots of FREE teleconferencing websites that work really well such as this one http://bit.ly/9tkMB0

Plus, anything you are planning to do can be publicized on the internet here:
The Open Press - Free Press Release Newswire http://bit.ly/EHR2F

Last but not least, if you have credit card debt because your cash flow is slow, get my FREE debt reduction guide here: http://bit.ly/dne4w6


I hope this has been helpful.

 

Sandra, I have an Adjustable Rate Mortgage on my home that is going to cause my mortgage payments to go up starting in 3 months. My husband had to take a cut in pay to keep his job and we can barely afford our house payment now. We sure can't afford any increase in my payments. Is there anything we can do to try and get our house payments to be less or even to just remain the same as they are now?

Asked By: Svetlana L.

 Dear Svetlana, First let me tell you that I do not recommend that you pay a mortgage modification company to do this for you, because there are very few loan modifications going through. Usually the bank or mortgage lender will not even talk to a mortgage modification company.

You have a much better chance if you work with your mortgage holder yourself. The first thing you need to do is make an appointment with the mortgage holder to discuss your situation. There are several things that you will need to take with you to the meeting. You will need to write a "hardship letter" outlining your current situation and making reference to the documents that you will attach to the letter which are covered below. In your hardship letter you should ask for relief in the form of a conversion to a PITI loan (Principal, Interest, Taxes & Insurance Loan) at a reduced interest rate (possibly they will also consider an extended term on the loan.)


What you need to refer to in the hardship letter and attach to the letter is a current financial statement for the past 12 months that itemizes your income and ALL of your expenses: mortgage, car loans, credit card debt, groceries, gas, utilities, child care expenses, etc. Also attach a paycheck stub from your husband's employer from BEFORE he took the pay cut, and the most recent stub showing his current pay to substantiate that he has received a cut in pay. The final thing is a copy of your last 3 years of personal tax returns.

Most mortgage holders are willing to work with the homeowner who is sincerely trying to avoid losing their home. If they refuse to work with you on a plan you can afford to keep your home, you can, as a last resort, ask for a short sale agreement or a deal where you will sign over the deed to the house instead of going to foreclosure. This is referred to as a "Deed In Leiu of Foreclosure" deal.

I hope this has been helpful,

Hi Sandra, I have some stocks that I lost money on and am considering selling for the tax write off. What is the IRS rule on buying the stock back if it starts to move up if I’ve written the loss off on my tax return? Thanks.

Asked By: Bradley R.

If you are considering selling some stocks at a loss for the tax advantage, the IRS applies what is known in accounting as the “wash rule,” meaning they will not recognize a loss if you’ve bought the same stock again within 30 calendar days before or after you sell that stock at a loss. As long as you wait more than 30 calendar days before buying the same stock, the loss will count on your tax return. The sales commissions you would be charged for the sale should be factored into the equation to ensure the write-off is really a significant tax advantage. Of course, the stock could start moving up while you are waiting for the 30 days to pass, so consider that as well. And congratulations on doing your tax planning. That is a very smart money management action that many people neglect until it is too late to make the strategic moves that will lower their tax liability.
 

Sandra, RE: Pay off your mortgage in half the time article- Why do you suggest that I ask my mortgage lender and pay $25-$75 for an amortization statement when I can get one for free by using any of the hundreds or so available mortgage calculators on the web?

Asked by: Joe from NY

Dear Joe,

Yes, there are numerous free amortization calculators on-line. However, it is extremely difficult to get the numbers to match exactly what the lender’s statement shows, especially when they include property taxes and mortgage insurance into the loan payment. If your calculation with an on-line calculator is different from the lenders, disputes can arise. In my opinion, it is inexpensive one-time insurance to get the statement directly from the lender that holds the mortgage. Good question though.
 

HI Sandra, Can you send me to resource that will help me assign a value to my client list? I am moving, not totally out of the area and staying in massage. So I would like to sell my list to someone with a noncompeting clause for those who do not move with me. Thanx, Elaine

Asked By: Elaine A - Massage Therapist - New York

Dear Elaine,

I don’t have a specific resource for this, but there are several avenues you could take.

1 – Value it yourself

Calculate the average value in monthly income per existing client that is on your “sell List” and figure on a 50% retention as a conservative number. Multiply by 6 months to get your income value and assign that as the value of the list. Of course you may have a better idea of the retention percentage you would expect based on your clients and whether the person buying the list uses the same, or different techniques than you do.

2 – Ask Your CPA

Whoever you use as a CPA for your accounting or for preparing your taxes should be able to take your raw data on each current client and come up with a formula to value the list. They may have a different idea of the retention percentage than you expect so be sure and ask them what they based their value on exactly.

3 – Ask a Business Broker what they would charge to do the valuation for you.

4 – Ask an attorney who deals with corporate law how much they would charge to do the valuation for you. You will need an attorney to draw up the sale agreement that includes the non-compete clause so using an attorney for the valuation who can also draw up the legal papers might be more advantageous. I highly recommend you use an attorney for this and NOT try to draw up the agreements yourself as you may put something in there that is a violation of state or federal law, or not cover yourself adequately.

I also highly recommend you NOT finance the sale for whoever buys it. I have seen too many business owners finance the sale of their business and get left without getting paid. You are not a bank, so don’t try to act like one. Have them get a loan if needed to pay you the full amount due at the time of the sale.

Also, I would use resources in the area where you are as they will have a better sense of what is happening in business in your immediate area than someone from another state.
 

Hi Sandra, I feel really great about the progress I have made in paying off my credit card debt, but just about every time I make a payment on a card, the credit card company reduces my credit limit. This month the credit limit on one card I’ve had for over 6 years was reduced from $9,000 to $6,500. I want to have some credit available to handle emergencies or book my travel arrangements. What am I doing wrong to cause this?

Asked By: Alan J. – AJ’s Speedy Printing, Michigan

Dear Alan,

You aren’t doing anything wrong at all. If you call your credit card company and ask why they reduced your credit limit, they will almost always tell you something that makes it sound like it is your fault. Don’t buy it. What is really happening is that the card companies are desperately trying to get rid of the bad debt and toxic assets they have created by lending to not-so-creditworthy individuals who are not paying their bill.

The credit lenders and banks are trying to survive through the current economic crisis just like everyone else, and keep their shareholders happy by propping up their stock prices. An easy way for them to manipulate the numbers is to reduce the amount of outstanding loans on their books. Every time they reduce your credit limit they have (on paper) reduced their outstanding loans by that amount, they just aren’t being honest about why they are doing it.

What YOU can do to accomplish your goal of getting out of debt, but still maintaining some credit and being able to cover emergences is this. First, start stashing a little cash away every week until you have at least $1,000 in an “Emergency Fund” so you don’t have to worry about emergencies. Second, keep paying off your credit debt. The card companies still want to earn interest from you so it is unlikely they will reduce your credit limit to a few hundred dollars or close your cards completely. Third, you can always consider a secured credit card for travel, where you deposit funds to cover the available balance in case you can’t pay. That’s like a forced savings plan, but you won’t earn any interest on that deposit.

Trust me, when you get your debt paid off, or get close to that point, the credit card companies are going to be tempting you with all kinds of offers to get you using that card again, because they make profits only if you carry a balance. Don’t fall for that either. Only use the card if you can pay it off when the statement arrives in your mailbox.

Hi Sandra, I live in Ireland and I’m interested in earning more money since my husband died too young and I have a lot of debts to pay, both his and mine. Do you know any residual income activities I could do on an international level? Thank you.

Asked By: Melody - Dublin, Ireland

Dear Melody,

There are many residual income activities you can do. The most important thing is to decide what you are passionate about and then pursue something in that area. Your passion for the subject will sustain you through the work it takes to build one or more avenues of income.

Since you work in a library, let’s take books for example. You might be passionate about the subject of gardening and love to read as well. You can do a lot just with those two passions.

Start a Blog on the internet at one of the free sites like http://www.blogspot.com or http://www.wordpress.com and start writing book reviews about gardening books that are available at http://www.amazon.com

Sign up at amazon.com as an affiliate and put your affiliate link in your book review about that book so those who click through and buy the book earn you a commission on the sale.

While being an affiliate for other people’s products can bring a steady stream of commissions once your blog site becomes well known, the payments are small. The remedy is to also write your own book on gardening and sell it from your blog site at full price so you earn the entire price of the book. The book can be delivered as an electronic file (a PDF file) so you never have to publish a hard copy. All it costs you is the time to write it and format it. You can set up an online shopping cart so customers can pay you through PayPal.

If you love to talk to people live, you can start your own internet radio show on a site like http://www.blogtalkradio.com and interview guests who have lots of knowledge in certain aspects of gardening; growing roses for example. You can interview authors of gardening books. You can do on-air book reviews. How do you make money from this? You send your listeners to your blog site to buy the books there. You might even find a sponsor for your show like a local nursery that sells plants and will pay to advertise on your site. You can also find a co-host for your radio show to be on-air with you so if nobody calls in with questions you and the co-host can discuss something interesting instead of you talking by yourself.

The most important thing you need to do is build your list. What that entails is collecting the emails of people who visit your blog site or radio show so you can continue to send them notices about new books you recommend and tips on gardening for the appropriate season.

How do you find out if enough people will be interested in gardening to make it a legitimate business for you? Survey everyone you can and ask them. You can also do keyword research on the internet to find out how many people search for gardening topics. Do a search on Google for “keyword tool” and use one or more tool to search on “gardening” or “cooking” or “baking” or whatever you have a personal passion for, and turn that passion into a way to help others while marketing products to them that make you an income. That’s a smart money management technique that can get you that residual income.

A friend of mine said a very important thing, “Marketing is selling a solution to a problem for a profit.” So whatever subject you have a passion for, find out what problems people have with that and market things to them to solve those problems for them.

Another successful internet marketer made a very astute observation. He said, “The guy who buys a drill doesn’t want the drill, he wants the hole that the drill will make.” So make whatever you do benefit your target audience and solve their problems and they’ll love you for it.

I hope you have found this to be helpful, and I wish you all the best.

 

I've been seeing internet advertisements that claim they give you the ability to make thousands of dollars a month by "posting links on Google". Seems too good to be true and I can't believe it is something that Google supports. Is it?

Is your product designed for business or personal use?

Asked By: Neal Singh - SmartFuel International (South Africa)

Do you have an affiliate program? I’m interested in all sorts of passive income opportunities. I love your site about the depression and how to profit. Liquid cash is key.

Asked By: MC - Internet Marketer

Is there some sort of "mortgage accelerator" program where your mortgage gets paid off in a fraction of the usual 30 years time?  I want to learn how I can do this for my mortgages.

Asked By: Brenda B.

Dear Brenda,

Brenda: You can do this yourself by making extra principal payments each month.

Example if your mortgage payment is $2,000:



If, when you make the payment for 8/1, you include an extra payment for the principal due 9/1 of $302 then you don't ever have to pay the interest of $1,698 that was due 9/1. Your next payment due (which you will pay on 9/1) is actually the 10/1 payment.

Then on 9/1, when you make the 10/1 payment, if you also pay the principal payment from the 11/1 payment, then you save that interest. If you do this you will cut your mortgage payoff time in half.

Write on your payment coupon “Extra Principal Payment $302” so there is no question of where you are directing the funds, and keep a copy of the coupon and the check for your records.

If you want to accelerate it even faster, (cut it by 2/3rds) if on 8/1 you make the payment and include the principal amounts for the payments due 9/1 and 10/1, then you don't pay the interest on the 9/1/and 10/1 payments. Then on 9/1 when you make the next payment you would pay the payment for 11/1.

Ask your mortgage lender for an amortization statement of your loan so you can actually see the correct principal and interest amounts broken down for each payment. They may not want to give you one so you can't do this as they lose interest income, but you have a right to have it. Even if you have to pay them for it, it is worth it. Typically they charge $25 - $75 for an amortization statement.

I value my work and yet find it hard to raise my price.  I am low for my area but also have a medical spa nearby where there are more services and medical referrals.  The massage price is also higher there.

Asked By: Elaine Allen – LMT – Licensed Massage Therapist

I heard that companies are required to file new I-9 forms on new employees this year.  Do you have any information on that?

Asked By: Stacy B – Restaurant Owner

I read your article written for Massage Magazine. I printed off the Business Checklist for Increased Profits and just requested the free "Debt Reduction" Solutions Guide. My partner and I have a small practice here in Tennessee. It’s a full service salon and massage spa... I know the economy is bad and although you say not to worry about it, because we can not control it what do I need to do because although I am not worried about the economy in general, I am worried because of the economy, we do not have the business we should and to pay the bills. True I can not control what others do or if they come in to our salon, yet if the economy is bad, which we all know it is, than I do not have clients coming into the salon to spend money. Without these clients, we do not make money to pay our bills. We have been in business under 2 years. I guess what I am asking, in your article you said not to worry about the economy, How do I not worry and focus my thoughts to increasing profits to pay the bills when because of the economy, we are down in business… Thanks for your time.

Asked by: Randy (Full Service Salon and Spa – Tennessee)