Make Money Work

Acclerated Debt Payment

2008-04-17T10:17:00.000-07:00

Saving money from our family budget and investing is one way of accumulating money. Another strategy is to reduce the amount of interest you will be paying on credit cards, first and second mortgages, other installment credit accounts, and car loans.

As part of a financial plan, consider taking a thirty year mortgage on which you will have a total interest amount larger that the origianl loan and pay additional princple. You have already agreed to the terms of this mortgage and by adding $100.00a month to a $160,000 loan it will reduce the length of the loan around five years.

The best appoach is to review the interest rate charged on all your revolving credit accounts and pay of the one with the highest interest rate or smallest balance. When an account is paid off add that amount to another account's payment make the balance reduce faster. Continue this proceedure until you are debt free. The amount that was being paid to the last debt should now be put into an investment, 50% for future spending and 50% for retirement spending.

The time value of money is a big help in accomplishing your financial goals. Start young, make a good income, and use a lot of financial discipline.

For more information go to makemoneywork.info

Energy Cost -Part II

2008-04-08T15:14:00.000-07:00

One of the arguments is that fossil fuel pollutes the environment and that we need to use some other form of energy. Electricity runs from 6.5 cent to 12 cents a kilowatt. Solar power runs between 34 cents to 42 cents. Wind is between 3 to 5 cents when the wind is blowing.

The market place says that oil is the most cost effective source of fuel for mobile vehicle energy consumption. So government says we will add a tax to pay for roads. The tax keeps going up but the taxpayer do not have accountability. Is the money going to roads, or maybe to partially fund a mass transit system?

Atomic and coal fire electric power plants provide the most cost effective electricity. Oil is the most cost effective fuel for cars, trucks, airplanes, trains, etc.

There is no scientific proof that the environment is harmed by carbon dioxide omissions into the atmosphere. In science there is not consensus, only absolute conclusion. Global warming is a scientific consensus based on computer models.

In 2006, the west coast forest fires produced one-third of all the pollution in the United States. I have not heard any outrage from the environmentalists, laws being passed to make forest fires illegal, or a tax on smoke.

Animals exhale carbon dioxide. What is next, a tax to breath?

Let the market place work. Drill for the oil. Work on alternatives. The solution will be found when the price is right without governmental interference. Nature is to complicated to think that humans can control the atmosphere.

For more information go to makemoneywork.info.

Frame Of Mind

2008-04-04T08:22:00.000-07:00

Making money work hard sounds easy until you get into the process
of structuring a program to accomplish increased accumulation and
savings.

Your talents and interests may not involve planning how to spend your
money but it is very important to learn how to manage your money properly.
There is only one person who cares how well you do, and has the motivation to be successful.

An important concept is what frame of mind you’re in and how you
visualize the whole financial planning process.

Think of being at the entrance to a tunnel, looking into the dark and asking
yourself what do I see. Visually you see black darkness but mentally you
can envision what ever you want to. Accumulating excess money is the
catalyst to make the vision you saw in the tunnel happen.

For more information go to makemoneywork.info.

Energy Cost Part I

2008-04-01T08:07:00.000-07:00

One of the greatest thing about our market driven economy is the ability to solve problems. If there is a demand for a good or service, the market place will provide what is needed if a profit can be made in the process. Another type of economy is when the government decides by legislation to change the market place.

In the case of gasoline the oil company makes 8 cent, the gas station makes 8 cents, and the government makes 32 to 48 cents a gallon. The ability to refine crude oil has been restricted for environmental reasons, and drilling for news sources in continental U.S. has been restricted for environmental reasons.

To supplement the need for fuel, the government has decided to subsidizes a more expensive alternative. Since ethanol is made from corn the price of commodities have forced the cost of meat, milk, cereal, eggs and other groceries to new highs. The fuel cost has increased the price of all item hauled by truck. The price of natural gas has increased because it is used to refine ethanol, and fire power plants to conform to environmental restrictions.

What price must be reached before we get back to a market economy?

For more information go to makemoneywork.info.

Mental Picture

2008-03-04T12:55:00.001-08:00

One of the most important thing that we need to be aware of is our media sources. With the number of different kinds of information and entertainment, our space is invaded by others everywhere we go. The new portable communication devises make access a lot easier and the cost is declining so it is affordable.

These invasions into our space causes a mental reaction to the informations received. Most of the information is sensationalized, spun to match an agenda, conforms to a political point of view. Joseph Goebbel's in his Principles of Propaganda gave seventeen principles for a successful information program. He said if you tell the people the same thing over and over it become truth whether it is or not.

If you find yourself thinking that every thing seem to be going wrong, sub-prime loans, high prices for oil, low housing sales, four soldiers killed in Iraq, the dollar is declining against foreign currency, etc. Ask yourself, do any of these situation apply to you? Are these circumstance you can get involved directly to change? Would the best thing to do be turn off the media, don't read the newspaper, and make a choice as to what you really think or what you want to do about this issue.

The greatest asset a human being can have is to be a citizen of the United States. The rest is up to you. Don't let others do your thinking. Question everything and make you own conclusions.

For more information go to makemoneywork.info.

401(k) Allocation Review

2008-02-29T17:58:00.000-08:00

When the stock market takes a down turn, what should be done
with the allocations in my 401(k) to keep from loosing money?

By the time you receive the quarterly report showing the account
has lost money, it is probably too late to take any adjustments.

There are several steps that can be taken to reduce the loss in a
down market. The overall strategy is to buy low and sell high.
Changing allocations after the money has been lost will prevent
receiving the gain when the market turns around.

When you watch the evening news, make note of the Federal
Reserve prime interest rate, the change in the S&P 500, and the
trend of the stock market, up or down .

The prime interest rate shows what is going to happen short
term. Interest rates going up, stock market/bond market
going down, and economy slowing down.

This is the time to decide what action needs to be taken. The
closer you are to retirement will determine the action that needs
to be taken.

The investment company who is the fiduciary for you retirement
plan (401(k),403(b), 408 (a), or 457 Deferred Compensation will
change allocations per your instructions. Their income is made
managing the funds in the different variable accounts. It the
future retiree’s responsibility to keep track of the allocations
to minimize the loss in a down market.

For more financial information go to makemoneywork.info.

Retirement Day

2008-02-19T08:12:00.001-08:00

The magic time has arrived. Your old enough to stop working and retire which is defined when you have time, money and health. The amount of benefit is hard to pin down. There are defined benefit plans(union plans, government pensions), 401 (k), ESOP, and 403 (b) just to name a few.

401 (k) retirement plan for profit making companies are a combination of your money and employer matching money which says you can have all the money usually after five years of employment. You should transfer the balance to your own IRA , either an annuity or mutual fund and make withdrawals as needed. All withdrawals are taxable.

(E) ployee (S)tock (O)ption (Trust) is a retirement plan based on length of employment, position, and profits of the company. Your balance of the trust is available when you stop working and should be rolled over into your own investment account. All withdrawals are taxable.

403 (b) retirement plan for non-profit companies which in most cases the contributions are made by the employee by payroll deduction but can have matching fund from the employer. The withdrawals are all taxable and are usually in the investment vehicle chosen by you and is fully vested from the beginning.

Define benefit plans are calculated by the pension plans to determined you monthly payment.The usual scenario is the human resources department or pension trustee will call you into the office and ask you what option you want to take? So you ask yourself, what is he/she talking about? (1) Life income option is the maximum amount and you will receive this amount for your life then it ends. (2) Life with 50% survivor which means you will receive a lessor amount but your spouse will receive half that amount for the spouse's life then is ends. (3)Life and 75% survivor which is a lessor amount now and 75% for spouse for life. These are the most common choices. Some of these plans have cost of living adjustments but usually only on governmental plans.

For more information go to makemoneywork.info.

2008 Economy Stimulus Package

2008-02-11T10:38:00.000-08:00

The stimulus package has passed the Congress and has received President Bush's signature. It is estimated that $120 billion will be put in the hand of taxpayers with income below $75,000 for individuals -$600, $150,000 for couples-$1200, per child $300. For those seniors who did not file a tax return but have an income of $3000 or more (including social security, railroad retirement and certain veteran's benefits) $300. The later being dependent on how well the IRS Social Security, Railroad Retirement and Veteran Administration share information.

This tax rebate minus administrative overhead, fraud, and complexity will put about half of the $120 billion into the economy. The rest will be used to pay of personal debt. An additional $50 billion will be used to give incentives for business to purchase equipment.

The Laffer Curve shows what happens when taxes are to high, revenue declines. The politicians do not want to cut tax rates because they say it would reduce tax revenue and would take away some of their power. If this is a tax rebate being used to be an economy stimulus, would this not be the same as a tax rate reduction leaving money in the pockets of tax payers to stimulate the economy?

For more information go to www.makemoneywork.info.

Retirement Plan Account Fund Allocations

2008-02-10T13:15:00.000-08:00

The Federal Reserve Bank has lower the prime interest rate from 4.25% to 3.5% in two steps to try and get head off a predicted recession. This will cause interest rates to reduce and will influence the upward movement of the stock market.

If you moved the balance of your account to money market when rates were increased, watch the market, indexes, and Dow Industrial Average to determined when to get back into the market.

In 401 (k) accounts your contribution is matched by the employer (example: by 50% up to 5% of your wages or salary). Not all employees have a 401 (k), but if you do sign up now. Where can you get a 50% return without risk. Thirty per cent of employees that have a 401 (k) do not participate. Your contribution is before income taxes but is subject to Social Security and Medicare taxes.

For more information go to www.makemoneywork.com

Government Budget Process

2007-12-16T08:32:00.000-08:00

The federal government uses an accounting system called base line budgeting. Last year's budget is assumed to be adequate, programs need funding adjustments and all funds will be spent for the fiscal year.

A dirty little secret is that towards the end of the budget year the remaining balances are moved around within the different agencies and are systematically spent so funds are not carried over. State and local governments do roughly the same thing. Different items may be changed but the total budget is the about the same plus the year's inflation factor. The budget must be balanced as state and local levels.

Next taxes are raised to supply the money to pay for all the items in the budget. The federal government does not have a system to match expenditure and revenue thus the national debt.

Your personal budget does not have an automatic way of adding inflation and for most taxpayer our net income is reduced. The question is how do I influence the different governmental levels to stop this hidden tax?

For more information go to www.makemoneywork.info

Sub-Prime Real Estate Loans

2007-12-10T13:46:00.000-08:00

I find it interesting that the real estate loan market issued sub-prime loans and sold them to all the big bank. These are the people who sit across the desk and tell you all the things that you are doing wrong with your finances.

It might be good for these big financial operations suffer the consequences of their desire for big profits with salary reductions, reduce bonuses, and cancellation of stock option. But a usual the dividends will be reduced, the share price will decline, and big fines will be paid to government for wrong doing. This is known at a stockholder bailout.

The saving and loan system went though the same meltdown by financing everything that wanted credit. The government (tax payers) bailed them out combining banks with saving and loans. Now were doing it again. Freddy Mac and Fannie Mae are having financial troubles resulting from misstatement of earnings.

There is to much power in the hand of a few people and/or institution. We need to clean house and have more accountability on these systems.

For more information go to www.makemoneywork.info.

Federal Govenment Universal Health Care

2007-12-04T12:32:00.000-08:00

One of the topic that is being discussed by the politicians is health care. After many years of premium increases, the premium is becoming prohibitive. The current inflation rate is between 2.5% and 3% while total health expenditure in 2005 increased 6.9%

In the past employers offer health insurance as a way to keep good employees and paid all or a large part of the premium. As the premium increased (up 7.7% in 2006 to $11,500 for family coverage and $4200 for single coverage) the employer health plan coverage was reduced adding co-pay with larger deductible. The cost of health care has forced smaller companies to drop coverage all together to keep from going out of business.

With a third party paying your bills, you do not see what is charged by your doctor or hospital for services. The health insurance premium and deductibles /co-pay are your cost. How does the bill compare to the estimate you received before the elective surgery? Were the drugs generic and aspirin $4.00 each? What estimate? What are you talking about?

If you have some body work done on your car, the insurance company requires two estimates before approving repairs say in the range of $5000. Would is not make sense to get an estimate of the cost of a $45,000 to $200,000 surgery.

The over use of health care is one reason cost are going up, another is the lack of competition between health care providers, and drug manufactures with patent protected drug pricing. What do you buy that you find out the price after you have received the goods or services?

Universal health care as a federal program will be subject to Washington inflation. That's when we send one tax dollar to the federal government and receive 27 cents in benefits. This will make national health care cost nearly four time the cost now plus full cost of the estimated 40 million uninsured. The difference is now it is called health premium which will change to tax increase.

Just a reminder the same government that gave us Social Security, Medicare, Medicaid, Amtrak, Veteran's medical services is now being considered to take overall health care coverage.

Canada and Great Britain have national health care. In Canada you wait in line for joint replacement, or transplants. In England a man needed a hip replacement but is being required to stop smoking before the surgery. That was three and half years ago. He says he can not stop smoking and is collecting government disability income payments while he waits. Is this the beginning of government behavior management? Is this part of the nanny state?

For more information go to www.makemoneywork.info

National Debt

2007-11-25T08:44:00.001-08:00

We hear Congressmen /Congresswomen and Senators talk about reducing the national debt of $9,374,145,939,713.01 and growing by raising taxes and balancing the budget. Lowering budget deficits or creating surpluses that lead to debt reduction do not lead to improving the economy.

Lowering tax rates will encourage more investment and employment. The economy will be stimulated and inflation will be lower than if we have higher government spending. Increased government spending will lead to inflation, higher interest rates, and economic slow down.

The Laffer Curve has been correct every time it has been tried. The Harding-Coolidge rate cut in 1925, John Kennedy in 1964, Ronald Reagan 1981, and George W. Bush 2001.

The revenue to the U.S. Treasury increased with the lower rates because the point of maximum return has been surpassed on the curve.

To reduce government deficit, Congress must reduce spending and cut tax rates. This creates a surplus and stimulates the economy. The results are more revenue and a budget surplus that can be applied to the national debt. As of this date Congress has alway spent the money in some buy more votes program and the debt increases.

For more information go to www.makemoneywork.info

Calculating Time Value of Money

2007-11-24T16:44:00.000-08:00

Have you ever wanted to know how long it will take to pay off a debt at various interest rates? Or,how long will it take to double your retirement funds? There are three formulas to calculate this type of result.

Rule of 72

This is the number divided by the interest rate or the number of years of the loan. The first result being the number of year to pay off the loan The second is the number of years of the debt divided into 72, determining the interest rate.

Rule of 114 (114.4 Exact)

This is the number to calculate how long it will take to triple you money.

Rule of 144

The calculation for quadrupling your balance is dividing the rate into 144 or dividing by the time element to determined the rate of return needed.

These number are not exact but while helpful to determined some number for your long term planning.

For more information go to www.makemoneywork.info

Revenue Created By A Tax Increase.

2007-11-24T14:35:00.000-08:00

Have you ever wondered why the amount of revenue increases when federal income tax rates are reduced? This is called the Laffer Curve.

For example is the bus company does not have enough revenue to cover expenses there are two ways to increase revenue. 1) Increase fares ) 2 Reduce fares to fill the bus in addition to better marketing. The fare increase assumes that the ridership will not change . Let,s say the fair goes from $1.00 to $1.50. The bus has 35 seats. Average ridership is 7-9. Total revenue is $7.00 to $9.00. When the rates are increased the ridership drops to 5 so the revenue drops to $7.50. If the fair was reduced to $.75 and the ridership was increased to 20 the revenue increases to $15.00. Maximize ridership to maximize revenue.

Laffer Curve shows when tax rates get to high the number of tax payers decreases because the "movers" and "shakers" stop creating taxable income. Every time it is tried it has worked and the politicians just keep raising taxes.

For more information see www.makemoneywork.info.

I Can Save Money Too

2007-11-24T13:46:00.000-08:00

There are some guide lines such as your debt service should not be over 25%, and long term savings needs to be 10%. Two thirds of households over $50,000 income use a paid financial adviser. The questions are: 1) Do I spend enough time trying to improve my income or grow my business? 2) Do I keep an eye on what is being paid out in taxes of all kinds? 3) Do I spend money wisely for family expenses? and 4) Do I reserve enough for future spending needs.?

For more information go to www.makemoneywork.info.

Target, Focus, Vision, Goal

2007-11-24T13:10:00.000-08:00

The greatest gift that can be experienced by a human being is to born in the United States of America. The freedoms that we have provides the opportunity to make great achievements. Financial wealth is the most sought after, of all the many successes available. The first step is to make a decision on what is to be achieved and concentrate on its accomplishment.

How or when this will happen may be unknown in the beginning but amazing thing can happen if you are focused,patient, and committed.

For more information go to www.makemoneywork.info

Welcome

2006-04-10T10:48:00.000-07:00

Welcome to the Make Money Work blog. All financial products are sold paying the agent a commission or fee. The service on client accounts is generated by the opportunity to make an addition sale. The cost of marketing financial products is going up and the amount of service is going down. This blog's purpose is to teach you simple ways of watching what is happening to your money, yourself. See makemoneywork.info for more information.