Free Money Finance

Starting a Small Business: From Idea to Reality

The following post is from FMF contributor Brad Richardson.

Do you have a brilliant idea you’ve always wanted to turn into business? Whatever your product or service, transforming it into a reality may be a more straightforward prospect than you think. In this article, we’ll explore the various options that are available (and recommended!), if you’re considering starting a small business:

Do your research

Time spent conducting market will reap dividends in the long run. Find out where your idea might be placed in the market; are there competitors doing exactly what you do, or do you have a unique selling point? If there are already established players in the game, it’s important to differentiate yourself. Whether that a distinctive feature or a lower price point, researching the market will allow you to explore how you will set yourself apart from the pack.

Gather your initial investment

One of the most daunting prospects of pursuing your business idea is securing the finances to get started. But it needn’t be intimidating! If the initial investment is relatively small, consider whether to dip into personal savings, or ask a relative if they would like to help. For larger requirements, it might be necessary to involve an outside investor, or purse crowdfunding. You may also wish to consider a small business loan. Lend Genius helps entrepreneurs to find the best loans to suit their business. Visit their website to learn more.

Create your product

Once you have your initial investment secured, it’s time to turn your business idea into a tangible product, or if you’re offering a service, to narrow down exactly what it is you will be selling. You may need the help of designers and outside manufacturers for this process; shop around and ask to see portfolios before committing. Remember that quality is always better than quantity (or a price that seems too good to be true!).

Find a place to sell it

Nowadays, it’s easier than ever before to sell your idea. You might consider a physical store if you’re selling something that potential customers will need to see in person before purchasing (such as furniture), or going mobile (for example, if you’re a hair stylist or beauty therapist), or your product may be suitable to sell online. Sites such as eBay, Etsy, and Big Cartel make this a straightforward process.

Generate a buzz

Now that you have your product ready and a place to sell it, you’ll need to let people know! Creating free social media accounts is a brilliant first step. With no additional investment, you can begin promoting your business, connecting with customers, and generating a buzz around you. Ask family and friends to share your posts; word of mouth is still a powerful force in generating business.

Take feedback on board

As soon as your first few customers come through, encourage them to share feedback about your product or service, the customer service they received, and their overall experience. Any feedback at this stage is critical to your future performance. If this feedback is good, make sure you keep doing the right things! If your customers offer constructive criticism, be gracious, thank them, and take their opinions on board. Demonstrating the ability to adapt for your customers will keep them coming back.

 

Five Ways to Cut Retirement Costs

CNN Money lists five ways to cut retirement costs as follows:

1. Downsize your living space
2. Give up a vehicle
3. Enroll in Medicare on time
4. Dine at home
5. Lower your tax bill

Here's where I stand on each of these:

• We haven't downsized yet since our kids are still at home, but we could one day. Being able to sell our home and move to a smaller place is one way we've built a margin of safety. into our retirement.
• I think we will go down to one vehicle sometime in the future. We walk to so many places and hardly ever go in opposite directions, so why do we each need a car?
• I have some years left before I need to consider Medicare. ;)
• We eat at home as much as we ever did -- which is a lot. I've gotten fairly good on the grill and my wife makes great things that are healthy and cost-effective, so why do we need to go out several times a week? The answer: we don't.
• Taxes go down dramatically in retirement especially if you were a high earned-income generator. I've certainly been enjoying that!

Any of you who are retired taken action on any of these?

What Happens When You Retire Without Enough Savings?

The following post is from FMF contributor Eric Olesen.

According to a survey done in 2012 by the EBRI (Employee Benefit Research Institute), most of the Americans approaching retirement age don’t have the savings that would allow them to do just that.

Only 22% of working people aged 55 or older reported having saved as much as $250,000, and this isn’t thought to be enough for a traditional retirement. Worse than that, 31% of people in the same age group have reported they have only saved $100,000 or less! (All statistics are from the same survey.)

If you use the 4% rule, (what financial planners tend to recommend) a savings for retirement of $250,000 will give you an income in retirement of about $10,000 per year. Even when you add in benefits expected from Social Security, this will still not be enough for most retirees to live on comfortably.

Some people though, somehow manage to save enough to retire early! Wouldn’t that be great? However, this doesn’t happen with most of us. So, aside from eating nothing but Ramen and living in a tent throughout your retirement, what can you do? That is what we are going to discuss today.

Reverse Mortgage

If you are already planning your retirement party when you realize that you won’t be bringing enough in with your retirement fund to live on, you might want to check out some of the statistics about reverse mortgages. Reverse mortgages might seem to be a bit confusing at first. But they really aren’t. They allow you to borrow against the equity you have built up in your home. To qualify, you need to own your home, or just owe a little on it, be 62 or older, and live in the home. You can get the mortgage in the form of a line of credit, a lump sum, or in monthly payments. You will still be responsible for insurance, taxes, and upkeep of the home. The mortgage is to be paid back when you either move out of the house or die. Because of this needing to be repaid upon your death, this is something that definitely needs to be discussed with your family members so there are no unpleasant surprises during an already trying time.

Do What You Love

None of us wants to have to get another job after we retire just to make ends meet. However, there are ways to make money doing the things you love. For example, if you love dogs, you might want to become a dog sitter. If your hobby is fixing or working on engines and motorcycles, you might want to consider turning your garage into a motorcycle repair shop. Is it really working if you love what you do?

Maximize Social Security

People might have the opinion that the largest question in regards to Social Security might be whether they should start drawing it at 62 or if they would be better off waiting a few more years. However, if you are married and looking at Social Security, there are many different strategies for how to claim it. You need to carefully look at each one of these strategies to determine which will be best for you and your family. A financial planner can help you do this.

Drop the Debt

During the last 5 or 10 years of your working life, even if you are able to retire early, you need to focus on paying off your debt. This is where a lot of post-retirement expenses go. If you pay this debt off before you retire, that means that you will have that much more money each month to live on.

Keep On Keeping On

If you enjoy being out of the house and working, you might want to consider taking on a part time job to augment your retirement benefits. Aside from that, many people find that they are so used to working that not working leaves them with entirely too much time on their hands. Getting a part time job can also remedy that. However, if you feel like this might be your reaction to retirement, you might just make the decision to continue working for a few more years. During those extra working years, try to save more while spending less. You might be surprised at how much of a difference it can make.

 

Star Money Articles for the Week of Aug 21

Welcome to this week's edition of Star Money Articles.

ESI Money interviews someone with $5 million.

High Income Parents does a money exam.

Centsibly Rich tells how to save money gardening.

Retirement Manifesto lists the three enemies of FIRE.

Physician on Fire discusses second generation fire.

My purchase of the week is a Minus33 Merino Wool Men's Lightweight Short Sleeve Crew. I'm looking into merino wool as a way to pack lighter when I travel and this is my first purchase!

Have a GREAT weekend!!!

15 Habits of Self-Made Millionaires

Business Insider lists 15 habits of self-made millionaires. The ones that I identify with the most are:

• They read consistently.
• They exercise.
• They pursue their own goals.
• They get up early.
• They have multiple sources of income.

A few details on each of these:

• I used to read a TON when I was working (lots of stuff on business) and I still do today (though now I read more on money, self-improvement, health, and for fun.) Some of my most recent recommended reads are Tools of Titans: The Tactics, Routines, and Habits of Billionaires, Icons, and World-Class Performers, Washington: A Life, and The Simple Path to Wealth: Your road map to financial independence and a rich, free life. All good books! I read a lot of blogs and websites as well (plus listen to podcasts) which could count as "reading".
• I work out six times a week -- three with weights and three cardio. I also walk at least 14k steps a day, swim once or twice a week, and hike often. That's one thing about early retirement: there's plenty of time to get into/keep in shape. I've worked out much of my life but never as much as I am now -- and I'm loving it!
• I set goals every year and then track them daily to make sure I'm making progress every day. Have done this for years and credit it with being a key reason I was able to accomplish many of my key goals.
• I have been a night person most of my life. But I had to force myself to get up since that's what my employers would demand. Surprisingly, I'm up even earlier in retirement. The reason? I have things I WANT to do not HAVE to do. A great book on the power of getting up early is The Miracle Morning: The Not-So-Obvious Secret Guaranteed to Transform Your Life (Before 8AM). Some even say getting up early can make you wealthy!
• I have several sources of income including rental properties, P2P loans, dividends, blog income, and interest. I've either had or been developing these for years -- helping prepare myself for retirement.

Those are the ones that fit me best. How about you? Do you identify with any of these -- or maybe some others on the list?

Star Money Articles for the Week of Aug 14

Welcome to this week's edition of Star Money Articles.

ESI Money lists the best ways to save money.

The Green Swan is embracing lifestyle inflation.

Money Boss is trying to stay on top of home improvement.

Budgets are Sexy likes home ownership.

Retire by 40 is planning an around the world trip.

My purchase of the week was a Hawkman T Shirt. I'm a t-shirt collector and loved this one!

Have a GREAT weekend!!!

Saving Money When You Move Out of State for More Affordable Housing

The following post is from FMF contributor Eric Olesen.

With more people leaving the traditional 9 to 5 job and opting to perform services from their computer full-time online, it opens the door for families to live just about anywhere. With this growing trend, people can move their families to another state and enjoy the benefits of cheaper living while earning the same amount of money. If you are planning a move out of state to reduce the cost of your living expenses you can save money on the move too.

Professional Movers

If you are moving across the country hiring a professional moving company, such as North American Van Lines, to transport your items can take the stress off getting your belongings to your new destination safely. If you do your research and plan your move during the slow season, you can actually reduce the cost drastically versus driving a rental truck on your own. Just like any other business, moving companies have peak seasons where the rates can rise. Since you work from home you have the luxury of avoiding this period, generally between May and September, and can schedule your move either before or after these months. Since weekends even during the slow season are busy, it's also in your best interest to schedule the pickup date on a weekday.

Cleaning out your home

Before you can get a written estimate that's accurate, you need to decide what you want to pack up. If you're moving to the coast and your current residence is in a cooler climate, you may want to leave your furniture behind and purchase new pieces that work better with the environment. Decluttering your home benefits you in several ways, especially if you'd lived at your current residence for many years. First, it gives you a chance to finally get your things organized. Secondly, it allows you to reduce the volume, making the move more affordable. Remember, the less you bring, the more affordable the price tag for the move becomes.

Opting to pack up on your own

Unfortunately, the packing process is tedious and time-consuming. However, if you tackle one room at a time, it gives you a chance to put things in their proper place making the unpacking at the receiving end easier. This is also a time where you can eliminate anything that you don't want or no longer need. Just keep in mind while you are packing up your things as to the number and the sizes of the boxes you agreed to on your written estimate with the movers. If you go over you will have additional fees.

Acquiring boxes and packing supplies

When you plan a move there are several additional costs that come into play, like the boxes and packing supplies. If you get the supplies from a moving company, they can add a significant amount to your bill. Luckily, there are other ways to pack virtually for free. Since you have plenty of time to get things in order, you also have the time to contact local hardware stores, retailers, and supermarkets to inquire about picking up some of their boxes. Most stores get deliveries once or twice a week. If you contact them, they can put them aside for you. As far as the packing supplies go, you can use ordinary towels, linens and newspaper to wrap up dishes and breakables.

Earning money on your move

With the items you've decided to leave behind, you have several choices. You can give things away to your family, friends, or neighbors or donate them to charity. There's also a third option and that's to have a moving sale. If you work from home, you can really schedule it at your convenience. Pick a weekend where the weather is supposed to be good to attract a larger crowd, and then set up your things neatly and organized. If you have many items in good condition, you can stand to make hundreds of dollars in a single weekend. This money you can use to pay for your hotel, food, and gas or other travel expenses you may have on the way to your new home.

Working from home has many advantages. You can work on your schedule, make appointments for during the week, and have the freedom to move to another state or city where the cost of living is considerably less.

Difference Between What Social Security is Supposed to Cover and What People Use It For

Here's an interesting piece from USA Today which compares the percentage of retirement income the government says Social Security should provide to how much it's actually used for. The details:

Data from the Social Security Administration (SSA) shows that 61% of retired workers count on their benefits to provide at least half of their monthly income. For unmarried elderly individuals this figure jumps to 71%.

Yet according to the SSA, Social Security benefits are only truly designed to replace about 40% of the average worker's wages during retirement.

It's not surprising that people are over-relying on Social Security for retirement income. I think we've all suspected that for quite some time.

I'm actually kind of surprised a higher percentage isn't counting on it for an even greater percentage of retirement income. I would have thought something like 75% would have counted on it for at least 75% of their income.

Still, it's worrying given that we may face a cut in benefits in the next 20 years or so. Hopefully people will wake up by then, begin to save more for retirement, and go back to counting on Social Security for 40% or less of retirement income.

Star Money Articles for the Week of Aug 7

Welcome to this week's edition of Star Money Articles.

The White Coat Investor says executives are worse than doctors.

ESI Money tells why wealth creation begins with frugality.

Physician on Fire asks if a bear can take away your financial independence.

Chief Mom Officer loves her 15-year mortgage.

The Retirement Manifesto had a home sale explode.

My purchase of the week was a Scosche RHYTHM+ Heart Rate Monitor. I've had and used one of these for a couple years, until I dropped it and it stopped working. So I bought another one! ;)

Have a GREAT weekend!!!

Eight Steps to Be Financially Healthy

Nerdwallet lists three steps to be financially healthy as follows:

• You can manage your day-to-day financial life
• You can absorb a financial shock
• You’re on track to meet your financial goals

They then list eight behaviors that help as:

• You spend less than you earn.
• You pay bills on time.
• You have a decent emergency fund.
• You’re on track with retirement savings.
• Your debt load is sustainable.
• You don’t routinely carry credit card or other high-rate debt.
• You have good credit scores.
• You’re appropriately insured.

We've met all of these for as long as I can remember -- for 20 years at least.

The article says only about 10% of people nailed every one of these, so that's rare. Debt, retirement, and emergency funds seem to be the killers for most people.

These are really, really basic. I'm surprised the percentage who meets them all isn't higher.

How about you? Which of these do you do well and where do you need to improve a bit?

How To Protect Your Credit Score From Medical Collections

The following post is from FMF contributor Josh Erickson.

It is painful to discover yet another medical bill when you check you mail, but it's even more painful when you discover how much all those unpaid medical bills are hurting your credit score. Your formerly good credit score could drop by as much as 100 points, all because of medical collections that show up on your report. Here's some information about how medical debt can negatively impact your credit score.

It Causes Lasting Damage

Generally it isn't the hospitals or doctors that report the debt to the credit reporting agencies, it's the debt collector that they turn unpaid bills over to for collection. Once the collection agency reports them, the damage to your credit can be significant. The score should improve over time, assuming that no additional negative information is added to your report, however collection accounts will continue to appear on your report for 7 years and 180 days from the date the original delinquency occurred. This is true of both unpaid and paid accounts.

Isn't Medical Debt In Collections Ignored For Credit Scores?

There actually isn't one, single type of credit score, there are several. While it's true that the newest version of the widely-known FICO score, referred to as FICO 9, ignores any paid collections that appear in you report and places less weight on medical collection accounts, it's not as widely used as other FICO scores yet. The same is true of VantageScore 3.0, which also ignores paid accounts.

The majority of lenders still use credit score versions that do not provide any allowance for medical collections. Because if this, you should go on the assumption that any negative accounts that are included in your credit report will be viewed negatively is you apply for employment, insurance, or credit.

The True Impact Of Medical Debt

The impact of medical debt on American credit scores is much more significant than you might think. According to a report issued by Consumer Financial Protection Bureau in 2014, over half of all reported debt on credit reports is related to unpaid medical bills. In a survey conducted by Credit.com, 1 in 10 people who review their credit reports will discover a collection account that they were previously unaware of.

This fact alone makes it extremely important for you to review your credit report every year, and to monitor your scores daily. It's kind of like a checkup to protect your credit health. Credit.com provides free credit report snapshots and two free credit scores every year.

Ways To Maintain Healthy Credit

It's vital that you do what you can to protect your credit from medical debt. Here are some common-sense steps that you can take:

1. Make yourself more aware of the medical debts that you owe. People often don't even know what they owe in medical debts. In fact, many don't even know that they owe medical debt at all, frequently because they don't understand how co-pays and deductibles work. Make sure you follow up with your insurance company and health care provider after receiving care, to verify if you owe a balance. Don't assume that everything will be taken care of by your insurance.

Also noteworthy is the fact that in 2015, 31 state attorneys reached an agreement with the three largest credit reporting agencies that they would not report any medical debt until after 180 days after the debt was incurred. This change was intended to allow people, such as yourself, the opportunity to resolve medical bills with insurance companies and health care providers.

2. Review the Explanation of Benefits that your insurance provider supplied to you, and contact both the insurance provider and your health care provider if the bill isn't promptly taken care of.

3. Request an itemized bill from your health care provider. This way you'll be able to verify the charges and it'll provide you an opportunity to negotiate payment terms with the medical billing company.

4. If a collection agency contacts you regarding a medical bill, negotiate with them. Ask if they'll refrain from reporting the bill is you pay it right away, assuming that the debt is legitimate. Some will agree not to report the debt in exchange for quick payment.

Remember, it's usually not helpful for your credit scores for a collection account to be updated as paid, unless your lender is one of the few that are using one of the newer credit score variations. It's always best to get the item removed, if possible. Some agencies are willing to make concessions in this area, others won't.

There are a couple of things that you can do if you feel that the situation is highly unfair to you, for example if you never received a bill from the health care provider. The first is to appeal to the Consumer Financial Protection Bureau by filing a complaint. The other is that you can contact the health care provider and request that they pull the debt back from collections so that you can make payment directly to them. If they agree to do this, the account is usually no longer reported.

If a collection agency contacts you in an attempt to collect a bill that you don't believe that you legitimately owe, then the Fair Debt Collection Practices Act gives you the right to dispute the debt with the collection agency and to ask that they validate the debt. The Act also gives you the right to dispute it with the credit reporting agencies that the debt was reported to.

Star Money Articles for the Week of July 31

Welcome to this week's edition of Star Money Articles.

Budgets are Sexy details ten moves that will skyrocket your net worth.

Money Q and A offers five early retirement killers.

ESI Money tells why $3 million is not enough to retire on.

High Income Parents lists the magnificent seven investing decisions.

The College Investor tells how to build a CD ladder.

For my purchase of the week I'm considering the Maximus Video Security Camera as I'm looking to ramp-up my home security a bit.

Have a GREAT weekend!!!

Top Ten Cities Where You Can Live Comfortably on Less than $60k

CNBC lists the top ten cities where you can live like a king for $60k as follows:

10. Louisville, Ky.
9. Kansas City, Mo.
8. Birmingham, Ala.
7. Cincinnati
6. St. Louis
5. Indianapolis
4. Cleveland
3. Pittsburgh
2. Memphis, Tenn.
1. Detroit

I've actually lived in three of these cities and two others which are close/similar.

Cities I lived in include:

• My work career started in Cincinnati and I lived there a couple years. Young and single (seems like eons ago) while there, I absolutely loved it.
• I worked in Indianapolis for a summer internship. It was a nice city and I wouldn't have minded if I ended up there.
• I spent five years in Pittsburgh which is where I met my wife. I still have relatives who live there. I'm not sure I'd move back (it's pretty cloudy) but I do love the city.

Here are a couple cities I lived in near ones on this list:

• Nashville. AWESOME city!!! It used to be inexpensive to live there but I think that has changed -- too many people want to live there.
• Grand Rapids. Way better than Detroit IMO (my dad lives in Detroit) and much cheaper. Lived there 14 years and my kids still call Michigan "home."

How about you? Have you ever lived in any of these cities?