Category Archives: Finances

Finances

How Are You Protecting The Financial Security Of Your Clients And Yourself?

Unfortunately it’s time for us to own up to this particular fact; our financial information is no longer secure, which means that if we’re business owners dealing with customers who are paying us, or we’re paying for our own business or personal products, we need to be more careful and try to protect ourselves as much as possible.

In the last few years there have been countless reports on major retail outlets that have been hacked with all kinds of financial information stolen on its customers. We’re also hearing about businesses such as insurance, the government, and banks that don’t seem to be able to stop these criminals from breaking in. If these organizations can’t stop them, then what the heck can we do to protect ourselves and our customers?

Truthfully, if someone really wants to get into our records there’s not a lot we can do. However, just because we may not be able to initially stop them doesn’t mean we should lay down and make it easy for them. Here are three things to think about as they pertain to your customers and your own finances.

1. Find a secure way to collect credit card information.

If you’re still using paper and the swiping machine to accept credit card payments it’s time to move into the 21st century. There are much more secure ways that are also faster such as setting up a link to PayPal or using something you can attach to your smartphone like Square. It’s easy to figure out how to use both of these, and these companies were created by people who know a lot about security.

2. Think about alternate ways to pay for things online.

Unless you’re buying something from a major company, or the URL (web address) begins with “https”, it’s probably not the smartest thing to buy things using your regular credit cards or debit cards online. The two better ways of handling this are to either send someone a check or call them and ask them if they can take your information over the phone. Yes, there are a lot of people who get scared to give out that kind of information over the phone, but these days that’s a lot safer than buying things online when you don’t know if those websites have been hacked and your information is being redirected.

You could think about purchasing a prepaid debit card, where you put only so much money on it and use that to make purchases. The problem with that is that some of them come laden with a lot of fees that, even though they hurt less than people stealing your money, eats up the amount of money you’ve put on your card way too fast.

3. Apply for a low balance credit card.

This is a very good idea because the hackers could only get so much off of the card. Also, credit cards are easier and faster to get satisfaction from the issuer, because banks usually want to send you all kinds of forms to fill out about the fraud that’s taken place.

These three ideas are worth taking into consideration to protect both you and your customers financial information.
 

Finances

Is Your Money Safe In A Bank?

Within the last 24 hours, there have been two stories that are causing the world markets to shudder.

The first involves Greece, which shut down its banks for six days to help them get a handle on their economy, as they’re about to default on their debt payments and could possibly be thrown out of the enrozone exchange.

looking up in Singapore
Jim via Compfight

The second involves Puerto Rico, which announced that it can’t pay its $72 billion debt. This one definitely hits closer to home since Puerto Rico is in essence part of the United States.

When we read about things like this, it makes us question our own economy and wonder just how safe our money is, especially the money that’s sitting in the bank. After all, if a country can shut down its banks, what do we do when we can’t access our money besides write checks and use credit cards?

This was a big issue back in the Depression era. Banks shut down and even the richest clients didn’t have access to their money. For many of them, the money no longer existed, and many people were suddenly broke.

That led to the passage of the Banking Act of 1933, which launched the FDIC, or the Federal Deposit Insurance Corporation. Its purpose was to offer insurance for banks by guaranteeing them access to at least $250,000 per bank within an organization. This means that if a banking system has 10 locations, each bank has at least that much for its consumers.

The FDIC protects around 6,700 institutions throughout the country, and because of them no depositor has lost money since the program began. Even banks that fail, which leads the federal government to take them over and try to find new owners, are granted enough money to protect consumers actual funds. This relieves a lot of stress on those of us with checking or savings accounts.

Not only that, but if you have invested in a bank plan that helps you grow your money, that’s protected as well under its own plan. So, if you have $250,000 in savings and another $100,000 in investments, you’re covered for all of it. However, if you have multiple checking accounts (which some businesses have), they would all be combined and only $250,000 would be guaranteed.

So, it’s not perfect, but it’s better than the alternative of not having access to your money at all.

Finances

Lower Interest Rates Aren’t Always The Best Option

If you’ve ever gone for a credit card you know that the biggest thing you’re looking at is the interest rate. Many cards will offer you an introductory period of free credit if you move a balance over to their card. If you pay it off then you owe only what you got, but once you reach a certain period now you start having interest added to it.

Still, this seems like a good deal, but you’re still shopping for the lowest interest rate card you can. At least with credit cards this is a smart move.

However, this yearn for the lowest interest rate isn’t the same when you look at other things. For instance, when you go for a car loan or a home loan, depending on your circumstances, it might be more prudent to go for the higher interest rate sometimes.

Does that seem unbelievable? Let’s take a look at an example.

Say you go to a car dealership to buy a new car. Before you went there you went to your bank and they said they’d give you a rate of 3.5%. That sounds pretty low so now you’re at the dealership, trying to see what they have to offer you.

They go back, crunch some numbers, and come back at you with a counter offer. You look at it and say “Hey, this interest rate is higher than the one the bank is giving me. This means their deal is better.”

The car person says “Yes, our rate is 4.25%, but we’re willing to give you an instant rebate of $2,500 up front and set the payments up over the course of 5 years. With our deal, you’ll pay less than you will if you take the bank’s deal.”

Does this sound kosher?

Actually, it is. The reason it ends up working better is because of the way interest is calculated. For most car loans, it’s calculated daily, but it’s based on the initial amount you’re starting out with.

Since the numbers will look convoluted if we actually show a daily interest calculation, let’s look at this a different way.

Even though interest is calculated daily, the percentage is actually an annual, or yearly, percentage rate. Thus, at the end of the year the rates have to equal either 3.5% or 4.25%. However, each month, after you make a payment, the amount you actually owe keeps getting lower, no matter what the interest rate is.

What we’re going to do is divide each percentage by 12. If we take these two numbers, 3.5% becomes .08625 and 4.25% becomes .086875. Those are pretty close, aren’t they?

Next, we look at the two deals we have. From your bank, the .08625 goes against $10,000, whereas the .08675 goes against $7,500. This means that on the first amount, without a payment, the amount of interest accrued is about $8.62; on the second amount, the interest accrual was $8.69. It’s higher but negligible.

At that rate is would take decades before there would be some kind of balance equality. However, your car loan is only going for 5 years in this instance; even if it was over 6 years, you end up with a lower payment and less to pay because more was put down on the car ahead of time via the rebate.

It’s for this reason that, when you’re looking to buy a new house, everyone recommends you find a way to put down as much money up front as you can. It lowers the amount you’ll have to pay monthly, the amount you’ll end up paying in full, and gives you the potential to pay it off quicker.

If you get an offer where the seller is looking to give you something like $10,000 off the cost of the house but the interest rate is slightly higher, it could be the better deal overall, even with a 30-year mortgage.

Of course, you’ll always want someone representing your interest to put the numbers together to make sure you’re protected from higher payments. But don’t immediately dismiss a higher interest rate if someone is willing to pony up a bit of money on your behalf.
 

Finances

Will You Have Financial Goals In 2015?

Back in 2013 we had an article on the blog titled Setting Financial Goals. In that article we laid out what we considered the 3 most important things for any financial goals one might wish to set: saving money; reducing debt; and increasing income.

Money Shirt
Creative Commons License Rob Lee via Compfight

Every once in a while we get the opportunity to work with clients to help them set financial goals for the year. The year doesn’t always start at the beginning, but it’s a good time to do it because it fits with the tax time period.

Almost everyone that comes in wants to talk about one thing, which doesn’t quite fit any of the three, though comes closest to saving money; reducing how much they might owe in taxes. It must be an occupational hazard for being a consultant because, though it’s a big part of what we do, it’s not the only thing we do.

Truth be told, taxes aren’t a major concern when other needs are met. Although you sometimes hear a few rich people complaining about having to pay too many taxes, the overwhelming majority don’t have a problem with it because they have enough money and, if they’ve got good accountants, all that is taken care of and they still have lots to play with.

If you’re worried about having to pay taxes, learning how to save money and cut corners on spending will provide you with enough to pay your taxes. Also, if you’re really good you can make sure you’re having enough taxes taken out of your paycheck if you’re still employed.

If you reduce your debt you invariably end up with more money. That’s because as you pay your bills down you owe less, and even if you keep paying them at the same high rate you’ll pay off the debt sooner, which means you’ll have a nice chunk of cash you can move elsewhere.

If you increase your income… well, we already touched upon that part. 🙂

With that said, do you have any ideas on what types of financial goals you really should have? If not, we’ll give you 3 to think about:

1. Find ways to generate more income in 2015. There are so many ways for people to do this that all it takes is an hour of uninterrupted thought every day for a week to plan it out and you could be making more money in another week. The idea is to think about what you can do, how much more money you’d like to make, and then go for it. Many people are doing it; you can also.

2. Set a goal to pay off one of your bills where the payment starts at least at $100 a month. If you don’t have anything like that good for you. If you do, realize that if you could pay one of those bills off you have the opportunity to have an extra $1,200 a year and it’s tax free! Pay off more debt and you’ll have more money the same way.

3. Think of one thing you’re willing to give up or alter that will help you save even a little bit of money. For Christmas one of my friends got a coffee maker and many bags of special coffee that can be made at home. The reason was her daughter hated knowing that her mother was stopping at a national coffee location buying expensive coffee every day, both going to and coming home from work.

Suddenly, her mother can now save $10 a day, which equates to around $300 a month, which can be applied to other things. And the coffee will be just as good, maybe even better because that same brand can be bought in many stores if she wishes to stick to that brand and will still cost her less than paying someone else to make it.

Financial goals don’t have to be really big to make a big impact. All it takes is a little bit of ingenuity adn the willingness to make a change here and there. After all, isn’t a new year a good time for resolutions and goals?

We wish everyone a safe and happy new year, and of course a financially successful year as well.
 

Finances

5 Things You Need To Know In Trying To Sell Your Home

Are you looking to sell your home? No, we’re not buying, but we know that it’s a stressful time. You put your house on the market for a certain price and if you’re lucky you’ll get it. You hold an open house and people seem to be rejecting your home, or it prompts offer for way less money than you want.

It turns out that the things most people look at when they’re trying to sell their home aren’t the things that most buyers are looking at. If you’re looking to maximize the visibility of your home for potential buyers, and possibly make more money from the sale, there are some specific things you should look at.

We’re going to give you 4 of those things; the fifth is a money tip because, after all, we are accountants. Here we go!

1. Make sure your lawn is immaculate but not overly cluttered. Remember the line “you only get one chance to make a first impression”? Seems that’s true when it comes to homebuyers, especially new homebuyers. Sometimes the outside of a house might be enough to prompt someone to say they don’t even want to see the rest of the house. Having a lawn that’s trimmed nicely can do wonders. Also, if you have your home heavily landscaped with bushes and trees and many rock patterns you might want to think about getting rid of some of that. Few people move into a house without wanting to put their touch on it, including the lawn.

2. Work to emphasize open spaces. Do you have a table with trinkets sitting in a hallway, even a big hallway? Remove that, as well as some of your pictures if you have a lot of them. If you have a dining room with lots of other furniture in there you might want to think about putting it elsewhere. Just like your lawn, people like to put their own stuff into places where you might already have something sitting. You might think you’re showing the space well by enhancing it but instead potential homebuyers see less space than they thought they’d have to work with. Even people who are looking to downsize want rooms that look and feel spacious.

3. Paint all the rooms in the house the same color, preferably some kind of white. Once again, homebuyers aren’t interested in your sense of style. Turns out it’s hard to imagine what a room might look like when you get to it when the walls already have a different color on them, potentially a color the buyer might not like. Almost everyone is used to seeing a white background they can do something with.

4. Clean, clean, clean! Your house probably won’t get the white glove inspection from many buyers but they will notice if things look dusty or dirty. That gives the impression that the house hasn’t been taken care of and that if they move in they’re going to have to do a lot of work to get it the way they want it. The bedrooms, bathrooms and kitchen are obviously your biggest targets but don’t miss the inside of cabinets and drawers and other rooms.

5. You do all of this because for the overwhelming part of the population all the profit is yours. That’s right, the more money you get, the more you get to keep for yourself, after paying off the balance of the mortgage if that’s still an issue. Turns out you can claim capital gains on a primary residence for up to $500,000, or $250,000 if you’re single, as long as you pass the residency requirements in your state and haven’t sold another primary property within a 2-year period. When you think about it this way, if you’re looking to get $150,000 for your home and you keep getting offered $125,000, maybe spending $5,000 to take care of the things mentioned about will get you the rest of what you’re asking for; sometimes you have to spend money to make money.