Wednesday, July 1, 2015
A very common question that keep's popping up when talking to people about finances is “How much money should I set aside for emergencies”? This question has many variable answers but when I did my research most financial advisers suggested to start with a goal of three months. But the ultimate goal would be to have six months of income set aside in an interest bearing account.
I would shoot for the six month goal in order to give yourself a good cushion to fall back on if an emergency arises. Back about twelve years ago I was laid off work without any warning sign or knowledge of it coming. I was out of work for six months but thankfully I had six months of income set aside, if I did not have this cushion I and my family may have ended up on the street without a roof over our heads.
Back in 2008 during the great meltdown of the economy many people were without work for long periods of time. With the economy today and the unstable governments in other countries the American economy is very fragile. At any given moment we could have something major happen here in the United States and our money system could have a major collapse and people would be out of work and have no income. Having a nice financial cushion of money set aside makes life a lot easier and less stressful if you find yourself like me out of work for any given period of time.
The truth is that anything could happen to anyone of us at any given moment. We could find out that we have some major illness, or we get into a car accident, your spouse dies out of the blue, etc. One just never knows what may happen at the blink of an eye. We are not guaranteed our next breath. My best advice is, be prepared and if you are not then make it a goal to get yourself prepared.
Let’s look at how we can get this started.
You first need to know what your bills are. You need to take some time and sit down and write out what your fixed monthly bills are, this way you will know what your fixed expenses are. Now figure out what your variable expenses (gas, groceries, entertainment, etc.) are.
Once you know what your total expense picture is you can then determine how much money you will need to save. Take all your expenses and multiply by three for three months emergency fund or six for a six month emergency fund.
To set up emergency account correctly do not try and save the money in your checking account. I have tried this and if it is sitting where it can be seen you will spend it, trust me. Set up another account preferably with another financial institution like a credit union and make sure it is an interest bearing account.
Be extremely disciplined to get this account filled up, this is a very important fund and needs to be handled as a do not touch me account. Only draw money out of this account for emergencies only. You can decide what you call an emergency; some examples would be car repairs, hospital bills, money to live on if you or your spouse loses their job, things like this. Not vacations or money for a down payment on a new car.
No one expects to lose their job, I didn’t twelve years ago, but things happen. That is why it is wise to have this emergency fund set up and the fund filled as soon as possible. It is better to be prepared then to be caught with empty handed and you and your family be caught in a financial disaster. But if you do have an emergency and you have an emergency fund set up then you can sleep at night soundly if you are prepared.
If you are new to planning a budget or if you are not technologically advanced, this simple budgeting process of using envelopes may be right for you. I remember back many years ago when I was just around twenty years of age this technique was introduced to me. This particular budgeting system is very effective and has a proven track record for working for most people as long as they stick to the program. Many people today rely on technology to do their budget and finances but if you look back you will probably see that a large portion of population is in debt because of technology. It is so easy for people to pull out that plastic card to pay for things even when they don’t have the money to pay for them. We all have been guilty of this in one way or another and that is why we are in debt, and many us are deep in debt way over our heads.
Let’s take a look at these simple steps to setting up an envelope budget.
- The first thing you will want to do is go to a Dollar store and purchase a box of envelopes. I like e to use the yellow envelopes that has a clasp on the top.
- Next write on each envelope preferably with a Sharpie the items you need to budget for. The envelopes need to be categorized and labeled. For example, label one for groceries, one for gasoline, one for credit cards, and so on. I would also make a miscellaneous envelope and a backup envelope. These will be used only for a couple of months to make sure that you do not run out of cash in a particular envelope. This will be your cushion while you are adjusting your budget per category.
- Now that you have your envelopes set up you will need to sit down and figure out the monthly dollar amount for each envelope. You should have a good idea of how much you spend on each of the categories. If for some reason you have no clue what you spend on these then you will need to keep track over a month or two on paper to see what you are spending so you have an idea of what to put on the envelopes.
- Now pay your recurring fixed bills like your mortgage, utilities, car payment, etc. The money left over is what you are going to use to set up the envelope budget.
- Take cash out of your account at the bank and put in the allocated funds into each envelope. When you make a purchase you will pay for the item with the cash in the envelope. Get a receipt for the item even if it is for gas, take the cash from the envelope and replace it with the receipt. When all the cash is gone in the envelope you are finished for the month in spending in that category. The idea of the receipt is for review, if you are upset because you have no more cash in that category and you want to know where it went you can go back and look at the receipts and see what you spent the money on.
You will find it takes a couple three months of tweaking this system to make it work smoothly. This is why you have a miscellaneous and a backup envelope with spare cash in them to fall back on so one of your envelopes runs dry and a emergency happens in one of these categories.
At the end of the month and you have left over money in any of the envelopes you will want to take this money and put it into a savings account. If you are like most and you don’t have a savings, now is the time to start one. Once you have three to six months of income saved up in your savings you will want to take the money that is left over each month to start paying down your debts until you are fully financially free of debt.
Monday, June 29, 2015
Credit Unions - Why Should I Use Them?
When driving around town you will see both credit unions and banks in your neighborhood. People sometimes do not know or understand how a credit union works. Plus everybody is different especially when you are talking about their money and savings, some people may prefer to open an account with a large commercial bank while others may prefer to go with a small credit union where they get more personal attention. Here are some advantages and and a couple of disadvantages of credit unions.
Credit unions are similar to banks but are owned and operated by its members. A credit union is a not-for-profit, cooperative financial institution that is owned and controlled by its members. A credit union is obligated to take the money it makes and invest it back into the operation or uses the profits to better the institution.
Once you open an account with a credit union you automatically become a member. A credit unions goal is to deliver great customer service and please their members. At credit unions you the members are the owners. At some credit unions they even allow members to vote on policies concerning the operation of the facility. At banking institutions especially the larger one’s their main focus is to make a profit and making their stock holders happy. This is why there are so many fees for every little transaction you make. Anything they can do to increase the revenue of the bank they will do. At credit unions if there are any fees they are much less than regular banking institution. The lower the fee’s the more money you can keep in your pocket.
Credit union employees you usually will see time after time, this is nice because you can build a relationship with the person that you deal with and gain their trust. This can come in handy when you have questions about your account or need a loan. At a regular bank you hardly ever get a chance to build a relationship with your banker, so when you have a question or need a loan you may not feel as comfortable as you would at a credit union. Credit unions are here to help you but a bank is only here to make money.
ATM's at credit unions is service that you usually don’t get charged for if you use the credit union ATM, the disadvantage is that the ATM’s can be hard to find because there are very few of them. They usually will only be located at the credit union location. You can save money on ATM fees but the con is you will have to travel out of the way to use the ATM or pay a service fee for using a ATM that is not connected to your credit union.
Credit unions like to offer its members lower interest on their loans, such as lines of credit, credit cards, auto loans and other types of small loans. Credit unions usually don’t like to do home loans because it ties up the credit unions money for a long period of time. Credit unions usually don’t have strong stipulations on their loans and offer lower interest rate which makes their loans look more appealing than the larger banking institutions. If a member has poor or weak credit most credit unions are willing to sit and work with you to obtain a loan that fits your needs. Most of the time they will be able to help you get the loan that you need.
Disadvantages to belonging to a credit union are few, one of the minor disadvantages is that not everyone qualifies to be a member. Unlike banks that are open to anyone, laws require credit unions to have a defined field of membership, which means you'll have to be a member of that group to access the credit union and its services.
The field of membership can be broad, including an employer, church, school, community and employee group.
Gaining access through an employer is the easiest way to become a member, but community-based credit unions are also widely available in many cities and towns across the country. The vast majority of consumers, especially in large communities and cities have an opportunity to join a credit union.
As you can see the pros do heavily outweigh the cons for belonging to a credit union. Look around in your community to find a local credit union to see if you qualify to be one of their members. If you don’t check out others in your area, you will probably find one that you can meet their qualification’s.
Once you do find one that you can belong to make sure you sit down with one of the credit union advisers to find out all the services that they offer.
Today we are going to take a deeper look into setting up an EBay business.
We talked about in the previous post about opening an EBay business and the basics of what it took to opening this type of business. Now we will dive in a little deeper as too setting up an EBay account and running the business. I listed several steps to help guide you along the process, hopefully they
Step 1. The very first thing you will need to do is open and EBay account and a PayPal account. You will need to do this in order to sell on EBay and to collect the funds that you are owed for the items that you have sold. Paypal is truly an awesome site that is easy to use and they accept all major credit cards and will do international processing as well.
Step 2. Since you have just opened your first EBay account you will want to build up some positive feedback. I would recommend purchasing a few small inexpensive items to build up positive credibility and a positive feedback score. Positive feedback will set your buyers minds at ease and it will show people that you are a trustworthy person and that you have good integrity.
Step 3. When it comes to selling items you will find a lot of opinions on the web both positive and negative. Try to not look at the negative opinions because there is no way to know why their EBay business did not work for them. Focus on the positive comments and learn from these power sellers.
In order to learn how to sell items on EBay I would recommend selling some items that you may have laying around the house at first so you can experiment with wording and pictures and if you make a mistake it won’t cost you an arm and leg. Plus this will help you de-clutter your home, garage and shed and put a few extra dollars in your pocket.
If you are selling items like clothing, jewelry, or anything that has a brand name, make sure that you put the brand name in the title and description. Most people will be searching brand names in their search criteria on EBay and if you do not have the name of the brand in the title or description your item will not show up on their search list.
When it comes to condition of items, be 100% accurate and up front in the description of the item. If there is a flaw or scratch in the item make sure you mention it, I go as far as to take a picture of the flaw so people will know about it and cannot come back after me for not mentioning the scratch. People love it when you are honest and don’t try to sell something as mint condition when in reality it has a flaw. This also go’s in helping to build your credibility and good feedback on EBay.
Step 4. Take good pictures with a simple digital camera, you do not need anything fancy or expensive save your money. I use a point and shoot automatic camera, I do not use any kind of fancy high dollar camera. I do spend some extra time staging the item so it has good clarity, and there are no other items in the picture that would confuse the buyer.
With jewelry I try to use a black background that is nice looking. I may take a cardboard box and put it on top of a table and cover it with a clean black sheet. I smooth out the wrinkles, and place the item on top of the covered box. I take several pictures from the front, top, and sides. I then download the pictures into my computer and use a simple free picture editing program in the computer to crop the photo and clean up any distortion to the picture.
I have four or five different backgrounds that I use, it just depends what I am selling and the color of the items. Staging to me is a very important along with writing a good description, spending time with the staging will make your item look more professional than your competitors.
Step 5. Pricing an item on EBay can be a little tricky. Do some research on EBay or Amazon Auction for the same item that you are selling? You do not want to over price your item and it does not sell, this is a waste of time and listing fee’s. Find what everyone else is selling the item for, as you will see some people take one or two pics of the item and write a brief description of the item in hope that it sells. If you want a few more dollars for your item, put on multiple pictures and write a detailed description of your item. You may find that you will get a few more dollars for your item than your competition since you put more effort into your listing.
Sometimes I will hold off on listing an item for 3 to 6 months in order for the market to turn around and the price to come back up. Once in a great while I will put something on a shelf for a year because the same exact item is selling to cheap and I have more invested in the item than what it is selling for. A little patients does pay off.
Step 6. Writing a description and listing your items to sell is at the top of the list of priority of importance. You do not want to take a short cut on this.
- a. Brand Names
- b. Item Name
- c. Model Numbers
- d. Sizes
- e. Color
- f. Make of the material
- g. Circa
- h. Measurements
You Must! Give an extreme detailed description of the item. Remember that you want your item to sell and not lose the customer to the competition. There is a lot of competition on EBay so you want to make sure that you stand out above the rest of them.
EBay selling manager is a great tool to use. They offer different styles and templates to help you sell items. A listing template contains everything you need to design your listing page. There is other listing template software on the internet that you can use to dress up your product listing page.
Step 7. Answering Customer Question. Buyers will have all sort of questions for you. It is imperative that you answer these questions as soon as possible. Customers would not be asking questions about your product if they were not interested in purchasing the item. Several of my customers ask questions about each item they purchase and will not make a bid until their question is answered. Customers can be fickle so do not let a customer slip away because you forgot to respond to their question.
Step 8. Shipping and handling. There are many ways to ship your items to the purchaser. I find that USPS has worked out the best for me. You still can receive free shipping supplies from the USPS if you order them correctly. Do some research online with the postal website to find these free items for shipping.
You will find that you get positive feedback from customers when you ship quickly and you use good packaging. Do not go cheap when it comes to packing the item to be shipped. I still remember receiving a 20” computer monitor from a seller on EBay that came in a box with no protection put around the monitor. There was no bubble wrap or peanuts in the box to protect it. I was very upset and I never bought another item from this customer, I also did give him negative feedback.
Customers want their items fast and in good condition, so take that extra few minuets to package the item extremely good, it pays off in positive feedback from your customers.
These steps should help you in setting up your EBay business. You will find a lot of positive and negative comments on having an EBay business on the internet. But like any business it takes work and commitment in order to make it successful. It is not one of those businesses that will make you get rich overnight, but it can make you some serious money part time and could eventually turn into a full time business if you devote the time and energy to make it one.