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Tips And Stories To Help You With Managing Money

Basic Tips For Buying A New Home

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Before You Sign Mortgage Papers, Know the Facts

First-time home buyers can find themselves bogged down hopelessly in a sea for facts, figures, statistics, competitive advertising jargon and who knows what all else. That argues for a thoughtful preliminary process that will ensure that you go into what likely will be one of the most important purchases of your life. A clear vision of what you really want in a home, what you can realistically afford and what portion of your earning power and your time you want to dedicate to home ownership should guide your ultimate decision.

Obviously, if more than one person is to be affected in the process, a thorough discussion of every detail is essential. Don’t give anyone else the opportunity for “I told you so’s.”

Start with the question: Do we really want to do this? If there is some doubt that you will remain in the location where you want to buy, home ownership may not be for you. Up-front costs tend to skew the figures mostly in the first few years. If you are not likely to pass that point, you could end up losing money if you relocate. Since no crystal ball has yet been invented to forecast every twist and turn in a society that is prone to make life changes, there is no way to assure the future. But don’t overlook the obvious.

Maintain A Good Credit Rating

Be sure before you make any moves that your credit rating is as healthy as possible. A few months before you want to start looking, get a copy of your credit data and be certain it is correct. Resolve problems before you start any discussion of money so that they don’t become part of what is already an onerous process.

Know What You Can Afford

Be realistic about what you can afford. The usual advice is that you can afford a home two and a half times your annual income. But there are plenty of variables, such as how much debt you are carrying going into the home purchasing routine and whether your income is likely to stay on track. If Mom decides post-purchase to stay home to raise children, how will that affect your bottom line? Online “calculators” are available to help you picture your personal finances relative to what your home will cost you.

Determine Your Down Payment

Find out up front how much you will have to produce for a down payment. You may well qualify for a loan requiring 20 percent down or less. Many private and public lenders offer homes with a down payment as small as 3 percent. Study your options carefully before making a decision, and remember all of the up-front money issues before you are into the actual purchase mode.

Choose A Good Neighborhood

Many factors will affect your decision on where to locate. But as a rule of thumb, areas that have good schools have several advantages. Even if you don’t have children in school who would benefit from such a location, it is a fact known to Realtors all across the country that re-selling in such a neighborhood is enhanced, since that is one of the factors many people include on their “where to live” wish lists, a feature that boosts property values.

Use A Real Estate Professional

When you get serious, involve a professional. Despite all the readily available resources online, there are details that might slip past you that a professional would recognize. Don’t look for the busiest, look for the one who will keep your interests foremost as serious negotiations begin.

Understand the difference between points and rates. When you are selecting a mortgage, you may be offered the option of paying points. That means you pay at the beginning some of the interest that you will be required to pay at closing, in exchange for a lower interest rate. If you expect to be in the home for three to five years, the points may be the better deal. A lower interest rate will save you more over the term of the mortgage.

Getting pre-approved may save you the hassle of looking at properties you can’t afford, only to be disappointed. You will be in a better position to make a valid offer if you do find the property that is just right. Pre-approval is different from pre-qualification, which is based on just a cursory review of your financial data. Pre-approval goes deeper into your income, debt and credit history.

Make a study of recent sales in your desired neighborhood before making a bid. Look at the past three months and if homes have been selling at 5 percent or so under the asking price, make a bid that is 8-to-10 percent below the listed price.

Hire a home inspector aside from the home appraiser the lender will require anyway. An engineer with experience in doing home inspections would be best, especially if he has experience in the area where you plan to buy. He likely will be aware of existing problems in the neighborhood, if any, and be able to alert you to potential problems that could rack up expensive repairs in the future.

There. Ready? Get set and go find the house of your dreams!

Small Business Lessons From Disney

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Learning from the “Big Boys” simply makes sense. Companies that claw their way to the Fortune 500 ranks obviously are doing something right and though few start-up companies will end up in the billion-plus class, there are some attitudes and actions that pop out when you read about those who do.

In a recent edition of Fortune 500 Magazine, the corporate history of Robert Iger, Disney’s most recent chairman and CEO (since 2005) chronicled examples of a leadership style that has boosted Disney back up in the ranks after a bit of temporary stagnation. Now 66th on the Fortune 500 list, the mega-entertainment company estimated 2012 fiscal revenue at $42.4 billion. The money is generated through cable networks, theme parks and resorts, broadcasting, studio entertainment, consumer products and interactive media. How the company manipulates these elements is part of the success story.

Imagination Has No Boundaries

Some of what can be learned from Disney includes a momentum that never stops. Every step taken by any of the various money-makers is expected to dovetail nicely into the whole. Imagination has no boundaries. For instance, passengers aboard Disney’s new cruise ship Fantasy find themselves asked to doodle on their place mats, which are then collected and transformed post-haste into an animated movie that they can watch as they plow through the ocean — a reminder that the ability to create entertainment is near-universal.

Do More Listening Than Talking

Photo By Loren Javier - Flickr

Iger has a reputation for “listening more than talking.” But when he takes a stand, he’s tough. If a member of the management team is not contributing in the way he’d like, the individual may be on the way out. “If I can’t trust a person to do that, then I need a different person,” he is quoted as saying. Compassion is nice, but tough gets the job done in some instances. Finding the right managers and then leaving them alone to do their jobs is the first step. But having the smarts to take their good ideas and disseminate them through the business is a cultivated talent.

Expand Your Assets

Sometimes, absorbing the competition is the way to go. When Pixar emerged as the new king of animation, Disney moved to get the company inside its circle, at a cost of $7.4 billion. It marked the end of an animation era in which Disney ruled without peer, but opened up new vistas in the genre that are beneficial to both. Also added to the Disney corral was Marvel Entertainment, which brought the popular mania for such characters as Iron Man and Captain America under the Disney umbrella. It was an immediate boost to a live-action-movie segment that had begun to flag. It also expanded the company’s $3 billion income from consumer products.

Learn From Your Failures

A good lesson in how to handle a failure was embedded in the “John Carter” fiasco. The movie has been described as one of the “biggest bombs” in movie history. Rich Ross, chairman of the live-action division, lost his job shortly after the movie hit local theaters to pan reviews all across the country. But the upshot is that successful companies do not wallow in the occasional flop. They take the steps necessary to go around the failure and learn what it can teach. Internescine warfare is not nice, but someone at the top has to do what must be done.

Think Outside The Box

The penchant for thinking outside the box has been a historic hallmark. The company’s acquisition of ESPN moved Disney even farther beyond Mickey and Minnnie and into a universal entertainment mode. The sports network is considered by some the Disney “outlier,” but if you define entertainment broadly, it fits the definition. Football fans, in particular, who make up the bulk of ESPN’s viewers, certainly hold a near-steady diet of sports to be the epitome of entertainment.

Details Matter

Looking at detail is an Iger quality that contributes to the company success. While scoping out plans for the Shanghai, China version of the Disney Resort, a joint venture with Shanghai Shendi Group, he was looking out for such things as spots that serve as convenient “photo-ops.” The company also is not averse to the occasional lateral move to implant the brand in the minds of those it hopes to make customers. Disney has set up English Language enters in Shanghai, a move that may eventually affect how many of the city’s residents are attracted to the theme part.

Recognize Your Limitations

Knowing, or at least anticipating, your limits can save some headaches in the future. Iger has announced he will leave his Disney post in March 2015. That way, he says, he may avoid some of the turmoil that surrounded his ascension to the company’s top spot. The company is on notice that a suitable successor should be primed and ready when the time comes.

Disney checks are one of thousands of popular Disney products.

Small Business Lessons From Coca-Cola

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Innovation Never Ends

When does a successful company come to the point at which it can rest on its laurels and coast? Never, according to Muhtar Kent, CEO of the Coca-Cola Co. When he took over the reins of the soft drink giant four years ago, it was a bit stagnant, struggling to keep up with the PepsiCo competition. Through a series of brilliant manipulations, he put Coke back on top of the rankings. Last year, the Fortune 500 company racked up sales of 5.5 billion cases of product in the United States alone, with more than twice that amount in top markets throughout the world.

World Wide Distribution
Coke Advertisement In Israel - 4/27/2012

Those numbers are staggering to smaller businesses struggling to establish themselves in a competitive market. But in a recent far-ranging article in Fortune 500 Magazine, he reveals tactics that could be applied by just about anyone. Among them:

Don’t become blasé about the possibilities.

When Kent spent five days touring Asia he cranked up employee enthusiasm by telling them “This is your once-in-a lifetime opportunity. Don’t miss it.” He describes his own leadership style as “constructively discontent.” There is no room for standing still.

Stick to business

The company talks in figures that track up into the billions, but Kent has initiated a policy of charging managers $15 if they use their cellphones for personal calls. He lives by the same rule. He bases this seeming nit-picking policy on his perception that one of Coca-Cola’s problems was a lack of respect for cash. He uses cash to fill his BMW at the service station and keeps a well-supplied money clip in his pocket for spending money. It’s a reminder that its small amounts mounting up that keep Coke in the top rankings. (Currently they are 59th among the 500.)

Look for ways to be innovative

When Kent was heading a marketing job in Rome, there were rumors that Coke planned to shut its Italy offices. He came up with the idea of putting Coke products into 150-milliliter mini cans, a much more manageable size for airline galleys than the standard 12-ounce cans. The company was first with the concept and latched onto major accounts with airlines, trains and ship lines across the Continent.

Watch out for your partners

Kent understands that while Coke manufactures its famed concentrates and syrups, the bottlers down the line are closer to the customers who buy the product. He capitalizes on that fact, treating the contributing components down the line with consideration and respect. At one point in his career with Coca-Cola, he quit over such issues, compounded by a stock-trading incident that involved short sales of Amital shares. He resigned from the company for a time. But bouncing back from reverses also is part of his approach to business. During the interim, there were several years of rapidly changing leadership and related problems in the company. He was rehired in 2005.

Be prepared to take a bold step when needed.

For Coke, one of the steps that put the company back in the lead was a deal with entrepreneur Steve Cahillane, who had founded State Street Brewing in the 1990s. Kent put together a deal that enabled Coke to acquire Cahillane’s company while giving the latter rights to bottle Coke products in Norway and Sweden, a profitable scenario for both. It was without question a bold move for Kent, but he shored up his chances of convincing his board by preparing a finely detailed plan that cogently outlined the advantages to the company.

Keep an eye open for products or services that fit neatly into your family

Coco-Cola has 15 brands with retail sales over $1 billion a year. The public’s demand for a periodic something new in the soft-drink arena suggests that the number could go up. Refusing to become bogged down in narrow interpretations of what fits has been a boon to Coke and could be for many a smaller company as well.

Capitalize on new technologies

Kent had the foresight to recognize the value of using emerging technologies to sell more product. He encouraged his vice president of innovation to head up the design of a self-serve fountain machine that allows customers to mix beverages to their own taste via touchscreen. The company has focused on marketing via digital strategies. It has the largest consumer brand fan page on Facebook, with 41.4 million likes.

Provide growth opportunity for your leaders

Coke has initiated a program called Talent 2020. Executives are assigned a research project outside their area of expertise and have six months to put up a defense of their findings to a leadership team. No Power Point. They are expected to stand up and present what they’ve found sans the glitter. Some of their ideas have already been woven into the corporate fabric.

Look ahead

Kent’s vision is incorporated in his statement that “The future of the world belongs to two groups: those that can grow and those that cannot grow. Those that don’t grow will go into oblivion.”

Next time you order personal checks consider Coca-Cola image checks.

Start Saving Money Now

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When it comes to personal savings, getting started is the hard part. Few people would disagree with the concept that having a cushion to see one through emergencies and to provide against the day when retirement becomes a reality is a good idea, but a surprising number of people don’t get around to starting a savings program until it is very challenging.

Facing reality is a good place to start. Know precisely how much income you have. Don’t confuse gross income with net. Don’t forget such items as taxes that automatically reduce your take-home pay. Consider all the sources and don’t fudge. You can’t establish a savings system on shifting soil. Then apply the same realistic appraisal of your outgo. The difference between the two is the logical launching point. It may require some adjusting to create the leeway you need to set money aside.

Benjamin Franklin said it first: “Spend less than you earn.” It is only common sense that you can’t save anything if all your income is devoted to current living expenses. A little belt-tightening is requisite if you are serious about building a hedge against future needs. Consider these steps:

Discern between wants and needs. A little economy now will mean a lot less stress later on. Consider the relative advantages between buying an amenity-stacked vehicle, computer or electronic equipment or having a little cushion in the bank. What you could save by eliminating just a couple of trips to fast-food outlets in a week could provide the seed money for a savings account. Don’t complain about not having enough money to save if you are making frivolous purchases on a regular basis.

Use the resources offered by your employer. Many companies offer opportunities for savings plans, with the money automatically deducted from your paycheck each pay period. Some companies even offer a match of some kind as incentive for you to save. Investigate.

Seek professional help. Information about common-sense money management is readily available online, at a library or through publications put out by financial institutions. Dozens of tools are available to help you keep track of your money, including budgeting, meeting short-term and long-term goals and saving.

In the current economic climate, banks are actively promoting savings plans. Some offer ways to save automatically through your debit card or automatic deductions from your deposits. Ask. Some have a plan that allows you to round up purchases to the nearest dollar, with the additional money going into your saving plan. Over time, small change can add up to real savings. You may find that you have more peace of mind if you control the amount going to your savings by arranging for a transfer of a certain amount of money to your savings account each deposit period.

Compound interest is your friend. Putting money into a low-interest plan may be the way to get started, but consider moving into an investment account when you are ready. You’ll earn more money. Investment and retirement accounts provide more interest over time.

Practice frugal banking. Look for a bank that offers free checking, automated savings and the ability to withdraw cash from an ATM. But be sure to document your ATM transactions. It is easy to lose track if you don’t. Do whatever you can to minimize outgo and capitalize on what you are able to save.

A raise or a windfall from some source outside your normal income is an opportunity to build savings. Avoid the temptation to adjust spending upward until you have contributed to your future well being by adding to your financial cushion.

The time to start is now. The future is just around the corner.

Don’t forget to save money on your personal checks by ordering online. You’ll find big savings there!

Social Networks Can Boost Business Start-Ups

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Getting the word out about a new e-business can be a considerable challenge for a beginning entrepreneur. Social networking on such sites as Facebook, Twitter and LinkedIn can be an inexpensive and effective way to promote, but there are some things you need to know before setting out.

In a recent Wall Street Journal column, Sarah E. Needleman offers advice for the uninitiated, with the underlying message being to take time to understand how the networks work and use good judgment in choosing where to post your messages to get the biggest payback. The sites are free and “wildly popular,” she says, but diving in without a little know-how might be counterproductive. Among the dozens of choices, the newcomer to the game might spend a lot of time spinning wheels without the desired results. Some of the fast-growing newer sites, including Google+ and Pinterest are attracting scores of competing businesses, all of them vying for attention.

The average Facebook user spent seven hours on the site in February, according to comScore, a market research firm. That’s powerful incentive to get your company’s name before the social networking public.

However, those in the know recommend that you hold off using the social network until your start-up is functional. Spend your limited time and energy on establishing the business at the outset. Networking shouldn’t rob from the demands of your start-up during the tricky challenge of getting it in motion. Acting too fast might end in embarrassment or adverse reaction. One bad reaction from an unhappy customer could “go viral” and be re-posted many times, spreading negative information about your business in the exact opposite manner you desire. Needleman quotes Kevin Ready, an Austin, Texas entrepreneur who has learned from experience, as saying: “Your first priority is to get your operation started. . . Social media is a long-term investment and not magic. It’s hard work.”

With that in mind, when you think you are ready to launch social networking in your company’s behalf, look for a network that will get your message to those most likely to be interested. LinkedIn, for instance, is an outlet that has a membership made up primarily of companies and business professionals — a logical place to post if your business sells goods or services to businesses. A few days or even weeks spent in research could multiply the benefits when you are ready. There are plenty of examples of start-ups that found themselves consumed by networking while still in the throes of getting off the ground. Some reported they had to back up, become better prepared and begin again. Your preliminary research should include noting what your competition is doing on the network you are likely to use. Looking at the competitor’s messages also will give you a consumers-eye view that may guide you in creating your own ads.

Before using a network, you should secure your business name. There is the possibility you could lose your name to another business of another individual as you concentrate on building your company. Claim your name on the network you are considering so you avoid potential frustration. Post a “coming soon” message to hold attention while you prepare the real thing.

Long experience has shown that the most popular company profiles are those that attract visitors with contests, surveys and special offers, Needleman noted. Store shopping or social networking, buyers are assessing what’s in it for them.

For business start-ups, make sure you have adequate checking account supplies