Business advice

Changing the next generation’s personal finance habits
December 25, 2008, 1:21 am
Filed under: businness advice | Tags: , ,

America’s personal finance habits need an overhaul. This is not new to anyone who has seen a news headline during the past year. We, America as a whole, are in a financial mess. We haven’t a clue as to how to use logic when it comes to money.

Suze Orman, Oprah’s financial guru, has risen to superstar status because this has been in the headlines non-stop. Let’s see if we can apply some logical similar to her offerings.

This country needs help in earthquake strength. We are in the midst of a whirlpool of financial debt resulting many times from poor judgment. There is no way to change everything within the next generation. The only way to tackle such a mess is one step at a time. Martin Luther King, Jr., started with one article, one demonstration and then another.

So we can start with involving all family members in budgeting for grocery shopping. You are saying, what? I don’t have time for that. Make time. No one will ever make wise financial decisions if they don’t know how to budget.

Everyone wants to eat on a regular basis. Call a family meeting and explain it is now going to be a family project to make sure you keep within a certain spending limit. Go into the reality of how the family is going to have to be careful with spending and here is the place to start. Giving an entire dismal picture about the family budget is too much to burden children with.

Explain coupons, sale days and lists. Assign tasks to everyone to get ready for shopping day. There will be no more quick trips to the store. Explain how much is allotted for the food budget. If they help find a way to get in under that amount, there will be a reward.

Start a policy of keeping daily spending dairies. No one can save money if they don’t know where money is going. You can create a chart, get it blown up and put it on a bulletin board or the kitchen refrigerator. Receipts can be kept for daily entries

You are changing your family’s way they view money. Once children start these habits, this behavior will become ingrained. It will change the way they think out their buying decisions as they grow older and plan during their adult lives.

Decide on how much cash you are willing to hand out every week. Once that’s gone, the children are responsible for finding other ways to earn more. Collecting cans in the neighborhood takes work, but can be done by children at a fairly young age. They will have to organize it and let you know when it is time to go to the recycling center.

Parents complain these days they feel like an ATM machine when it comes to their kids. Things can’t get better, unless parents change the patterns they have ingrained in themselves. Before cutting the kids off, explain the options. If they don’t like the idea of cans, especially for younger children, put up a rooster of chores they can do if they want extra tacked on to their allowance.

The next time one of the children, or even your spouse, talks about wanting a fairly expensive object, sit down and have a detailed discussion. Can you afford it? Do you need it? Most of the time, the money will not be readily available. So, there will have to be a savings plan. You can establish your own family lay-away plan.

Search for financial reading the children can grasp. Get them involved, no matter how hard it may be at first. The following link contains several helpful books on Amazon:

The path you are starting on will not only help your family, but hopefully spread to the next generation. Pre-teens and teens, for the most part, have been spoiled these days. They fail to comprehend ‘no’ when it comes to asking parents for money. Unless this trend is squashed, they will carry on the same way with their children. This all leads to the overspending that triggered this financial crisis to begin with. Let’s puts some common sense back in how we use the cents we earn.

Once children start watching what they do with their money, they will have some left over. Make sure they don’t spend even that foolishly. Sit down and suggest savings plans. There are still Christmas club accounts. There are regular savings passbooks that don’t require a specific opening balance. They may even get enough together to put into an account that earns interest. Put a new spin on money. Never stop hitting on the theme that money is not just for what it can do for us today, but what will it earn for us tomorrow.



Big Guys versus the Little Guys
September 7, 2008, 7:35 pm
Filed under: Blogroll, businness advice | Tags: ,

Some people are just bound and determined to conclude that big businesses in any given market niche pose a dire threat to small business owners.

We have all heard the complaints railed against Wal Mart. However, did you notice the news stories that covered the towns where the small business owners got together and kept them from moving in?

Economic competition does not mean that someone is always going to win while the other one loses. Competition in the market is simply the opposite of a monopoly market. I am sure no one would be happy if the world’s markets were run like OPEC.

So, in this country, since the government-backed monopolies AT&T, etc., have been broken up, we have markets with many players. These players by the very nature of the game are going to be different sizes and styles. In order for any one of them to keep alive in a market, they have to be savvy. Getting one’s name out, dealing with pricing and services are the major issues.

Because smaller companies can’t offer as many products or services as the big guy it is falsely assumed they have a smaller chance of being successful. Not true. Think of an easily identifiable example. Big chain grocery stories cater to a certain niche. While they have customers in all their lines, just a block a way the same can be true of the neighborhood 7-Eleven. Why? 7-Eleven’s are convenience stores. They fill a niche for consumers in a hurry. When hurried, most consumers are willing to pay a little bit extra for getting in and out quicker.

7-Eleven Stores began operating under this name in 1945. Previously experiments had shown customers willing to pay more for small items when presented with the opportunity, instead, in those days, having to travel to a bigger store. 7- Eleven’s success has in no way decreased the market for grocery chains.

In Pasadena, CA, three bookstores operate successfully on the famous Colorado Blvd. There is a chain, a mainstay, and a Mom and Pop. All offer slightly different services and refer customers to each other when needed.

None of this doesn’t mean that a business somewhere isn’t going to fight unfair and try to gain an unfair grip on the competition. We all know that Wal Mart has some unsavory business practices. Bill Gates has been sued for allegedly trying to do similar things.

Then, there were the Robber Barons in the early 20th century who really didn’t care what they did to keep their huge share of profits. They are the reason we have anti-trust laws today.

The point is that those types of activities aren’t the norm. They are out of the ordinary and are dealt with via bad press and lawsuits.

This doesn’t mean that when shops open in your niche you wouldn’t have to work harder to keep your customers. Adding services, finding out what your customers really want and more marketing will be a part of the mix.

The current threats to small business are the tight market in the overall economy and constant talk of economic downturns. This is an aggregate economic issue, not one dealing directly with competition.

Economic competition is healthy for the market. It needs to be dealt with logic instead of emotional reactions to misconceptions about basic economics.

For more examples of my work:


Everyone is looking for a culprit for the real estate mess
July 29, 2008, 7:22 am
Filed under: Blogroll, businness advice | Tags: , ,

I have a candidate: creative financing. Creative financing began to show its ugly head in the late 70s and early 80s. Before it was used by ‘ordinary’ consumers Robert Allen made a splash on the real estate scene.

For those unaware, Robert Allen claims to be the first with the “No money down,” principle of real estate investing. He made a name for himself by proving he go into a town and sign a deal with no money down. What I don’t think he mentioned was that he had excellent credit and this wasn’t going to be his first purchase in real estate. Translated this means that he had collateral to offer as a part of the loan.

The other factor is simple. There was no way on earth Allen was planning on keeping those homes. He was going to flip them in the years when the value increased in big numbers every year. So selling in a short time for a higher price was how he made a profit. Good logic for him, but not for consumers wanting them as a long term investment or a home for their families.

That’s not happening now. It might not happen again for years. This equates to the fact that it makes no sense buying with no money down.

Initially, no money down was just the beginning of the history of creative financing. During those times, right after Prop 13, it appeared as if the ability to buy homes would be in a downturn for a long time. (Sound familiar.) Anyway, the prices were still horrific despite the caps promised by the passage of Prop 13. Interest rates also were out of sight. I remember the day prime rate hit 22 per cent. I don’t think mortgage rates ever got that bad, but they were up there in the double digits.

Fixed rates were close behind and no one was standing in line for a home mortgage that was going to cost double digits in interest for the next 30 years. Someone came up with adjustable rates. They were eased into the financial institutions. It didn’t happen over night. In fact, I remember the year California passed a law allowing banks to write mortgages with them, 1981.

The trick was then to get in and cross one’s fingers that when the balloon payment came due, oh yes, they had them; the fixed rates would be down enough so you could roll over into a fixed.

However, some owners were so eager to sell then when a potential buyer couldn’t qualify to finance the whole amount, after down payment, they agreed to carry a second. This became known as a “wrap-around” mortgage. Many times the amount of paper was for the total amount of the house’s value. In some cases, even more. When those folks’ money got tight, they simply walked away from the homes since they had no equity and no ties to the house. They only thing they lost by leaving was their credit rating for a good number of years. This is the history of creative financing.

However, loans, in that day, no matter how allegedly creative they were, still were based on some of the traditional guidelines. You know: proof of income, credit reports and how much you could logically afford for a mortgage payment.

Fast forward to today’s market. There was a big potential consumer base for home ownership untapped because of their bad credit and questionable income. Greedy folks started rubbing their hands together with the idea that after all, everyone is entitled to a piece of the American dream. They started writing loans with introductory interest rates and the dubious consumers were signing on the bottom line as fast as they could pass the paper across the table. They couldn’t afford to keep up those loans and now the credit market is suffering because of greed basically.

We have millions losing their homes. Congress is passing laws to offer government backed loans for those who are about to be homeless; another government bailout by any other name. Banks are going under and the mortgage industry will probably never be the same.

So if you want to find something or someone to place the blame it on, creative financing is a good candidate (along with greed). It’s time we got some common sense back in the world of financing. This litany of troubles is just another further example that it was thrown out quite awhile ago. If a loan in the long term doesn’t make common sense, then don’t sign. That’s the problem in a nut shell.


Work for equity?
July 10, 2008, 7:10 pm
Filed under: businness advice | Tags: , , ,

I just had a Linkedin member ask me to consult on a project in exchange for equity. And, perhaps down the road, three to six months, they would have the money to pay me. Ah, gee. Well, no.

I am sure he wouldn’t answer my email, which explained I can’t buy groceries with promises of equity. Oh yes, he also told me I could have the exclusive on the story of his company.

You would think alleged business owners would have learned by now. There was a recent article in Vanity Fair, which gave a widespread history of the Net. One quoted individual relayed a conversation about a company who not only wasn’t profitable, but was on their third round of financing.

It seems that this craziness continues. I figured that the explosion had taught everyone that businesses need to be capitalized with money to run their daily activities.

Back in the early heydays of Net, people were willing to take a chance your company was going to be the next one with a great IPO. After all, there had been a string of others who had done it. However, great IPOS don’t mean that the company is profitable or hopes to be anywhere in the future. There was a comment on that in the same article in Vanity Fair.

When companies aren’t funded/budgeted properly they ask the rest of their world to go along with the gamble. That’s what I equate to asking vendors, me for instance, to take their pay in equity or to wait three to six months to get paid.

I have another great example of these nutty practices. I have a friend who is a partner in a business incubator. She got an inheritance, which she used to buy a partnership, and was worried the last time I talked to her because she never had any money. She lamented, “We should be rich by now with all the companies we got off the ground, but we keep putting all the money that comes in back into the company.” I explained to her that was a recipe for disaster, but her answer was, “Oh, well.”

Running a business successfully means have enough in the budget to pay for its expenses along with your own personal bills. The first time you take personal money for business, consider it the first step towards bankruptcy court.

If you are running a business or thinking about running one, please read this advice carefully. Also go back over some of the lessons that we witnessed, and were very well documented, during the explosion. We should be past the stage of thinking someone else is going to plunk down hard cash if you don’t use your first round of financing wisely.

Do not be the next one who asks vendors for their wares and services for future payment. Don’t be the employer who let’s his employees know there is no more money in the bank when they were suppose to have gotten a paycheck that day.

Frivolous business planning doesn’t just hurt you, it hurts everyone you have interacted with during the time your doors were opened. Please think hard about these principles and make sure you don’t find yourself trying to explain why you make similar errors.

For more samples of my work:


Are you thirsty?
May 18, 2008, 8:24 pm
Filed under: Blogroll, businness advice | Tags: , ,

It’s been brought to my attention that the increased scarcity of water is looming on the horizon as a massive problem.

This is a link to a list of articles on the subject: . Take a look at this long list and it will set you back a moment. I live in the Los Angeles area and the subject of water, do we have enough, and where can we get more is a part of the city’s history. When I hear mumblings about how this is going to be an issue again, I tend to put in the back of my mind, on the shelf of troubles that the rest of the world is going to fix.

Under this link, I found an article entitled, “”Those who control oil and water rule the world.” Think about it. If we stand back and let the major powers be the ones that deal with this issue, it will turn into a big mess. We all know how well they, the powers-that-be, deal with the ongoing scarcity of oil.

Now, if you are having doubts that a water shortage is an issue, check out the link and look at the number of articles on the subject on just this one website.

Dams are needed in California and there is a chance the Las Vegas will run out of water completely. This doesn’t include the troubles abroad with droughts and famine.

One of the biggest solutions mankind needs in the next couple of decades is a more efficient way to utilize the water we have. We also need a way to provide more and just maybe a solution to an age old problem, how to use sea water to our benefit.

All of this is time consuming and costly. The party and government that comes up with efficient solution to these problems will be controlling the strings of the rest of the world.

There are some attempts already at easing this problem. This is a link to a story about a system that deals with saving rain water:

We all know that the world is fascinated with getting a jump on what the next big thing is going to be. I am here to tell you that is and will continue to be water.

Keep your eyes peeled on the news coverage and any techie potential solutions. If opportunities for potential investment crop up, don’t think twice before jumping in.

This is sure to be ongoing topic for the foreseeable future. I doubt the problems with water will ever completely be resolved.

Technology for delivering water will without a doubt one of the next big things.

For samples of my work:

Laura Bell


Do you control your money or does it control you?
May 6, 2008, 6:41 pm
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This is a good question to ponder when the country is awaiting their economic stimulus checks with baited breath. Consumers tend to think checks are going to keep coming. If you run your life on that premise, it means that you are planning on working until the day you drop dead. If you spend your life waiting anxiously for your next check, your money controls you.

Stop presuming that checks will continue to show up in your life as they can stop for a myriad of reasons. Nowadays, even government checks can be delayed.

I know. You are shaking your head wondering how to get control when all your money disappears as you soon as you pay your bills. Getting one’s financial accounts under control is a primary goal. However, it doesn’t mean that you can’t save. Nor, does it mean that you can’t put away unexpected rewards, such as the economic stimulus check. I know several working folks who are planning to use it for a vacation or new ‘toys’ they could do without.

This type of behavior simply is saying to the universe that I will keep on working. I have absolutely no hope of ever putting my money to work. You either make a plan to put some of it to work, with more later, or you will be working until your funeral.

I know times are hard and money is stretched money is stretched to the point of snapping. My point is that you have to put money away, no matter what the circumstance. This is even more important when it comes to unexpected windfalls. You only spend that $600 on a vacation if you already have an investment plan in place.

This problem, of acting as if checks will continue is so widespread in this country that even the top-earners run up bills they will never be able to pay. They are under the illusion the good times will keep rolling forever. All you have to do to realize how nutty that idea is to look at the movie stars that have gone broke once shows were cancelled.

The lower end of the earning curve can start small. There was an interesting article in the business section of the Los Angeles Times just the other day on how one can find treasures at estate sales. Don’t shake your head until you investigate. Children start out with small stamp collections that eventually end up being passed on to the next generation. Collectibles can be a starting base for building wealth. They can be accumulated with small purchases in the beginning. Forbes used to have a section that talked about the ups and downs of the market value of various collectibles.

For the long term, one needs an investment or savings plan. Suze Orrman, the current national financial guru, continues to talk against using retirement money early. Whatever problem is bothering you currently should be dealt with other options besides taking out retirement funds. There are penalties, not to mention the loss of a nest egg for the down the road where the only sure thing may be a social security check. Once a retirement account is established, however, it can be used as collateral for a short-term loan without penalties.

Spend some time finding out how you can grow your money if you have only a small amount to play with. Online investment firms offer bank accounts which offer higher than normal interest rates. When you have enough put away, you can start trading a little at a time.

If you accumulate enough, open a CD, a certificate of deposit, and don’t crack it open, the first time something goes wrong. You can still buy United States Savings bonds and other investment bills issued by the US Treasury. Here is a link with more info:

If you feel the need to understand more about your finances, do some reading and then start a plan of action. You are losing money every day you put it off.

For more examples of my work:

Laura Bell


The times; they are confusing
March 26, 2008, 6:57 pm
Filed under: businness advice | Tags: , ,

Prices are rising, credit is crunching and unemployment is rising. The Fed is dumping money into the system more vigorously than previous. We see nonstop headlines about rates cut and worries over cheap money. What’s it all mean? What’s it going to mean; and most important how is everyone going to cope?

There is no way to know all the answers. There are certain things that are different than previous economic crunches. Monies are being offered to investment banks to keep them from folding. Legislation is in the wings in an attempt to minimize the mortgage rate mess.

The credit crunch is trickling down to credit card companies. A tighter hold on credit means a slow down in buying, investing and jobs. Slow downs or the threat thereof usually means demand in all markets slows. A decrease in buying prompts a decrease in prices, the exact opposite of what’s going on.

This influx of money into the system, better known as the money supply, has a nasty side effect. It has been referred to in the media without an adequate explanation. The more money in circulation, the cheaper the money. This means it takes more to buy the same amount of goods: rising prices, not good.

How all of this pans out is anyone’s guess at this point. There are some things you can do to ensure you make wiser choices.

Uncertain times means you need to be more careful with purchases of durable goods. Think of this as anything that will still be around after you are finished paying for it, hopefully. Making long term commitments, tying up funds, long term payments, is not wise now. Things may change where you have to move in a hurry. You may be forced to move out of your home. You may be forced to change jobs. Investors may also see chances at making money when stocks, gold/silver, make a quick change in prices. All this boils down to a needed shift in your liquidity preference. Can you get your hands on cash in an emergency or will you have wait until your escrow closes. If you are employer and you are forced to cut back, it is much easier to get rid of temporary workers than letting go long-standing employees. Having more liquid assets means you are equipped to move quicker when changes come and come they will.

Sellers of durable goods are keenly aware that buyers are thinking harder before signing on the dotted line. They are up nights thinking of lures to bring you into their market. The latest I heard was a radio commercial offering car deals with no payments for 12 months. The announcer also encouraged listeners to get themselves pre-approved before arriving at the showroom. Car dealers’ aim is to get your signature. They create an atmosphere with promises that make you not think past tomorrow. The problem is they want you to forget about extra charges they have in the contract. Anyone promising durable goods without payments in the beginning is going to charge you at the end of the contract. Don’t be lured into thinking the salesperson is your friend. The only person they are looking out for is themselves. Bigger lures are bound to appear in our future.

The best thing you can do for yourself is to ask whether or not you can get out of a commitment easily six months down the road if your finances change. If not, forgo the purchase or the hiring of the extra employee. This also applies to investments that wouldn’t allow you to withdraw your funds without a stiff penalty.

Long-term planning has probably never been so important. Think twice and wait a day or so before signing any contract. You’ll be glad you did.

For examples of my work:

Laura Bell