A book and the comming recession or depression
I am a pretty upbeat guy so a lot of my friends ask why I am so sure that our economy is in the toilet. The answer is pretty damn simple! We are as a nation in debt way over our heads just at the consumer level, our government is trillions of dollars in debt with China along with a massive trade deficit and on top of that the mortgage and real estate markets are in the hole as well.
Yet my reasons are bigger then that! More because I am a student of history. I really suggest you read a book called The Forgotten Man
It is very important for us to understand the history of our welfare state, how so many once proud Americans ended up on “the dole” because the coming problems may cause a worse knee jerk reaction. Always remember once the government creates a tax, a department or a program it never ever goes away. Check out The Forgotten Man
Can you pass the entrepreneurship test from Donald Trump
We talk a lot about building wealth and being prepared here and when it comes to both a true master is Donald J Trump. Well I just found this very cool, entrepreneurship test provided for free by Trump University. I took it and got an over all score of an 8 out of a 10 and in the areas where I scored low I very much agreed. These are actually areas I have “shored up” these specific areas with team members, partners and employees.
I was very impressed with the accuracy of the profile produced. The entire test is 36 simple questions you just click where you feel the area applies to you on a 1-5 scale. It took me perhaps 5 minutes to complete. If you want to see how you stack up against Donald Trump then give his entrepreneurial test a shot.
Filed under Business & Marketing | Comment (0)Consider a business coach
You know every great athlete, ever great performer and ever great competitor had a coach. The very best of the best had coaches that helped them to get better. Well did you know that just like pro athletes have sports coaches there are also business coaches that help business owners do a better job at running their companies and managing their time.
There are a lot of advantages to having a coach in your business. The biggest one to me is that a coach is on the outside, they are not married to your ides, your internal dogma or your internal convictions that what you have always done has been good enough or is the only way. I was recently asked to take a look at a website for a company called ActionCoach and I must say I was impress with them and their free resources.
One thing you might really want to check out is their Business Health Check, I ran through it and it was quite eye opening to say the least. Remember it is a new year, time to really make things happen in Q1 so you don’t struggle in Q4. So consider getting a business coach to help make it happen or if nothing else check out their free resources over at ActionCoach.
Filed under Business & Marketing | Comment (0)More on investing in copper pennies
Heck why not one more post about pennies. Yesterday I did a pretty long post extolling the virtues of pre 82 pennies as a simple and small investment. Again I want to restate this isn’t a “way to get rich” but it is a really cool and fun little inflation hedge and about as risk free and low cost as any form of investing has a right to be.
Anyway I found a really cool little resource that reinforces my point that 95% copper pennies that are still in circulation are a pretty hot little item to set aside right now.
The site is called CoinFlation and I have put it into my book marks so I can always find it in the future. One of the coolest tools is a coin melt value calculator that tells you the exact value of coins when you melt them down. They have two calculators one for silver coins (pre 65 dimes, quarters, halves, etc) and one for coins currently in circulation. To give you an idea of how “valuable” pennies made prior to 1982 are. I decided to run all the comparisons at a 100 dollar face value. So lets look at some of the out of circulation silver coins that you can’t find today out side of a coin shop, some of today’s other coins and their “real value” and then compare them to the humble copper penny. Of course this is “raw
- 100 dollars face value of silver dimes, silver quarters or silver half dollars is worth $1017.81 at today’s current metal prices. They are all the same because each represented a fraction of an ounce of silver as in 1/10th, 1/4th, 1/2 ounce etc. So these coins represent about a 917% return of investment just in metal value for those who had the forsight to pull them from circulation in the 60s, 70s and for a bit of the 80s when they were still around.
- Now if you took 100 dollars worth of today’s quarters you end up with about $18.33 in raw metal value or an 81.7% “instant loss”.
- How about 100 dollars worth of today’s pennies (anything minted after 1982) you get a whopping $58.80 in raw value or a 41.2% “instant loss”.
- What about 100 dollars worth of Kennedy Half Dollars? Everyone loves those right? Same formula as the modern quarter. Melt em down and you get $18.33 in raw metal value or an 81.7% “instant loss”.
- What about the nickel? There is a lot of copper in a nickel and it is a thick coin so it does ok. Try a raw value of $113.75 or an instant return on investment of 13.7% Perhaps storing nickels ain’t a bad idea either?
So how does our humble penny add up against all this? Today’s metal prices for copper and zinc put the value of 100 dollars in pre 82 pennies in raw metal at $193.61. That is easy math an instant ROI of 93.61%! Sure the penny isn’t currently holding pace with those old silver coins and it will never catch up to them. As copper goes up you can bet silver will to. Yet that is my point you can’t just go around picking up a dozen silver dimes a day any more but you can pick up a good amount of pennies from prior to 82.
Sure even with copper at say 5 - 6 dollars a pound you would need a lot of pennies to be worth even say 10,000 dollars. Yet just think about it, each day you sort and toss some into a jar. Painless and foolproof, what do you have to loose other then a bit of space?
Filed under Business & Marketing | Comment (1)The reason I invest in silver coins
I have already written a bit about my affinity in my post, What I Blow Money On, but today as a follow up to my article on investing in gold it seems like a good time to talk a bit more about precious metals before we move on. In addition I am going to provide you some of my own rules on buying silver coins.
First let me lay out my case for why silver is a good investment. Simply put all metal commodities are doing very well right now and will continue to do so. Heck even copper is getting rather expensive. Back in the 80s I remember copper going for about 70 cents a pound. Today it is hovering in the range of 2.80-3.00!
Many people see silver as a “poor man’s gold” and I think that is rather short sighted. First I don’t care if silver is ounce for ounce far cheaper then gold if you have 1000 dollars worth of gold or 1000 dollars worth of silver you are holding the same value. Now silver and gold are true brothers in my opinion and the price of one is indeed tied to the price of the other. While they are not completely pinned to one another and the Hunt Brothers debacle will skew numbers from the 80s and early 90s there is a strong correlation (precentage wise) to movements between the two. To get an idea of the correlation look at the two graphs below which cover 1997-2007…
As you can see again while not lock step with each other the two metals perform very closely to each other on the open market.
So why not just buy gold? Understand I am not saying to not buy gold it is just that I truly “invest in gold” I buy through my broker and I buy both actual gold, gold funds and stock in gold companies. I have nothing against doing the same with silver but I prefer to actually buy, hold, touch and own my silver mostly in the form of coins.
Why? Two answers….
First, because I love silver coins, they are history, they are beautiful and they are something material to me that I can look at and appreciate. In this way Silver Coins offer me something that 95% of my other investments can’t. Sure I can look at my stock certificates but there isn’t much fun in that. Most of my other investments are just numbers on paper then don’t have the feel, look and glitter of my coins.
Second, because investing in many different things and in many different methods creates diversity. The beauty of silver coins (at least of the type I purchase) have most of their value in the silver basis price. I can “cash in” anytime I want and do so with no paper work or government red tape. I can literally walk into a shop, sell my coins and walk out. Holding silver coins is like holding cash money with out the cancer of inflation upon it.
So what rules to I have for investing in silver? Here they are but understand these are no ones rules but my own. A few you really should follow but others are more about your risk tolerance and your personal view about numismatic values.
1. I do not belong to nor do I buy my silver in any kind of “club” or any highly advertised coin supplier. In particular Littleton Coins is among the worse places of all to buy coins. Their prices are generally 40-90% higher then local coin shops in my area. I buy from local merchants or only via mail order if the price is as good or better then local pricing.
2. Directly related to the above, I am not on any type of auto shipping or monthly arranged purchases. I buy what I want as I find it and as I want it. My silver investments are truely incremental investments outside of my conventional portfolio.
3. I never buy “junk silver coins” which are large unknown lots of mostly 1960s and older dimes and quarters. Most are worn so badly you can scarcely read the dates.
4. While I don’t buy junk coins I also don’t buy highly numismatic valued coins. In other words I never buy a coin where the bulk of the coins value is based on how “collectible” or “rare” it is. Such values are highly subjective and only represent a “real value” if you can find a buyer. Try buying a 200 dollar silver dollar this week and see what the same shop will pay you for it (with out a big jump in price) the following week. This is the one rule that I understand when others break, this is my personal preference but I have my reasons.
5. What I do buy are Silver American eagles as they are priced right about bullion prices. I also buy high quality but common Franklin, Kennedy and Walking Liberty Half dollars which are still quite affordable and made of 90% pure silver. My other big favorites are the more common Morgan and Peace dollars. These coins to me represent a nice mix and all are very affordable and most importantly highly tied in value to the silver basis.
So what is my advice? Well I think it makes a lot of sense to buy some silver over the years and just have it as a hedge against inflation not to mention an investment that remain liquid in both the best and worst of times. The beauty is you can buy say a 10-20 dollar coin just once or twice a month if you don’t have a lot of extra money to invest. Even that over the years can build a nice collection and a lot of real value. I personally buy between 20-150 dollars a month of silver and have been doing so since 1995. As you can see by the graphs in this article that has been a very good move.
Filed under Business & Marketing | Comment (0)Why you should be making money online
In the future I will discuss many specific ways that you can make money online. Remember key to our philosophy here at cut that bill is not just reducing expenses but keeping more of your money, investing it wisely and most importantly increasing your cash flow in to your household or business. There is quite simply no easier or more passive way to earn some additional money today then to do it online.
Let me be clear though, “how to do it”, is irrelevant until you get your head around the why and until you grasp how a very “small success” can drastically change your future. Let’s take three very doable numbers and consider how they could impact your life to really grasp how powerful an additional income stream from the internet can be. These figures are
- $100
- $250
- $500
Now trust me making these types of additional monthly income figures is very doable for just about anyone with a willingness to do some investing, learning and work. You will have to work harder in the beginning but such is life. Again though for now let’s stick to why you should and what it can mean. What do each of these figures mean to you,
An extra $100 dollars a month can smash 1200 dollars of out standing additional debt a year which is a good start. Paying off 1200 dollars in additional credit card or other high interest debt actually saves about 5000 dollars of long term interest if it is applied on top of your existing payments. Add 100 dollars to a typical house payment on say a 120,000 dollar mortgage and it can shave GET THIS almost 5 years off a 30 year loan. Invested at 10% and just put away it will add a quarter million to your retirement in 30 years, do it for 40 years and it is now worth about 600K added to your golden years. Remember that is only 100 dollars a month more!
An extra $250 is a lot more powerful as you might imagine, with investing you don’t just get 2.5 times the effect as compounding creates an exponential increase. Invested over 40 years of your working life that 250 dollars a month turns into over 1.5 million at simple 10% interest. Of course you can do much better then that with some creativity and participation in your financial planning. Turn to debt and you can pay down an addition 3000 dollars in debt annually which can save many in credit card debt over 20,000 dollars over the live of debt!
Step up to an additional $500 in income into your monthly cash flow and you can begin to really make a massive impact. Try 6000 dollars in additional debt destroyed per year. This alone would destroy the average of 20K in consumer debt most middle income Americans are living under in just over three years. Get out of that type of debt in three years or less and you can save massive amounts of interest. Investing gets interesting, 30 years of 500 a month at 12% interest equals GET THIS over 5 million dollars. There is even more power though!
500 a month would allow you to buy a modest second home if you wanted for vacations in some beautiful part of rural America. Don’t believe me? Fine I own a beautiful modest second home in an somewhat tourist area of the South up in the beautiful Ozarks. The place sits on 5 acres, is 15 minutes to town, 20 minutes to a beautiful lake and only about 10 people live all the dead end road the place is located on. Everyone owns at least 5 acres so the houses are very spaced apart. My total payment? With taxes and insurance 523 dollars a month. How I just looked hard enough.
Now the real beauty here is what I call my “Plan B”. Let’s say that my companies all go bust, I can’t find a job and my wifes income all of the sudden can’t cover our bills at our primary residence. Now this is not to say that everyone should invest extra income in a second/vacation home, it just begins to open your mind to the types of things you can do to build and preserve wealth with just a few hundred extra dollars of income a month.
Filed under Business & Marketing | Comment (1)Help your children save for college
OK I have to give credit for this idea to my Brother-In-Law (we will call him Mark). I took a different approach to saving for college for my son. In our case simply set up a 529 plan for our son, made contributions as part of our financial plan and he is now in college and can do four years (including housing) as a state college with no debt and almost on out of pocket expense. While this seems wonderful a bit of it is already biting us in the rear. Our boy just doesn’t seem to realize how lucky that makes him. I am glad we did it but what I am about to lay out for you is a much better solution at least to a degree.
What Mark has been doing since both children were born is both simple, cost free and may I say genius.
Every kid has birthdays, Christmases, Easters and many other times that relatives, friends etc send them cards and gifts and very often money. Mark has required that 50% of his two children’s financial gifts (no matter how small or large) go into savings accounts to be used for college. He choose very safe investments and did not elect to use a 529 due to its restrictions.
What does this mean to his kids? Upon Graduation both will have over 20,000 dollars in funding toward schooling or life in general if they choose not to go to conventional college. I should point out that this is not a family the gets huge amounts of money for each event, we are talking 20 bucks here, 5 bucks there, may be 50-100 for a Christmas that goes into these funds. Mark requires his kids to save this money no matter the source. If they come over to my house and I give them a ten a piece for spending money, Dad puts 5 bucks a piece away, just like clockwork. The fact that 18-20 years is a very long time for money to grow, takes care of the rest.
Some of the family thinks this is “taking away the fun of just being a kid”, most of our family is BROKE by the way! Taking advice from the broke is a good way to not only be broke but build generations of kids and grandkids that are broke too. Mark wisely has ignored this and I think when his kiddos go to college or start a business or do what ever with their money as adults they will put more value on the funds.
Now we did teach our son to save, we helped him invest in stocks, set up accounts and always made him put some money away. Yet if I had it to do over I would have also had some allocation go to his college fund directly from his hands. Not just to increase the funds available but to give him a true sense of ownership, responsibility and gratitude for the fact that this money is available.
What I know is this my niece and nehpiew will have real options when they finish high school. Options my brother-in-law would be hard pressed to provide on their household income. All this from the simple wisdom of “pay yourself first”. Consider it the next time your little ones get a card from Grandpa Joe or Aunt Betty. A few less do-dads today for a real kick start to life tomorrow.
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