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Heard on the Light Rail

Published on Saturday, 07 July 2012 16:33 |

Being oblivious to those around you doesn't make them go away.

Imagine sitting at your desk just before Christmas looking forward to some time off. The phone rings and the voice on the other end says, “Hello, Mary. You don’t know me, but you will be laid off next Friday. Goofy Corporation knows you are a dedicated, hard-working employee, but they have to let someone go. They picked you because of your annoying habit that bothers people in the office.”

You hang up and decide it’s a prank call. But how did the caller know your name? How did he know you have three kids and your husband has a good job?

Imagine now a different scenario. You are a Senior VP with Goofy Corporation. A business reporter calls you about the pending restructuring and layoffs. She heard there are financial setbacks forcing the company to make significant cuts.

She also heard you and the CFO disagree about how to handle the situation. Can you please comment? Immediately after that call, Mary comes into your office and asks if she is being laid off. Where did these people get this information? There have been discussions about restructuring and layoffs. Mary is on the list, but none of this was discussed outside the close circle of managers involved in the decision. You trust them all and have no reason to think they leaked the information. How did Mary find out? Who else knows? Where did they find all this out?

Is Chief Justice John Roberts crazy...like a fox?

Published on Sunday, 01 July 2012 23:32 |

From CaptainCapitalist.com

When Chief Justice John Roberts sided with the more liberal side of the Supreme Court bench to uphold the Affordable Health Care Act (Obamacare) under the taxing authority of the Federal government, a lot of Conservatives, Libertarians and Tea Party types thought he had lost his mind, if only temporarily. I must admit, that was my gut reaction. However, after hearing some of the punditry opine on the matter, I'm beginning to think the John Roberts opinion may some day be seen as the Trojan Horse that put the breaks on runaway Federal spending.

The Obama administration and Democrats in Congress did not want this law regarded as a taxing legislation. In fact, they rejected a version that referred to it as a tax. What the Roberts ruling does, is establish that a piece of legislation that requires individuals to make a payment to the Federal government is a tax, no matter what you call it or don't call it. This is important because a tax bill only takes 51 out of 100 votes in the Senate to undo. Other types of legislation can require a super-majority (60 votes) to accomplish a repeal. Whether the Obamacare bill survives or not, this will make it tougher to enact spending programs in the future, at least ones based on "fees", "surcharges", "penalties" and the like.

Perhaps more important, or at least equally important is the ruling on the expansion of Medicaid. Many states have opposed this portion of the law because it requires them to expand their Medicaid rolls through new eligibility rules. The Federal government, under the law as it stood before the ruling, would force states to comply by threatening to take away all of their Medicaid funding if they refused. The ruling says that's a no go. The Federal government can withhold funding for that particular program, but cannot take away existing funding. This is big, because other government programs have been forced on states using the same tactic. If you didn't raise your drinking age to 21 for example, you would have lost highway funds.

What this part of the ruling could enable is true state laboratories for government spending programs. States get to choose on their own, without the threat of force, whether or not to participate on an a' la carte basis. Good programs would be adopted by other states in the future. Bad ideas would gradually go away. More immediately, programs already in force are vulnerable. States may be able to now opt out of existing programs within programs without fear of reprisal.

Now, I think it's still possible that Roberts simply dropped the ball on this one. But whether unintentionally or with brilliant forethought, it's also possible that Chief Justice Roberts has opened up two new fronts in the war on over-reaching government. Fronts that big government fans were not prepared for.

Many small business owners work long, hard hours only to lose their businesses after 4 years

Published on Friday, 29 June 2012 15:48 |

Most small business owners dream of financial independence. Yet almost half fail within four years. Only 35% make it to their tenth year in business. These are chilling Small Business Administration statistics.

Here's what small business owners can do right now to honor Independence Day and achieve business financial independence:

Stop unintentionally "cooking the books" and get timely, accurate financial statements each month. Business owners can't make good business decisions with inaccurate financial statements. Cooked books can get a business owner cooked.

It's like cooking a frog. Put the frog in a pot of cold water and slowly increase the heat. The frog is dead and cooked before he can jump out and save himself. Business owners with inaccurate financial statements can't see the mistakes and cash flow issues that can put him out of business.

Like the frog, he can't see minor issues before they become major problems. Soon he's dead without realizing it.

Here are four other strategies to achieve business financial freedom:

   1. Understand that cash isn't profits. Business owners need both profits and cash to be successful.
   2. Invest 15 minutes each month to calculate the critical financial ratios to see the trends for the business.
   3. Don't meet a competitor's price - unless the company can be profitable at that price. "If they can sell it for that price, then so can I" is a recipe for disaster.
   4. Teach every employee how they impact the profitability of the company and share the profits with them.

Keeping Score: Financial Management for Entrepreneurs by Ruth King, gives the details of these five steps to business financial freedom. This 86-page manual, written in English rather than accountingese, is FREE to anyone who asks for it. Go to www.divaofthedollars.com to download this essential manual.

ABOUT THE AUTHOR
Small business financial expert, Ruth King has written financial applications for the iPhone, iPad, and Android as well as written The Ugly Truth about Managing People and The Ugly Truth about Small Business, a USA Best Books for Entrepreneurship award winner. Small business owners can test their financial aptitude by going to www.TurnOnMyFinancialLightbulb.com.

Supreme Court helps bring the economy to a standstill

Published on Friday, 29 June 2012 00:58 |

From the LindaOutLoud blog

Linda Duffy The Supreme Court has finally ruled on Obama care. In the good news category, they ruled that congress can not use the commerce clause to force you to buy insurance or any other products. The bad news is the Individual Mandate still stands as a tax. In 2009, President Obama emphatically declared that the penalty for not buying insurance was NOT a tax, thus proving once again he and his cohorts are lying sacks of crap. (In other news, the sky is blue, the sun rises in the east and water is wet.)

Another section of the ruling says that the feds can not force states to expand medicaide. It was the goal of the federal government to force states to expand those programs by installing penalties by taking away existing federal funding. This is not allowed according to the Supremes.

As the talking heads and legal eagles pour over the full text of the ruling, the most important thing is how it effects individual business owners. What exactly is the impact? Well that's the problem. Nobody really knows and that is a serious problem. The sluggish economy will now come to a complete standstill as a small business owners try and figure out how this will effect their payrolls.

Personally, I do know that despite wanting to hire someone for my small business, I wont. Not until I can calculate what this will cost me down to the penny. Without that knowledge, hiring could cause serious financial hardship to my family. If I am not hiring despite needing an extra hand, you can be assured that other business owners will be in the same situation. If the legal and political climate effecting your day to day operations is murky, the smartest thing to do is to make do with what you have and wait for clarity. This means economic paralysis. If you were hoping for a new job or a better paying job anytime soon, your odds just got much much worse.

Three Brothers and a Cousin How to Choose the Right Investment Fund

Published on Thursday, 28 June 2012 21:26 |

Three Brothers and a Cousin
How to Choose the Right Diversified Vehicle

by Ron Phillips There are many compelling ideas for plunking our investment dollars into. It might be international stocks, a Dow Jones index, commodities, real estate, utility companies or tech stocks. No matter the investment, chances are there is a mutual fund for that. But what kind of fund to buy? What kinds are there?!

THE OLDER SIBLING

The first U.S. fund type was the closed-end fund. These have a fixed number of shares and trade like a stock, changing value all day long. Many times the closed-end variety can sell at discounts to their real value. You can get assets for the proverbial “pennies on the dollar.” Being smaller, they have their advantages. They are quicker to go up when they gain in popularity and hidden gems fly under the radar. Although an investor may face difficulties selling a large block of shares in a thinly-traded closed-end fund. Another benefit to these funds is they can use leverage to magnify returns. Like being smaller, this leverage has the downside of added risk.

THE POPULARITY CONTEST WINNER

The open-end fund is the most-used mutual fund. They have the highest assets under management. Most 401k’s use them. Pensions and foundations use them. No-load funds are open-ended. They play an important part in a portfolio. They are traded once at the end of the trading day. This makes the price less volatile than closed-end and other funds. Yet it creates some limitations, too. They can not be liquidated quickly, be sold short or sell at discounts.

THE BABY

Exchange-traded funds are the newest fund type and a rapidly growing category. They have more assets than closed-end funds and are quickly gaining on open-end funds. They have a lot going for them. They have very low annual fees. High-priced open-end funds can charge over two percent annually. Some ETF management fees are only 0.09 percent yearly. ETFs usually involve a commission to get in and out. This can still be very efficient. You might hold the ETF for 15 years and lower that average cost. Most of the innovation happens with ETFs. There are new categories and asset classes created almost monthly.

THE DISTANT COUSIN

The least-used fund is the unit investment trust, or UIT. They were popular once but have severe limitations and share advantages that the other three execute more efficiently. For example, a UIT is issued once and the buyer has to absorb a large commission, sometimes as high as 3.5 percent. They can be re-sold but it can create some lack of liquidity. Also, the underlying portfolio “matures” and is then liquidated. Sorry buy-and-hold investors. Look elsewhere.

All four of these relatives offer diversification, professional management or strategies, reasonable costs and, hopefully, the ability to sleep at night. Knowing that your investments are not in a single, solitary stock, bond or other asset.

* * *

“Family is not an important thing, it's everything.”

Michael J. Fox

Ron Phillips is an Independent Financial Advisor and a Pueblo, Colorado native. He and his wife are currently raising their two sons in Pueblo. Order a free copy of his easy-to-read investor report Creating Your Own Pension That You Can’t Outlive by visiting www.RetireIQ.info or leaving a message on his prerecorded voicemail at (719) 924-5070. Simply mention Promo Code #2001 when ordering.

What to consider in a vehicle for a new driver

Published on Tuesday, 26 June 2012 02:36 |

Tips for selecting that first car for the kid provided by Dawn Langford of MasterDrive

Selecting the best vehicle for a new driver is an important step. New drivers need a vehicle that is maneuverable, safe, and practical. Here are our recommendations to consider when selecting a vehicle for a new driver:

v Get a midsize sedan with good crash rating –a big SUV is VERY difficult to control

v IF your new driver must drive a large car or SUV .. make certain they know how to handle it and how it feels when there are significant shifts in weight

v Consider the size of the vehicle .. the bigger the car the greater the damage it can cause another car in a crash