Author: Chillmaadi Admin

What’s better than saving some money? Saving money without really noticing that you’re saving money. How do you do this? Take a look at some of the less important things in your life and see if you can cut back. Or, take a look at some of the things you take for granted and cut back. Or, just trim something you don’t even use much anymore but still pay for… all these things can be removed to save you a little bit of money without you noticing one bit.

1. Cancel that Netflix Account.

How many movies do you really watch? Cancel that Netflix account and instead go with something like Redbox where you pay $1 a night (often times free with a promotional code) and save yourself that $20-$30 a month you’re paying now. I know I’ve been at my friends’ places and seen the same Netflix envelopes month after month.

2. Drink more water.

Get a water bottle, fill it up and drink from it during the day. Get used to drinking water and you won’t drink more expensive stuff like soda and coffee. Get used to drinking water and you’ll likely eat less, cutting out those expensive snacks. Get used to drinking water and improve your health, which means less in health care costs down the road that will be difficult to quantify. As a corollary, when you go out to eat, ask for water instead of your beverage of choice. This is a directly quantifiable savings because do you really want a $2 soda?

3. Visit the library.

Books are expensive and I’ve done a scientific experiment that has definitively proven that the only reason why you would ever buy a book is so that you can put it on your bookshelf to prove how educated you are. Seriously, I have done such an experiment because I know that after I read through a book once, there is a 99.99999% chance that I will never open it again and thus the only logical reason to ever buy a book is to show off. Okay, I’m being facetious but let the library be your bookcase and not only will you save money, you’ll save space, and even some trees. DVDs are available at the library too… so you can scratch off #1 too if you just do #3.

4. Switch to CFL.

Switching to compact fluorescent light bulbs will save you huge on your electricity bills since the bulbs use about a quarter of the electricity of their regular light bulb equivalents. Now, the bulbs will be more expensive but the lowered electricity bill plus the longer lifespan overcomes the initial price hit without minimal cost to you.

5. Reduce phone, TV, internet or just threaten to cancel.

Do you really need 23094820394238 minutes on your cell package? How about 290384029 channels? Heck no, I have like 500 channels and all I watch are ESPN, The History Channel, and maybe Oxygen (okay, not really Oxygen); but if you don’t want to give up all those options, consider just calling up your cable company and demanding a better rate. Verizon is coming into the neighborhood soon so I think I’ll be calling up Comcast and asking them to reduce my rate or I’m jumping ship. Either way, paying less for the same service is certainly an invisible way to save money!

If your finances are not just messy, but causing anxiety attacks, then it’s time to go into EMERGENCY mode. If you can no longer meet the minimum payment or you are continually forget payment for one credit card or another, it’s time to go into EMERGENCY mode. If you are dead serious about getting rid of this dead albatross around your neck and you want it done quick, then you might consider some of these EMERGENCY measures.

However, I want you to understand and accept that there are some financial situation that you can NOT handle on your own. These are rare, but they exist. If your health or well-being is jeopardized by your financial situation, then please seek professional help.

f you think you can handle it on your own and you are committed to, then read on. NOTE: I’m not a kind person. I don’t kid around. There are some harsh ideas in here, but if you are now in a financial emergency, then you must treat it like an emergency.

Emergency Debt Management

• Know Thy Debt: Gather all your most recent credit card and other debt statements together. List them by name, type, total balance, and minimum due. You need to know the monster you are fighting before you can fight. Are you able to make the monthly minimum payments? Then KUDOS! You are in a good place. If not, then find out why. If it’s a matter of simply not having enough money, then don’t worry, continue reading, you will get ideas on what to do to get enough money to meet the minimums.
• Least to Greatest: Arrange your debts from the least to greatest according to the outstanding balance. Different folks have different suggestions for how to arrange your debt, but I know that the younger we are, the more impatient we are to kill these debts. Arrange your debt from least to greatest so that you can get rid of the smallest debt quickly, see immediate progress, celebrate, and be motivated to work on the next smallest debt.
• Negotiate Lower Interest Rate: It’s time to call the credit card company and ask them nicely to lower your interest rate! The higher your interest rate, the higher your minimum payment and less of your money is actually working to lower your balance. You want that interest rate to be as low as possible, single digits or even zero percent. Call and ask for the supervisor immediately. Don’t bother with peons. Nicely ask for a lower interest rate. State that you are having difficulty meeting the monthly minimum payment (truthfully or not) and rather than defaulting, you want to be able to continue to pay. Threaten them with moving your balance to a competing credit card company who offered you a lower interest rate. You will usually get a lower interest rate simply by asking nicely. There are companies who are just HARD! You may have to follow through on your threats by transferring your balance elsewhere. If you have room on your other credit cards, call them up and see if they’ll give you a deal if you transfer your balance to them. If you don’t have room, then you’re out of luck. Since we are in EMERGENCY mode, chances are, you don’t have the credit-worthiness to apply for another credit card in order to transfer the balance. Don’t apply for a new credit card, that’s just more trouble down the road.
• Pay the Minimum: Yes, pay the minimum! No matter what, pay the very minimum on all these credit cards. If you had called up the credit card companies and convinced them to lower your interest rate, then there is a little breathing room. Do not slack off, pay the minimum on all your cards at all time! Arrange for automatic payment through your bank or through the credit card companies. I’m assuming here that you have the funds necessary to meet the minimum. If you don’t, read on for more suggestions.
• Pay MORE than the Minimum: The idea here is NOT to maintain your debt, but to get RID of your debt. You will have to pay more than the minimum! Where are you getting the extra money? You already have it! When you negotiate a lower interest rate, your minimum payment is lowered as well. The difference between your new minimum payment amount and your old minimum payment amount is what will get you out of hot water. Every month, pay all the credit card companies the new minimum amount, but heap all the “extra” money, meaning the difference between the new and old minimum amount, on your smallest balance credit card. The extra amount will quickly add up and KILL that small credit card. Then, take all your freed up money, the difference between the old and new minimum PLUS the minimum payment on this now defunct credit card, and apply it to the next credit card on your list. THAT credit card will soon be gone because you are. Do you see where we are going with this? Without need new sources of income, using just what you have now, you are going to systematically kill off one credit card after another.
• Pay EXTRA: In order to really get rid of your credit cards quickly (and for some people, quickly means in five years), you will want to apply extra money to the balance. Where will you get the extra money from?
• Hold a garage sale:  Gather all the stuff you purchased using your credit cards and sell them! I kid you not. Sell all those books, clothes, toys, extra T.V.s, radios, computers, programs, everything that is not absolutely essential! We are in a financial EMERGENCY and we don’t want to stay there. Sell everything that’s not essential. You will easily make hundreds of dollars because we young’ins just love to gather crap that we don’t need. Sell textbooks online. Post on craigslist.org. Hold a good old fashion garage sale. Clear out the lovely, yet useless furnitures. Bookshelves, gone. Extra lamp you don’t turn on more than once a week, gone. The five backpacks that you don’t use, gone. I won’t be surprised if by doing this, you have enough money to kill one credit card immediately!
• Live a STERILE existence: Yes, it’s time to live the life that you actually can afford. You are probably in this mess, same as me, because you want to live the life to which your parents accustomed you (or should have). Now, it’s time to live the life that you can afford. The sad fact is, you CAN’T afford much! And with credit card debt hanging over your head, you can afford even LESS! This is motivation enough to get rid of credit card debts so that you actually have MORE money to spend on yourself! No more luxuries! No more movies on Friday nights. No more dinners out, period! No more lunch at the nearby fast food joint. No more manicures. No more hair-cuts. No more shopping, obviously. These are all things you CAN’T afford. Really, think about it. Were you ever able to pay for these things with cash or only with credit card? If you haven’t got the cash, you can’t afford it. If you have the cash, but you can’t pay the minimum on the credit card, then you can’t afford it. If you have the cash, can pay for the minimum on the credit card, then use most of the cash to pay down the credit card, and maybe treat yourself once in a long while. Just remember, YOU CAN’T AFFORD IT! Don’t fool yourself or your friends into thinking that you can. You can’t.
• Get a JOB: Yup, time to get a job in order to pay the debt monster. Even if it’s only babysitting one day a week, it’s a job that will bring in extra money to help pay down the credit card debt. And know that this money is NOT for you to spend. You’ve already spent this money when you used your credit cards three years ago. Time to payback what you owe. Maybe keep a small percentage, say 10%, for yourself, but otherwise, send it off to the credit card companies immediately.

No matter what your age, sex, or marital status, you need to know a few things about yours and/or your spouse’s retirement plan. When setting your retirement goals, you shouldn’t leave anything to chance and getting the answers to these questions can eliminate future surprises.

1. Do you have a pension or retirement plan at your place of employment and are you eligible?

Some companies do not offer retirement or pension plans and some jobs within companies are not eligible for these plans even if they are offered.

2. How much will your pension or retirement plan be worth when you retire?

This information is necessary so you can decide if you need additional savings such as an IRA to supplement your retirement benefits when you decide to retire.

3. If your employer provides a retirement plan, what happens to it if you change jobs?

Your employer can tell you if your retirement plan can be rolled over into an IRA, cashed in, or left with the company if you should leave the company. You will need to decide which is best for you to do.

4. If you retire early, what happens to your retirement plan with your employer?

Your employer can tell you when you are vested with the company and what you can expect to receive in the way of retirement benefits when you decide to retire.

5. Will pension benefits be reduced by Social Security?

In some instances, your benefits could be reduced by the amount of Social Security you draw. Discuss this with your employer to see if this happens with your pension.

Current Ratio

Current ratio is current assets divided by current liabilities, an important indicator of a company’s ability to meet debt obligations. The higher the ratio the better, as it means the company has more liquidity. For example, a current ratio of 2.5 means that the company’s current assets, if liquidated, would be equal to 2.5 times the company’s current liabilities.

Debt Ratio

Debt ratio is total liabilities divided by total assets, indicating how much of the company’s current possessions have been financed with debt. For example, a debt ratio of 30% indicates that 30% of the company’s assets were bought with borrowed money. The question of leverage depends to a great extent on the economic climate. When money is expensive (i.e. interest rates are high) a large debt ratio can spell trouble, as the cost of servicing the debt may become unmanageable. When interest rates are low, on the other hand, high debt ratios matter less, as cheap borrowing allows a company to grow faster than would otherwise be possible.

Inventory Turnover

Inventory turnover is cost of goods sold divided by value of inventories, indicating how much product a company holds in order to meet sales requirements. Generally, the higher this figure the better, as it means less product is being held in warehouses at any one time (i.e. dead money). The sector plays an important part in how useful this indicator is – for example a company in a sector selling few high priced products (such as a shipbuilder) will tend to have a better inventory turnover than, for example, a supermarket.

Stock Price Valuation

Having analyzed the above factors, several ‘models’ can be employed to determine if a company’s stock is over or undervalued. Examples might include ‘dividend’ models which focus on the net present value of a company’s dividends, or earnings models which examine the present value of expected earnings, and even asset models which concentrate on the value of the company’s assets. Whichever model you decide to use, you must be consistent in your application.

Corporate Analysis

The financial health of a company can be determined by studying the company’s financial statements (its accounts). From these certain useful ratios can be calculated, usually divided into the areas of profitability, price, liquidity, leverage, and efficiency. Ratios from a particular company are compared to other companies within the same sector in order to get a handle on the sector norm.

Net Profit Margin

A company’s net profit margin is net income divided by total sales. This ratio indicates how much profit the company makes from its sales. For example, a net profit margin of 20%, means that $0.20 of every $1.00 in sales actually profit.

Price/Earnings ratio

The Price/Earnings ratio (or P/E Ratio) is a security’s current stock price divided by the earnings per share (EPS) of the previous four quarters. This tells you how much you must pay to get rights to $1 of the company’s earnings. For example, if a stock’s price is $50 and the EPS for the last four quarters was $5, the P/E ratio is 10 (i.e. $50 / $5 = 10). This means that you must pay $10 to “buy” $1 of the company’s earnings (buying a single share for $50 entitles you to $5 of earnings). Within a sector, comparing P/E ratios usually reveals some interesting facts – the lower the P/E ratio the better.

Book Value

Book value is total net assets (assets minus liabilities) divided by total shares outstanding (in issue). Imagine a company with $5 billion in cash and no liabilities whatsoever. You wouldn’t expect the book value of that company to be only $3 billion, would you? (If it was, hungry investors would buy it up in the expectation of liquidating it and turning an instant profit). Depending on the accounting method used, the book value of a company can be overstated or understated, for example Enron used highly dubious accounting ideas to create a book value far beyond any real possible valuation.

There are 4 basic steps taken when applying fundamental analysis to a company, and these involve:-

1. Place the company in perspective versus the economy as a whole.
2. Place the company in perspective versus the industry sector it belongs to.
3. Evaluate the condition of the company.
4. Combine these results to guage the value of the company’s stock.

The Strength of the Economy as a whole

Obviously, in boom times, prices tend to be higher than in depressions. Therefore economists examine the economy as a whole as a starting point to the analysis – what is the environment in which ALL stocks exist? Is there rampant inflation? Are interest rates rising or falling? Are consumers burdened with massive debt? Is the currency exchange rate good for exports? By determining the state of the general economy, we construct a ‘frame’ within which stocks can be gauged.

Strength of the Industry Sector

Even the strongest company will fail if it’s sector is in trouble. For example, there were a large number of buggy whip makers at the turn of the last century, some possessing large cash balances, tight operations, and apparently excellent prospects. A old chestnut proclaims that ‘a weak stock in a strong sector is better than a strong stock in a weak sector’. A good recent example would be the telecom sector. Until 2000, even mediocre telecoms companies enjoyed massively overpriced stock prices. Now they have to function in the real world again, because the sector as a whole hit enormous trouble at the start of the new century.

Long term investing is usually based on the principles of ‘fundamental analysis’, which attempts to determine whether a company’s underlying strength justifies its stock price. To begin with, a stock is a ‘share’ of a company. If you own stock in Microsoft, for example, you have a real and legal claim to a percentage of the assets of that company. The assets might include land, machinery, profits from business operations and so on. Obviously, the more stock you hold, the more of the company you own. In one sense, therefore, the value of a stock should be tied to the value of the underlying assets. In the real world, other factors come into play, including the market’s perceptions of the company’s prospects.

For example, if the tiny imaginary company XYZ Pharmaceuticals, employing just 100 people, and turning over less than $2 million a year is currently valued at $4 million, what do you think would happen to the share price if the company announced it had invented a cure for cancer? That’s right. No extra profits as yet, but suddenly the share price zooms, because the market EXPECTS bigger things in the future. This is one reason why the market is sometimes referred to as the ‘great expectation machine’.

Fundamental analysis then, is the study of a stock’s features outside of any technical analysis (moving averages, Grail Indicators etc). This might include the perceived economic prospects of a company, the general strength of an entire industry sector, and the state of a company’s financial accounts. By focusing on the various statistics in a company’s accounts (such as the P/E ratio, cashflow etc) investors believe it is possible to determine if a stock is correctly valued.