Lost Your Savings Mojo?

November 24, 2015

The power of saving is underestimated today.

True, several years of dismal interest rates on savings accounts has caused many consumers to ignore the benefits of learning to be a saver. Even some who regularly socked away something have abandoned their steady savings habit. We’re thinking….what’s the point?

But whether you are a student or retiree, young or old, employed or not, don’t under-estimate the power of habitual savings. Developing a savings mentality makes impact far beyond that meager percentage the banker pays in interest. Here’s why:

  1. Savers learn to allocate resources differently.

Those who learn to save money to reach a goal often look at their overall spending in a different light. Many consider the trade-offs, or opportunity costs. When saving for a car and a vacation, for example, they might decide they can be happy with less expensive choices for both items and enjoy both sooner. Yes, they refine their choices.

  1. Savers develop skills in delayed gratification.

Think of saving as delayed spending. There is value in having an end goal for saving, whether it’s short-term (like new shoes or to buy holiday presents) or long-term (a retirement nest egg). What’s the point of saving if you never are able to use the nest egg?

  1. Saving in one area begets saving in others – it’s a mindset.

Once you start saving, the habit can extend beyond stockpiling pocket change. For example, you might be more inclined to look for ways to reduce your costs by changing grocery shopping habits, borrowing books (and e-books) from the library, reducing electricity use, recycling, or re-using.

  1. Saving becomes a lifestyle, one passed onto your children.

Even simple money-saving acts become habitual—such as emptying your pocket change into a savings jar, using coupons, buying items only on sale, using a budget. Not only do these become part of your ordinary routine, but they are also a routine your kids (and grandkids) will model.

  1. Saving encourages investing – a key to financial success.

Many savers typically become investors too. Once saver see how their money can compound, they want that compounding to happen faster. That’s when investing becomes a possibility, even though with greater rewards comes greater risks.

  1. Lacking that savings mentality costs you even more.

Sadly, those who do not learn to save, pay more for almost everything. This comes in the form of

  • Paying bankers or others to lend you money
  • Paying credit card fees
  • Racking up interest on debt you can’t pay off
  • Lacking an emergency fund, so borrowing money for the unexpected
  • Not having money in your bank account, so paying overdraft fees
  • A lower credit score resulting from overusing credit cards and revolving balances, which translates to paying higher interest rates for mortgages and car loans
  1. And yes, even small sums add up.

The magic of compound interest should never cease to amaze. Left alone, even saving $5 a week can multiply into a nice nest egg and keep you away from the brink of financial disaster. Plus, the interest rates that banks pay savers will eventually rise, and it’s nice to have a nest egg to take advantage of that.

Once started, both good and bad habits are hard to break. You, too, can start the savings habit. What would you do with that nest egg?!


What You Need to Know Before Purchasing a Franchise

November 17, 2015


Entrepreneurs: Here’s a look, from a legal perspective, at what to consider if you think a franchise might be a way to start a business.

Originally posted on Your Lawyer:

  1. Why a consider purchasing a franchise
    1. Proven business model
    2. Market recognition
    3. Advertising strength
    4. Might be easier to finance

  1. A “Franchise” is an oral or written agreement, either express or implied, which provides all of the following[1]:
    1. Grants the right to distribute goods or provide services under a marketing plan prescribed or suggested in substantial part by the franchisor.
    2. Requires payment of a franchise fee to a franchisor or its Affiliate.
    3. Allows the franchise business to be substantially associated with a trademark, service mark, trade name, logotype, advertisement, or other commercial symbol of or designating the franchisor or its affiliate.

  • What a franchise is not
    1. A guaranty of success
    2. A job
    3. A recipe (but it might include recipes)
  1. Due diligence on Franchisor
    1. Check their financial capability
    2. Check their reputation
      1. Ask other current franchisees
      2. Ask business rating services like Better Business Bureau and/or Iowa Business and Industry
  • Ask FORMER franchisees

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Why Aren’t We Smart About “Smart” Cards in U.S.?

October 8, 2015

You probably got credit card replacements in the mail recently.

To combat data and identity theft, the payments industry (merchants and card providers) were supposed to change over to “smart” chip cards by October 1. Many have not.

The new cards have an embedded chip that replaces the outdated magnetic strip used to process a sale by credit card. But it appears the new cards just aren’t a big deal. Why?

  1. Consumers don’t understand how to use them – you don’t just slide your card like before, but insert it so the terminal reads the chip. A merchant can walk you through a sale.
  2. Small merchants aren’t ready – they aren’t using the new point-of-sale terminals because it’s expensive.
  3. Card providers went halfway – they rolled out chip-and-signature cards and not the chip-and-PIN cards used in Europe and other countries. The American Banker estimates only 70% of cards have chips, and most are chip-and-sig.
  4. New ways to pay – electronic wallets, mobile payments, direct debits – are becoming popular alternatives for consumers who don’t want to risk identity theft.
  5. Chip cards protect on-site purchases, not on-line shopping. E-commerce (and other “card not present”) fraud is a larger problem. In fact, industry experts estimate “card not present” fraud is a $3-billion problem that’s expected to double by 2018.

What’s the point?

Consumers: It’s more difficult to steal the data stored in the chip, thereby making chip cards more fraud resistant and hopefully deterring some identity theft. Learn to use the new cards to protect yourself!

Merchants: If credit card fraud happens at your business and the card provider uses the chip technology and you do not, you must cover the cost of the fraud. Are you willing to risk it?

How One Little Habit Can Save You $45,000…Really!

August 27, 2015

Chances are, it’s not one major financial decision you make in your lifetime that will seal your future. It’s about the small choices you make everyday.

Those everyday choices become habits. Habits become a lifestyle…a lifestyle to which you become accustom easily.

I’d like to share a true story about a friend of mine who just retired. Early in his career, he made a choice of going to the nearby gym over his lunch hour, and ate his brown bag lunch after exercising. This was his routine five days a week, 50 weeks a year. Oh sure, he would occasionally go out for lunch with colleagues, but generally, he packed his lunch so he could fit in his exercise regime. He really didn’t think much about the savings he would reap from his  brown-bag lunches, since he didn’t skimp on eating what he wanted.

But the results were remarkable…He conservatively figures he saved about $45,000 on lunch costs over his career. Wow!

Do you have a habit that packs a wallop like that? Let me know!

Spending Shift: More Buying at Moment of Need

August 20, 2015

Consumers are showing signs of shopping for items as they need them instead of buying a month or two ahead, as evidenced by a recent survey on back-to-school apparel shopping.

Contrary to shopping the traditional peak month of July, the shoppers surveyed said they are waiting until August or September, according to a survey conducted by The NPD Group market research firm. Roughly 55 percent of those surveyed said they will finish back-to-school shopping in August and 19 percent said September, making September the second largest buying month for back-to-school.

Marshal Cohen, chief industry analyst for The NPD Group, added, “When so many consumers are planning to do their back-to-school shopping in the months not traditionally considered part of the season by retailers, it’s time to break with tradition and change the way we market and measure this shopping season.”


Can You Cut Your TV Expenses?

August 4, 2015

Seems like you keep paying more for less TV service? It’s not just you.

Your pay-TV rates are rising an average of 6 percent a year. For 2015, pay-TV subscription for basic service and premium-TV channels will cost the average U.S. household $123 every month, according to The NPD Group, a market research firm. Data showed only 16 percent of U.S. households do not currently subscribe to pay-TV services.

So what about someone who cuts the cord and cancels? Many are accessing programs from free-to-air broadcasts, free Internet TV, and more on-demand services like Netflix.

Said Keith Nissen, research director for The NPD Group, “As pay-TV costs rise and consumers’ spending power stays flat, the traditional affiliate-fee business model for pay-TV companies appears to be unsustainable in the long term. Much needed structural changes to the pay-TV industry will not happen quickly or easily; however, the emerging competition between S-VOD and premium-TV suppliers might be the spark that ignites the necessary business-model transformation of the pay-TV industry.”

Should You Freeze Your Credit?

July 27, 2015

Worried about identity theft or already experienced several breaches? You might want to freeze your credit or use a fraud alert.

A fraud alert allows someone to get a copy of your credit report if they can verify your identity, and it’s free. A freeze restricts access to your credit report entirely, and you typically pay a $5-10 fee per agency.

A freeze or fraud alert does not affect your credit score, stop pre-screened offers for credit, or prevent you from getting your free annual credit report from annualcreditreport.com.

To order a credit freeze, you must contact each credit reporting agency:

Equifax – 800.525.6285 

Experian – 888.397.3742 

TransUnion – 800.680.7289 

You will supply your full name, address, birth date, Social Security number and other personal information. Each agency sends a confirmation letter and a PIN (Personal Identification Number) that you use to lift the freeze. The freeze remains in place until you request it be lifted, and there may also be a fee to do so.

You can place a fraud alert to protect your credit from unverified access for 90 days to 7 years. To do this, contact one of the credit reporting agencies listed here and give proof of your identity. This agency must tell the other two agencies.


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