Should I Try to Save While I'm Still in Debt?

There are two schools of thought on this subject. I am largely in the camp that believes debt should be retired before beginning a serious investment strategy. There are three exceptions and I will begin by addressing these.

Exception 1—Your Mortgage

The typical mortgage has at least a ten-year term and often a twenty-year or thirty-year term. I do not believe it is practical to wait that long to begin investing. 

Exception 2—Employer Matching 401k

If you are fortunate enough to work for an employer that offers matching contributions to a 401k plan, I cannot recommend that you wait to an investment in that plan. You would be leaving free money on the table and that makes no fiscal sense whatsoever.

Exception 3—Small Business Owners

If you are a small business owner, you should invest in growing your business. After all, it is be the wellspring of your present and future income.

These exceptions noted ...

I believe in the time value of money and by extension the value, indeed the necessity, of eliminating the interest expense associated with most if not all debt.

The Time Value of Money

The time value of money is the most persuasive argument available for retiring debt and for investing. You see, saving differs from investing. If you have a piggy bank and save ten dollars, you empty out the piggy bank in ten years and guess what—you still have but ten dollars. Conversely, if you invest ten dollars, in ten years you will have more than ten dollars because whatever you invested in (stock, bonds, certificate of deposit etc.) will have grown in value.

Debt also exemplifies the time value of money. However, with debt, the value accrues to the lender not to you, the borrower. Think about it … instead of you earning money on an investment, the lender is earning money from you. Why? Because you have debt and the interest expense that is a result of that debt finds its way into the corporate coffers.

Sample Scenario

In this example, imagine you have a credit card debt of $5000 with an annual rate of 10%. You would have to pay $126.81 every year for four years to pay this debt in full. That means for $5000 you will pay a total of $6086.88 over a four year period. Obviously, you are paying the credit card company $1086.88 for the privilege of using their money. The time value of money is working for the credit card company, not for you.

Now, I want you to consider this. If you elect to invest before retiring this credit card obligation, what investment can you make that will provide you a safe return exceeding the 10 percent rate you are paying the credit card company? Can you think of even one? I can’t!

If you are lucky and find a reasonably safe investment that pays even 5 percent, this is only half of what you are paying out in interest to the credit card company! This is not a rational course of action.

Conclusion

Apart from the exceptions noted above, it is clearly counterproductive to invest before you have retired your debt.

For you small business owners, the principle applies equally with respect to business debt. Look to your accounts receivable for cash flow and/or debt relief. Take advantage of free invoice factoring calculator to see if your accounts receivable can help you retire business debt early.

About Author:Andrew Cravenho is the CEO of CBAC LLC, an innovative invoice financing exchange. As a serial entrepreneur, Andrew focuses on helping both small and medium sized businesses take control of their cash flow. Prior to CBAC, Andrew founded an annuity financing company relieving tort victims of financial hardship.

How to Choose the Right Credit Card Reader for Your Small Business

card reader segfault (Photo credit: secretlondon123)

Card readers are data input devices that are used to retrieve information from data storage devices, most frequently in the shape of cards. This kind of technology has developed into the credit card reader. Credit card readers are used widely in a number of different businesses across the world. Anyone with a certain type of credit card, or even ATM card, will be able to pay for goods and services without having to use cash. If you are a business owner, then it may be possible to increase your sales by using a credit card reader. Before you decide to choose one, however, there are a couple of things that you need to look over. Small businesses in particular have it good these days. There are now mobile card readers available that are quite easy to use.

Mobile Card Readers

Mobile card readers are being produced by various companies. Many of these are being bought by small business owners such as local artists, as well as private contractors. It gives your customers the opportunity to pay on the spot by using their credit cards. For anyone who wants to get paid as soon as possible, this is probably one of the best options.

Choosing a Card Reader

There are many different types available now. For example, Square is one of the smallest options that is available right now. This reader can be plugged into Android and iPhones. The device and the app are both free as well. Customers who use this do not even have to have a merchant account in order to use it. The money is simply going to go right into your bank account. Every time a card is swiped, 2.75 percent of the price is going to be taken out of the transaction.

Different card readers are going to work with different types of phone. For BlackBerry, the Intuit 

GoPayment application is compatible. Getting the application and the actual card reader (if you are going to be using an Android or an iPhone) are going to be free.

Get What You Need

It is important to have a look at the features of every card reader. The smaller ones are usually the best for small businesses. Large businesses may want to sign up with a plan, such as the one that is offered by Intuit GoPayment. With this Intuit, you will be able to sign up for a thirteen dollar a month contract.

Using a card reader is going to make life easier for small and medium business owners. You do not even have to invest much with a lot of the readers that you buy. You just need to choose a good package deal.

Author Bio:
Tina Davis is a freelance writer and blogger. She writes on a number of different topics. These include small business management, career advancement, alternative energy and travel. As well as this she writes about brands such as True Merchant as well as topics like credit card machines for small businesses in Pittsburgh.

How to Make Money with Binary Options?

Binary options trading is the newest form of online trading on the Internet. The Industry was established in 2008 when US authorities officially legalized this form of online trading and gave the permission for US companies to apply for a financial trading service provider license at the CFTC.

But what are binary options and can you really make money with them? 

What are Binary Options? How do they Work?

Binary options trading is basically speculating on the future movement of various underlying assets. An underlying asset can be anything that’s publicly traded, such as the exchange rate between various currencies, stocks of companies, commodities like gold, silver and more. And to make it easy, online trading binary options is so convenient.

Unlike in regular stock trading, in binary options trading you will not have to actually purchase any asset. You will merely be betting on the future movement of an asset of your choice. One might even say that this type of trading is more like sports betting; and while there is certainly some truth in it, in reality in binary trading you can actually influence the outcome of your “bets”.

Lets take a concrete example in order to illustrate how binary options trading works:

• Imagine that the stocks of Microsoft are at $300 at this very moment
• You predict that the value of Microsoft’s stocks will increase above $300 within 2 days.

Now, at a binary broker you will have the possibility to purchase a binary options contract that predicts that the value of Microsoft’s stocks will increase in the future. 

• Imagine that the broker offers a payout rate of 90%
• You intend to invest a total sum of $100

In case your prediction will come true, then you will be receiving a total payout of $190. This is calculated by multiplying your initial investment with the payout percentage, which will be your profit margin. The broker will also return your initial investment, hence the $190 price.

So, as a concept, binary options indeed work like sports betting however here if you have expertise in financial matters then you will be able to predict the outcome of your bets. Many people who are involved in business and finance are perfectly capable of making correct predictions.

And the great part about binary trading is the fact that you will be paid out with very high payouts. Like in the example above, if you invested $100, you won $190. You would have won that amount even if the value of Microsoft’s stocks had increased to just only $301 from the initial $300.

However, would this have been normal stock trading, then to earn $90 profits you would have had to buy stocks worth $27,000 at the price of $300 to gain $90 profits while selling them at $301. – So, as you can see, the difference is huge.

Can you Really Make Money?

If you paid attention to the above example, then for sure you have noticed that yes you can indeed make money with binary options. However, you will have to treat binary options as a form of investment and not sports betting. If you buy binary options contracts by random then you will obviously lose.

If, however, you have the patience and discipline to conduct serious market research, then yes, you can indeed make large sums of money. Take the Microsoft example above. If for example you have researched that Microsoft will release a new product next week, then you can be 99% sure that the stocks of the company will increase after the product launch.

Instead of purchasing Microsoft stocks for like $10,000 hoping make around $100 profits, you can just invest $300 in a binary options contract that predicts that the value of Microsoft will increase make $200 profits that way. Doesn’t this sound easier?

But where’s the catch?

Well, there isn’t really a catch in the traditional sense of the word. However, if your prediction will not come true then you will lose all your investment. – But as explained, IF you are determined to conduct a proper research before investing, then you will be able to achieve a winning ratio of around 80% at any moment (just for reference purposes: Most of the time if you achieve a winning ratio of around 55% you will be making guaranteed profits.

Is Binary Options Trading Legal?

In most countries binary trading is at this moment either not regulated or legal. Options trading is not explicitly illegal in any country. If you live in a country where binary trading is not regulated then you should only invest at brokers that are regulated in other countries.

Laws in the United States

At this moment in the United States only NADEX (North American Exchange Derivative) is legal and licensed. All other brokers operate outside of the law. NADEX is officially licensed and regulated by the CFTC and SEC.

Laws in Europe and other jurisdictions

In most places outside of the United States binary options trading is not regulated. In Europe binary trading is regulated only in Cyprus, Italy and the United Kingdom. Brokers that are licensed in one of these countries are legally allowed to operate in other European countries as well.

In most other countries binaries are not regulated however this does not mean that they are not legal. This merely means that the government of those countries is at this moment not invested in this form of financial trading and it allows citizen’s to decide what to do in this regard.

However, people living in unregulated markets are recommended to only trade at brokers licensed in other countries, preferably in Europe. This is an absolute must, since brokers “licensed” in some weird places like Cayman Islands are fraudulent.

Future Regulation and Money Making Potential

It’s expected that more and more countries will in the future decide to regulate binary options. This will result in a much safer industry and much more advantageous and safer services. However, until then, people interested in this form of online trading are recommended to stick to the trusted USA or European brokers only.

So, in short, binary options trading is indeed a good method to generate money online. However, this form of trading should not be underestimated and treated lightly. If you treat it professionally and do your homework then you will definitely be able to make consistent profits.

Creating the Perfect Personal Finance Strategy for Middle-Aged and Senior Citizens

Finance (Photo credit: Tax Credits)

With the recent financial meltdown debilitating the job sector and leaving an entire generation’s financial security compromised, it’s hard to imagine the troubles faced by middle-aged and senior citizens when the younger generation is in so much hot water. Transitioning to a life with no full-time job and, more importantly, no fixed income can be overwhelming if you’re not prepared for it. 

Whether your retirement plans involve moving back to your old house in Exton PA or settling down comfortably in Napa Valley, you must have excellent dominion over your finances to help you realize these dreams. If you’re pushing 50 or 60 years of age, then here are five key questions to ask yourself in order to choose the most effective strategy for keeping your financial boat sailing smoothly under all conditions.

What Assurance Does Your Health Insurance Give You?

Blindly rejoicing under the blanket of assumed safety of Medicare may not be the smartest idea. It is imperative to be well-versed with all the fine print mentioned in the insurance policy you sign up for and back it up with another policy that covers the loopholes of the former one. It will save you the rude shock of getting a colossal medical bill you’re not prepared to handle.

Are Your Financial Records In Order?

Keeping vigilant records of your expenses and savings is the first step to developing a successful financial plan that will help you enjoy a comfortable retirement. They make it easier to identify any possible deductions such as employment costs, mortgage payments, or commuting expenses that will lower your taxable income. Consult a reputable financial planner by showing them your financial records in order to get a better assessment of your financial status.

What Are Your Tax Liabilities?

Sometimes getting a raise may not be the best thing to happen if you don’t possess the financial savvy to manage it. In fact, graduating to a higher tax bracket may do your bankroll more harm than good. That’s why it’s quintessential to keep track of any revisions in IRS and Social Security policies and adjust your financial planning strategy accordingly.

Is Social Security Really The Ultimate Safety Net?

Contrary to popular perception, Social Security isn’t always a financial guardian angel for your retirement years. If you look at the rules and laws governing Social Security policy, you’ll find out that they’re uncomfortably dynamic in nature is because the age of retirement specified in the Social Security policy keeps changing. Thus, you should maximize your income while reducing your taxable Social Security income as much as possible.

How Bulletproof Is Your Investment Portfolio?

Most financial planners agree that middle-aged citizens should focus on maintaining a growth-oriented investment portfolio with a healthy mix of blue-chip stocks and bonds. As a citizen crossing the age of 50, it’s recommended that you stick to making only stable investments with a low risk factor to ensure guaranteed returns.

Five Tips to Help you Launch a Successful Business

If you have a business idea, now could be a good time to take the plunge and set up on your own. Setting up your own business will not be easy, but the tips below should help get you started and highlight some potential pitfalls.

Start with a business plan

Before you start, it is essential to have drawn up a solid business plan to lay out the details of your business and help you secure finance from your bank or other lender.

Your business plan should contain an overview of your business and other information, such as its objectives and how you plan to finance and market it.

Consider serviced offices

Many fledgling business start-ups launch from home and later move on to an office or other business premises, though this in itself can be a daunting process. Leasing a building often means a commitment for a number of years and doesn't leave much room for expansion or the sudden need to downsize. 

A good compromise could be to rent a managed office for a short time or hire a unit in a serviced office complex. This is a fantastic cost saving measure, especially if you're operating a business that potentially doesn't require a lot of real estate space, like a home care healthcare business. 

The top home care management software will handle rostering and document systems in a way that allows your staff to be either with a client or off the clock and still be able to access vital information remotely, removing the need for a physical office presence. Once your business is off the ground a bit more, there may be more justification to upsize your offices.

Don't forget insurance

Professional indemnity insurance is a must for many businesses, particularly if you offer advice or provide any form of consultancy. For some professions, it is a legal requirement.

Mistakes happen, and if you make an error during the course of your work, which results in a financial loss to your client, you could be hit by a compensation claim against you, for which you will need to be covered.

Consider outsourcing

Taking on staff brings responsibilities. Salaries will be paid each month, not to mention holiday pay, overtime, and deductions to calculate.

Outsourcing routine tasks such as personnel, accounting and payroll can free up your time so you can concentrate on the important stuff - growing your business!

Marketing matters

Marketing lies at the heart of business success and is one of the most important considerations when you are first starting out. It is up to you to introduce your product to new customers via your marketing strategy.

A good strategy will combine such elements as PR, advertising and digital marketing. Once the awareness is out, you can start to rely on word of mouth and a good reputation.

Starting a new business can be a daunting process, and there are a host of reasons why new businesses fail to get off the ground. Often, simple things such as inadequate market research or overspending can lead a business to financial ruin.

Failing to take out business insurance could also cost your business dearly and is something that is easily overlooked.

If you are launching a business, make sure you check out the professional indemnity insurance from Hensure.com, which can provide immediate quotes and cover for most businesses.

Sending Money to People in Other Countries

These days there is an ever-increasing amount of people both going abroad for holidays as well as choosing a foreign country as a place to live or retire. 

This increase in the amount of people residing overseas has also meant that there has been a steady rise in the demand for international money transfers from banks and of course independent transfer companies.

In fact, these days most high street banks can transfer money to overseas accounts, as well as the independent money transfer companies that are now found in most town centres. For people that transfer money overseas on a regular basis there are other options and by visiting www.currencyuk.co.uk or other similar companies you can actually set up an account for dedicated international transfers. 

There are however, a few simple things to remember before you set off to the bank or transfer office to send money to your backpacking daughter or maybe even send funds as part of an overseas business investment. Below we will look at a few of these considerations, which will definitely save you time and possible even some money.

Your ID

Before you set off out to the bank or transfer office make sure that you have some proof of identity that you can present to the bank teller or transfer staff. These days all international transfers need proof of ID before they will send funds. This is due to international regulations regarding money laundering as well as the illegal funding of terrorist organisations. If you forget to bring your ID you will quickly find out that you have just made a wasted journey and will have to return home to retrieve it.

Pick your Day

A money transfer can take from 10 minutes to 7 days to reach its intended destination. Most banks however can generally get the money to the recipient in around three working days. So, if you are sending money to someone using a bank, remember that the beginning of the working week will always be advantageous. If someone finds themself in a situation where they are very desperate for cash, it is generally a good idea to pay the extra fees and use an instant transfer service.

The Exchange Rate Margin

If you are transferring larger sums of money overseas for maybe a business or an investment, it’s very wise to check the exchange rate margin. This is how much the service provider is actually taking from the currency exchange. If you are only sending a small amount the rate is not really so important but on larger transfers it can seriously add up. So, before you actually send your money make the calculations to make sure that you are not losing too much on the exchange rate.

Your Receipt

Remember to keep your receipt in a safe place, this will be your only proof of sending if for some reason the transfer does not go through cleanly. Keep the receipt until the person you have sent the money to confirms the transfer. It is just a precaution but if you are sending funds to some of the more remote areas in the world, still a good idea.

IBAN

An IBAN or an international bank account number is something that you will need if you are sending money to another persons bank account outside of your own country. This number will be on the top of your bank statements next your sort code and will be clearly marked ‘IBAN #’. You will also need to know the IBAN number of the recipient’s bank account before the funds can be transferred.


About the Author:Currency UK at www.currencyuk.co.uk is a money exchange business that is dedicated in helping clients move pounds in foreign currency across the globe.