Your Best Investment...You!

Everybody comes online looking to 'make money and start to work full time from home'. This is the dream of so many people in this business and rightfully so, I mean the greatest feeling in the world is getting up and developing your business and your brand. I think of nothing more rewarding that owning your own business, it really is a wonderful thing.

How long does it take? What is that magic number? Days, weeks, months or is it years? I'll give you my opinion on it, it's the latter. Yes, forget all those 'get rich quick' schemes you have read about. All those doublers and randomizers that promised you that you could sit back and let the money come rolling in. They do not exist. Here's the truth, it takes an investment of a few years to get these things going.

Let me say it again, you will NOT get rich from surfing a hit exchange and you probably won't be making a decent income off them for at least 6 months. Why? Simple, you should be trying and are in the process of building a 'business'.

Go offline, try to start a business and the turn around 'number' seems to be between 3 to 5 years, before a new business takes shape and starts earning the owner a profit. Yes, the internet can cut this down but not in the amount of time most 'hype machine' programs promise.

That being said, you have to develop your business and your name online. If you have been surfing a hit exchange for a month, and see no results, try a new splash page, switch up your surfing schedule but never give up. That's the easy road and the way to pin blame on someone or something else. The fact is, this business needs to be constantly attended to and grown into something solid.

Yeah, I'll say it. You need to keep surfing! You need to keep that upgraded membership. You need to pay your membership dues! You need to invest your time! You need to invest money! You need to stay in front of people's face! You need to stay focused!

This is what has worked for me, nothing more and nothing less. I have only been working 'full time' online for only about 12 months in my 6 year career. So for those first 4-5 years I worked my tail off, and did the grunt work. It was not easy and it took a lot of time but you know what, looking back it was worth the investment. The investment in myself and my dreams. Keep going, and don't stop promoting yourself!

Bookkeeping Basics

Most people probably think of bookkeeping and accounting as the same thing, but bookkeeping is really one function of accounting, while accounting encompasses many functions involved in managing the financial affairs of a business. Accountants prepare reports based, in part, on the work of bookkeepers.

Bookkeepers perform all manner of record-keeping tasks. Some of them include the following:

-They prepare what are referred to as source documents for all the operations of a business - the buying, selling, transferring, paying and collecting. The documents include papers such as purchase orders, invoices, credit card slips, time cards, time sheets and expense reports. Bookkeepers also determine and enter in the source documents what are called the financial effects of the transactions and other business events. Those include paying the employees, making sales, borrowing money or buying products or raw materials for production.

-Bookkeepers also make entries of the financial effects into journals and accounts. These are two different things. A journal is the record of transactions in chronological order. An accounts is a separate record, or page for each asset and each liability. One transaction can affect several accounts.

-Bookkeepers prepare reports at the end of specific period of time, such as daily, weekly, monthly, quarterly or annually. To do this, all the accounts need to be up to date. Inventory records must be updated and the reports checked and double-checked to ensure that they're as error-free as possible.

-The bookkeepers also compile complete listings of all accounts. This is called the adjusted trial balance. While a small business may have a hundred or so accounts, very large businesses can have more than 10,000 accounts.

-The final step is for the bookkeeper to close the books, which means bringing all the bookkeeping for a fiscal year to a close and summarized.

Careers

There are many different careers in the field of accounting ranging from entry-level bookkeeping to the Chief Financial Officer of a company. To achieve positions with more responsibility and higher salaries, it's necessary to have a degree in accounting as well as achieve various professional designations.

One of the primary milestones in any accountant's career is to become a Certified Public Accountant or CPA. To become a CPA you have to go to college with a major in accounting. You also have to pass a national CPA exam. There's also some employment experience required in a CPA firm. This is generally one to two years, although this varies from state to state. Once you satisfy all those requirements, you get a certificate that designates you as a CPA and you're allowed to offer your services to the public.

Many CPAs consider this just one stepping stone to their careers. The chief accountant in many offices is called the controller. The controller is in charge of managing the entire accounting system in a business stays on top of accounting and tax laws to keep the company legal and is responsible for preparing the financial statements.

The controller is also in charge of financial planning and budgeting. Some companies have only one accounting professional who's essentially the chief cook and bottle washer and does everything. As a business grows in size and complexity, then additional layers of personnel are required to handle the volume of work that comes from growth. Other areas in the company are also impacted by growth, and it's part of the controller's job to determine just how many more salaries the company can pay for additional people without negatively impacting growth and profits.

The controller also is responsible for preparing tax returns for the business; a much more involved and complex task than completing personal income tax forms! In larger organizations, the controller can report to a vice president of finance who reports to the chief financial officer, who is responsible for the broad objectives for growth and profit and implementing the appropriate strategies to achieve the objectives.

Bookkeeping

So what goes on the accounting and bookkeeping departments? What do these people do on a daily basis?

Well, one thing they do that's terribly important to everyone working there is Payroll. All the salaries and taxes earned and paid by every employee every pay period have to be recorded. The payroll department has to ensure that the appropriate federal, state and local taxes are being deducted. The pay stub attached to your paycheck records these taxes. They usually include income tax, social security taxes pous employment taxes that have to be paid to federal and state government. Other deductions include personal ones, such as for retirement, vacation, sick pay or medical benefits. It's a critical function. Some companies have their own payroll departments; others outsource it to specialists.

The accounting department receives and records any payments or cash received from customers or clients of the business or service. The accounting department has to make sure that the money is sourced accurately and deposited in the appropriate accounts. They also manage where the money goes; how much of it is kept on-hand for areas such as payroll, or how much of it goes out to pay what the company owes its banks, vendors and other obligations. Some should also be invested.

The other side of the receivables business is the payables area, or cash disbursements. A company writes a lot of checks during the course of year to pay for purchases, supplies, salaries, taxes, loans and services. The accounting department prepares all these checks and records to whom they were disbursed, how much and for what. Accounting departments also keep track of purchase orders placed for inventory, such as products that will be sold to customers or clients. They also keep track of assets such as a business's property and equipment. This can include the office building, furniture, computers, even the smallest items such as pencils and pens.

What Is Your Investment Style?

Knowing what your risk tolerance and investment style are will help you choose investments more wisely. While there are many different types of investments that one can make, there are really only three specific investment styles – and those three styles tie in with your risk tolerance. The three investment styles are conservative, moderate, and aggressive.

Naturally, if you find that you have a low tolerance for risk, your investment style will most likely be conservative or moderate at best. If you have a high tolerance for risk, you will most likely be a moderate or aggressive investor. At the same time, your financial goals will also determine what style of investing you use.

If you are saving for retirement in your early twenties, you should use a conservative or moderate style of investing – but if you are trying to get together the funds to buy a home in the next year or two, you would want to use an aggressive style.

Conservative investors want to maintain their initial investment. In other words, if they invest $5000 they want to be sure that they will get their initial $5000 back. This type of investor usually invests in common stocks and bonds and short term money market accounts.

An interest earning savings account is very common for conservative investors.
A moderate investor usually invests much like a conservative investor, but will use a portion of their investment funds for higher risk investments. Many moderate investors invest 50% of their investment funds in safe or conservative investments, and invest the remainder in riskier investments.

An aggressive investor is willing to take risks that other investors won’t take. They invest higher amounts of money in riskier ventures in the hopes of achieving larger returns – either over time or in a short amount of time. Aggressive investors often have all or most of their investment funds tied up in the stock market.

Again, determining what style of investing you will use will be determined by your financial goals and your risk tolerance. No matter what type of investing you do, however, you should carefully research that investment. Never invest without having all of the facts!

What is a Cash Out Re-Finance?

A cash out re-finance basically enables the homeowner to re-finance their home for an amount greater than the balance of the exiting mortgage. The homeowners than repay the existing balance plus the additional amount over the course of the loan period and are given a check for the amount above and beyond the balance of the exiting mortgage. The homeowners can use this check for any purpose they choose now and repay the debt along with the rest of re-financed amount.

When is a Cash Out Re-Finance possible?

A cash out option is available when there is existing equity in the home. This is important because the lender is able to justify the practice of offering increased funds to the homeowner due to the value of the property. This is because the lender feels as though the security of having the home for collateral does not put them at a high risk for the homeowner defaulting on the loan.

Homeowners who wish to take advantage of a cash out re-finance offered by a lender should inquire as to whether or not the lender offers this type of re-financing. This is important because not all lenders offer this option. It should actually be one of the first questions the homeowner asks when inquiring about re-financing programs. Doing so will save homeowners, who are seeking a cash out re-finance, a great deal of time.

How Can the Cash be Used?

For many homeowners the most appealing aspect of cash out re-financing is that the additional funds can be used for any purpose desired by the homeowner. The homeowner does not even have to offer the lender an explanation of how the additional funds will be used. This is important because once the lender writes the check for the additional funds, he has no concern for how the money is used. This is because the amount of the additional funds is rolled into the re-financed mortgage. The lender simply focuses on the homeowner’s ability to repay the mortgage and is not concerned with how the homeowner uses the funds which are released in the cash out.

While the purpose of a cash out re-finance does not have to be disclosed to the lender, the homeowner would be wise to use these funds in a judicious manner. This is because the homeowner will be responsible for repaying these funds to the lender. Some of the popular uses for funds collected from cash out re-financing include:

* Undertaking home improvement projects
* Purchasing items for the home
* Taking a dream vacation
* Putting money in a child’s tuition fund or
* Purchasing a vehicle
* Starting a small business

All of the reasons listed above are excellent uses of a cash out re-finance option. Homeowners who are considering this type of a re-financing option should also consider whether or not the deductions are tax deductible. Using the cash out option to make home improvements is jus one example of a situation where the funds can be tax deductible. Homeowners should consult their tax attorney on the matter to determine whether or not they are able to deduct the interest from the repayment of their re-financing loan.

Cash Out Re-Financing Example

The process of a cash out refinancing option is fairly easy to illustrate with a simple example. Consider a homeowner who purchases a $150,000 with a 7% interest. Now consider the homeowner has already repaid $50000 of the loan and would like to borrow an additional $20,000 to make a rather large purchase or invest in a small business. With this additional funding available the homeowners have the opportunity to use the equity in their home to make their dreams come true. In the example above the homeowner may refinance for a total of $120,000 at a lower interest rate such as 6.25%. This process allow the homeowner to take advantage of the existing equity in their home and also allows the homeowner to qualify for a substantial loan at a rate typically reserved for re-financing or home loans.

Why You Should Invest

Investing has become increasingly important over the years, as the future of social security benefits becomes unknown.

People want to insure their futures, and they know that if they are depending on Social Security benefits, and in some cases retirement plans, that they may be in for a rude awakening when they no longer have the ability to earn a steady income. Investing is the answer to the unknowns of the future.

You may have been saving money in a low interest savings account over the years. Now, you want to see that money grow at a faster pace. Perhaps you’ve inherited money or realized some other type of windfall, and you need a way to make that money grow. Again, investing is the answer.

Investing is also a way of attaining the things that you want, such as a new home, a college education for your children, or expensive ‘toys.’ Of course, your financial goals will determine what type of investing you do.

If you want or need to make a lot of money fast, you would be more interested in higher risk investing, which will give you a larger return in a shorter amount of time. If you are saving for something in the far off future, such as retirement, you would want to make safer investments that grow over a longer period of time.

The overall purpose in investing is to create wealth and security, over a period of time. It is important to remember that you will not always be able to earn an income… you will eventually want to retire.

You also cannot count on the social security system to do what you expect it to do. As we have seen with Enron, you also cannot necessarily depend on your company’s retirement plan either. So, again, investing is the key to insuring your own financial future, but you must make smart investments!

Why Should I Make a Budget?

You say you know where your money goes and you don’t need it all written down to keep up with it? I issue you this challenge. Keep track of every penny you spend for one month and I do mean every penny.

You will be shocked at what the itty-bitty expenses add up to. Take the total you spent on just one unnecessary item for the month, multiply it by 12 for months in a year and multiply the result by 5 to represent 5 years.

That is how much you could have saved AND drawn interest on in just five years. That, my friend, is the very reason all of us need a budget.

If we can get control of the small expenses that really don’t matter to the overall scheme of our lives, we can enjoy financial success.

The little things really do count. Cutting what you spend on lunch from five dollars a day to three dollars a day on every work day in a five day work week saves $10 a week… $40 a month… $480 a year… $2400 in five years….plus interest.

See what I mean… it really IS the little things and you still eat lunch everyday AND that was only one place to save money in your daily living without doing without one thing you really need. There are a lot of places to cut expenses if you look for them.

Set some specific long term and short term goals. There are no wrong answers here. If it’s important to you, then it’s important period.

If you want to be able to make a down payment on a house, start a college fund for your kids, buy a sports car, take a vacation to Aruba… anything… then that is your goal and your reason to get a handle on your financial situation now.

Accounting Principles

If everyone involved in the process of accounting followed their own system, or no system at all, there's be no way to truly tell whether a company was profitable or not. Most companies follow what are called generally accepted accounting principles, or GAAP, and there are huge tomes in libraries and bookstores devoted to just this one topic. Unless a company states otherwise, anyone reading a financial statement can make the assumption that company has used GAAP.

If GAAP are not the principles used for preparing financial statements, then a business needs to make clear which other form of accounting they're used and are bound to avoid using titles in its financial statements that could mislead the person examining it.

GAAP are the gold standard for preparing financial statement. Not disclosing that it has used principles other than GAAP makes a company legally liable for any misleading or misunderstood data. These principles have been fine-tuned over decades and have effectively governed accounting methods and the financial reporting systems of businesses. Different principles have been established for different types of business entities, such for-profit and not-for-profit companies, governments and other enterprises.

GAAP are not cut and dried, however. They're guidelines and as such are often open to interpretation. Estimates have to be made at times, and they require good faith efforts towards accuracy. You've surely heard the phrase "creative accounting" and this is when a company pushes the envelope a little (or a lot) to make their business look more profitable than it might actually be. This is also called massaging the numbers. This can get out of control and quickly turn into accounting fraud, which is also called cooking the books. The results of these practices can be devastating and ruin hundreds and thousands of lives, as in the cases of Enron, Rite Aid and others.

Basic Accounting Principles

Accounting has been defined as, by Professor of Accounting at the University of Michigan William A Paton as having one basic function: "facilitating the administration of economic activity. This function has two closely related phases: 1) measuring and arraying economic data; and 2) communicating the results of this process to interested parties."

As an example, a company's accountants periodically measure the profit and loss for a month, a quarter or a fiscal year and publish these results in a statement of profit and loss that's called an income statement. These statements include elements such as accounts receivable (what's owed to the company) and accounts payable (what the company owes). It can also get pretty complicated with subjects like retained earnings and accelerated depreciation. This at the higher levels of accounting and in the organization.

Much of accounting though, is also concerned with basic bookkeeping. This is the process that records every transaction; every bill paid, every dime owed, every dollar and cent spent and accumulated.

But the owners of the company, which can be individual owners or millions of shareholders are most concerned with the summaries of these transactions, contained in the financial statement. The financial statement summarizes a company's assets. A value of an asset is what it cost when it was first acquired. The financial statement also records what the sources of the assets were. Some assets are in the form of loans that have to be paid back. Profits are also an asset of the business.

In what's called double-entry bookkeeping, the liabilities are also summarized. Obviously, a company wants to show a higher amount of assets to offset the liabilities and show a profit. The management of these two elements is the essence of accounting.

There is a system for doing this; not every company or individual can devise their own systems for accounting; the result would be chaos!

Uses for Personal Loans

Personal loans are obtained for a variety of reasons. A personal loan has a very easy application process and generally has an approval or denial within a few days. Many individuals find it easier to obtain a personal loan than a home improvement loan or small business loan. There is less information required to determine eligibility. Our society has come to apply for personal loans for a variety of needs. Some are necessary such as medical bills while others are for leisure, a vacation for example.

The choice to take out a personal loan should be done only after researching your other options. The most popular reason a person applies for a personal loan is to consolidate other debt. Often this is done because the amount of the other debt is consuming a larger portion of their disposable income than they would like. The interest you will pay on a personal loan is much less than what you will pay on high interest credit cards by the time you pay them off. If you take out a personal loan for this reason, it is important to put your credit cards away. If you start charging on them again you will soon find yourself with many monthly payments again as well as the personal loan payment.

A personal loan is a great way to purchase an older vehicle that the bank won’t finance. This can be a vehicle over 10 years old that you want for a few thousand dollars. This can also be for a classic car you want to restore. Most lending institutions aren’t going to give you $7,000 to by that 1969 Chevy Camaro that isn’t even drivable. By accessing a personal loan you can choose to get such vehicles without any problem.

Education is very important. Sometimes individuals don’t qualify for financial aid, yet can’t afford to take the course without it. Using a personal loan to pay for education classes is a great idea. Especially if the class is going to help you further your career. We all know tuition and text books are very over priced.

Medical bills and emergency surgery can leave you will a very heavy cost that is consuming your monthly income. Even if you have health insurance your portion can be out of your budget ability. A personal loan can often help you pay such bills while having a smaller monthly payment than you would have otherwise.

Some individuals use personal loans to put a down payment on a home because they don’t have the amount needed to cover it. Home improvements are often needed out of necessity or desire. A personal loan can help home owner’s make these improvements happen. Others use personal loans for moving expenses or even to pay the rental deposit on an apartment. The cost of deposits for rentals and utilities can add up to a large amount of money that most of us don’t have.

A personal loan may be the only way for you to pay for the wedding you have always wanted. Some people find this extravagant, but people do it all the time. You will need to plan your wedding and come up with some figures so you will know how much money to borrow. Make sure you will be able to afford the monthly payments as you don’t want to start your marriage off with financial stressors.
Most of us work so hard and we rarely are able to take a long vacation. Personal loans can help you take that cruise to Alaska or trip to Italy that you have always wanted. Too often, individuals put off such dreams because they can’t afford them. However, it is important to try to achieve your dreams. Taking such a vacation can do wonders for your mental health as well. You can return to work rejuvenated and with wonderful memories of your vacation.

Personal loans are available for many uses. I am sure there are many more that I haven’t mentioned. They are used for bills, necessities, hobbies, vacations, and even weddings. The key is to be financially responsible and make sure you can realistically pay back any personal loans you take.

How to analyze a financial statement

It's obvious financial statement have a lot of numbers in them and at first glance it can seem unwieldy to read and understand. One way to interpret a financial report is to compute ratios, which means, divide a particular number in the financial report by another. Financial statement ratios are also useful because they enable the reader to compare a business's current performance with its past performance or with another business's performance, regardless of whether sales revenue or net income was bigger or smaller for the other years or the other business. In order words, using ratios can cancel out difference in company sizes.

There aren't many ratios in financial reports. Publicly owned businesses are required to report just one ratio (earnings per share, or EPS) and privately-owned businesses generally don't report any ratios. Generally accepted accounting principles (GAAP) don't require that any ratios be reported, except EPS for publicly owned companies.

Ratios don't provide definitive answers, however. They're useful indicators, but aren't the only factor in gauging the profitability and effectiveness of a company.

One ratio that's a useful indicator of a company's profitability is the gross margin ratio. This is the gross margin divided by the sales revenue. Businesses don't discose margin information in their external financial reports. This information is considered to be proprietary in nature and is kept confidential to shield it from competitors.

The profit ratio is very important in analyzing the bottom-line of a company. It indicates how much net income was earned on each $100 of sales revenue. A profit ratio of 5 to 10 percent is common in most industries, although some highly price-competitive industries, such as retailers or grocery stores will show profit ratios of only 1 to 2 percent.