The Beat Goes On...

   It has been a few weeks since my last posting. We have had two major events in our family since the beginning of May. The first was the unexpected death of a beloved family member. Even though we all understand that our loved ones will die sooner rather than later as they grow elderly, it is still sometimes a shock when we find ourselves unprepared. That is what happened to us. Yet, while we grieve, the beat goes on. The second event was the blessing of a new baby who arrived on the scene several weeks early, but healthy nonetheless. Even as I write this, the little newborn grows, fills out, and notices his little world. The beat goes on...life continues with or without us. But we do make a difference. And we can continue to make a difference by touching the lives of so many people.
   What kind of difference are you making in your business and in your community? Are commiting your passion and time to grow your business, to learn more about what you do in order to be more effective? Do you help your employees learn how to grow and become more adept at their jobs within your company? If you are a solo practitioner do you keep abreast of changes in your profession or field? Finally, are you committed to making  a difference in your community? Do you volunteer at church, school, a civic club or nonprofit organization? If not, why not?
   One of the blessings of being alive is helping people grow into what they can and should be. Your life touches many other lives. You can be someone who motivates and encourages others to be their best. Your example can touch hundreds or thousands of lives by what you say and do each day. Let your enthusiasm and passion kindle a fire in the people around you.  Your life is not necessarily measured successfully by the amount of money you make, but by the way you extend yourself to other people.
   Make the commitment to share your best with everyone you meet. Your life can be a shining light for someone else and it will make a difference.
Have a terrific day!
Patricia

Financial Wellness for Your Business Starts Here

Financial Wellness for Your Business Starts Here

   Dave Ramsey has a Financial Wellness program for small business owners. It isi designed for large and small business to teach personal money management to you and your employees. The classes are taught by Dave himself and offer video lessons, workshops, and group discussions. Dave’s website says, “Because we believe that personal finance is 80% behavior and only 20% head knowledge, our goal is to change the way your employees manage their money. Winning with money doesn't happen overnight. That's why Financial Wellness is designed to teach your team a step-by-step process to overcome debt and develop a long-term plan with their money.”

   Dave’s team claims the program can help reduce turnover and build community and loyalty at work. That’s a tall order, but the Ramsey group has a proven track record on return on investment.

   Next to your product, the most important asset you have is your employees. The way you manage your employees and they work together will make a difference in your company performance and your bottom line. As more owners work to improve employee relations, they find financial concerns are the number one priority in people’s lives. If you want your people to be more engaged in their jobs instead of stressing about their finances, help them get a personal money makeover.

   Ramsey says you can “Improve the performance of your team by adding stability to their lives. Financial Wellness offers a turn-key solution that will address benefit challenges such as:

Lack of participation in benefits packages

Frequent withdrawals from retirement plans

Income garnishments

Requests for payroll advances

Employees unprepared for retirement

   This common-sense approach and entertaining presentation will bring clarity to important, but often overlooked, matters of personal finance: saving, investing, eliminating debt, managing household income, and much more.”

   At least 70 percent of Americans are one paycheck away from insolvency. They are living from one check to another, have no savings, no emergency fund, depend upon credit cards, loans, and robbing Peter to pay Paul to get through life. Most Americans do not know how to manage their money and no one hgas really taught them how to prepare for the financial necessities of life. In fact, ost Americans will end up spending their Golden Years, as it were, in poverty because they are unprepared for life and for retirement.

   As your employees learn how to manage their money, they will begin to take advantage of benefits that will help them the most. They will learn to budget, save, have emergency funds, get out of debt, start investing in their retirement,  and have a future. They will learn to tell their money where to work, instead of working just for money.

   People who are financially secure and planning for their future will be much more content and productive. They’ll also spend more time at work instead of staying home with imaginary illness. Happy people make for a much better work environment

   If you are interested in seeing a dramatic turnaround in your place of business and the live of your valuable people, go to www.daveramsey.com and check out his programs. You’ll be glad you made the investment.

Use Plain English with Your Customers

   When Possible, Use English. That’s the headline for an article in the May 2 edition of The Wall Street Journal. That advice is given to financial advisors who might speak jargon to their clients. It turns out that people are happier and more satisfied when you speak plainly to them.

   Invesco Ltd., a fund managing firm, surveyed 800 of their customers to find out what would make them happy. Using ordinary speech to describe products and investing make a big impact on the customers. The WSJ article gave some vivid examples:

“Finance people may talk about “equities,” “fixed income” and “asset allocation.” Normal people talk about stocks, bonds and diversification.”

   The point is that we tend to lapse into our specialized area of expertise using jargon that is confusing or meaningless to other people. Since jargon is endemic to our way of doing any kind of business or occupation, the chances are that you talk “funny” to your customers too.

   If you want to make a sale and keep a good customer, you have to relate to your customer in a way that doesn’t demean him or make her look foolish. You can always show off your knowledge and vocabulary to people in your field. When talking to ordinary people, make the effort to describe what they need in terms that make sense to them.

   Another tactic the customers who were surveyed disliked was trying to scare people into a sale. This touches a raw nerve in many people. In my life I’ve heard countless people tell me that if a salesperson asks the question, “Don’t you care about your family?” my friends or acquaintances would answer with a resounding, “NO!” Scare tactics are not necessary and they irritate people almost as much as jargon.

   If you want to know the secret of excellent communication, you have to understand that your customer wants respect and honesty from you. Don’t talk down to your customers; don’t try to impress your customer by making him or her feel inferior. Try to imagine yourself in his shoes. Treat her the way you want someone else to treat your mother, wife or daughter. Stop trying to put yourself firs, and put that customer in first place. You need a few things to succeed in business: you need good customers and good employees.

   Mary Kay Ash, founder of Mary Kay cosmetics, used to tell her consultants to look each customer in the eye and pretend that the customer was wearing a sign on her forehead that said, “Make me feel special.” That technique worked beautifully for Mary Kay. It’s still sound advice for anyone who deals with people.

Have a terrific day!

Patricia

How You Can Benefit from a Cafeteria Benefit Plan

  Cafeteria Plans are benefit plans that fall under the Internal Revenue Code in Section 125. The plan is set up by employers to help employees have benefits on a pretax basis. Employees can have qualified benefits that allow them to make choices about where their money goes for insurance and medical insurance purposes. These pretax benefits can help employees and employers save money.

   Qualified benefits do not defer or delay compensation for work. These benefits can include health savings accounts, group term insurance, dependent care assistance, adoption assistance, and accident and health benefits. They do not include long-term care assistance or Archer medical savings accounts.

   All plans must be written and specific. They must include eligibility rules and include both taxable and nontaxable benefits. If a plan has only taxable benefits, it is not in compliance with Section 125 of the IRS Code and will be treated accordingly. By offering both taxable and nontaxable benefits, the employer meets the criteria for establishing a Section 125 plan. The plans will cover employees and their families and may cover retirees and their spouses.

   Why is the plan beneficial to employees? When employees deduct part of their income to purchase insurance plans, that amount is deducted from their gross wage before taxes are applied. Let’s use a simple example:

After Tax

Employee gross wage is $1,000

Taxes                                     250

After tax income                   750

Insurance                              100

Spendable income             $650

Pre Tax

Employee gross wage is $1,000

Insurance                              100

Taxable income                    900

Taxes                                     225

Spendable income              $670

   Here you can see the employee gains $25 in take-home pay using a cafeteria plan. The employer can save money as well. Using the same figures above, the employer pays 7.65% in FICA taxes, 15% in Federal taxes, and 2.5% in State taxes. Using the cafeteria plan, the employer would save $7.65 on this employee per pay check. Multiplying tax savings by every employee can add up to significant savings for employers. The more employees an organization has, the greater the savings. With these plans, small business owners can save on each employee.

   There are businesses that will set up and administer your S125 plan for fees. There are other options, however. Some companies will set up the plan and help you for fee. Another feature to look for is whether a plan is friendly or unfriendly. Some plans that are set in place have no provisions for other products or companies, thereby reducing the choices available to employers and employees. Look for a plan that is friendly and will help you have the greatest choices that will benefit you and your employees.

   Why does this matter? Let’s say you set up a plan with a company that is not friendly. You initially get your major medical insurance with a company, but after a year, you determine you can get better coverage or rates from another insurance company. Your plan does not allow you to change your medical insurance. For example, if you set up a cafeteria plan under Aflac, you have the options to make changes in your major medical provider and other benefits. Aflac is known as a “friendly” system for that reason.

   For more information, you can visit the IRS website at www.irs.gov for the rule and regulations regarding Section 125 Cafeteria Plans. The information for this article came directly from that site. If you want more information, you can also contact your accountant, a CPA, your financial planner, or even an Aflac agent.

Have a terrific day!

Patricia

How to Handle Your Debt

   If you own a small business, you might have business debt. It could be a large amount, a small amount, but in any amount it prevents you from investing your income into instruments that make you money. How do you tackle this debt, how do you classify it, and what steps can you take to eliminate it?

   Just as with your personal financial life, you need to stock of your situation and treat your business debt. In Total Money Makeover, Dave Ramsey advises you put business debt into a “debt snowball” to be paid down as quickly as possible Ramsey tells people that beginning with the smallest debt, pay it off right away and it gives you a sense of real accomplishment. You apply the same principle to your small business debt. Perhaps you have a credit card balance or equipment loan to pay. Pay it off now. Then you can use the money you paid on that loan to apply to the next largest loan. By using this method you will eliminate your accumulated debt.

   Ramsey says by starting small, paying off the smallest debt first, you not only feel good about the progress you are making, you provide additional funds to pay off the next highest debt, your interest payments will reduce as the principle is paid down, your financial stability strengthens and you will see there is a way out of the mess you created. As you pay off small and medium debts, the larger debts become more manageable and you know with certainty that you can get out of debt and begin to save money.

   The goal of this method is to establish an emergency fund, a savings account, pay off all your debt, and begin investing in your future by putting money into financial instruments that work for you, instead of you having to work to pay off debt. Here is what Ramsey says in his book, Total Money Makeover, “With gazelle intensity, great focus, extreme sacrifice, selling things, and working extra, we clear all debt. Again, if you are fired up, normally this will happen within eighteen to twenty months. Many people find a way to shorten the time with sheer intensity, and God tends to pour blessings going in a direction He wants them to go.” Finding your way out of debt will help you find a way to have a life again.

   The mounting debt we accumulate in our personal lives and business lives takes years creates stress that shortens our lives. Running a business is not the same thing as running your household, but there are some common practices in both arenas. When you spend far more money than you can make, your income goes out to pay off debt, leaving you angry and frustrated that you can’t really “live” because of your debt. You chose immediate gratification over financial wellbeing. That might sound harsh, but it is the truth.

   You might run a business where constant debt turnover is a fact of life. You can still apply the principles to your overall strategy. Remember this, as you free up your income from paying off debt to investing, you will have more money. You can pay cash for your business needs. It is not impossible and there are companies who operate in this way. The more cash you have, the better your position, the less chance you have to pay more for what you need because you have to finance your purchases.

   With an emergency fund in place, savings in place, and debt reduction an ongoing function of your financial life, you can begin to plan how to increase your business, or change the way you do things in your business. Your options will increase as your debt decreases. Even if you are a solo practitioner who is a consultant, you will find stress levels decreasing if you have provisions for times when business is slow. If nothing else has transpired the past four years, our awareness of our lack of security has risen. We now know that no one is guaranteed a job, or customers, or our income remaining stable. The best thing we can do as individuals and business owners is to prepare for the difficult times even while we enjoy our lives every day.

Have a terrific day,

Patricia

Money Makeovers for Your Small Business

   Last week we took a short romp through Dave Ramsey’s Total Money Makeover for your personal finances. (If you haven’t gotten it yet, shame on you! I told you it would save you your financial life…now get busy!) This week, we will take a peek at using some of those same ideas in your small business. It doesn’t matter if you are a one woman show, an LLC, have three employees, or 95, these principles will apply to your situation. You cannot afford to ignore what has happened in our economy.

   A brief reflection on the past four years of economic wasteland is in order. We got into this mess for several reasons. But underlying all the rhetoric about Wall Street, mortgages, big business and unemployment, is one truth: we spend money we don’t have, so we have to borrow more money, and then we can’t pay it back.

   The real estate business declined, is declining, and will continue to decline, because for many years people with no real income, or no ability to pay a mortgage, got loans. Liar loans, tweaking numbers, ignoring all good sense in lending, and whatever else went on, the industry forgot that loaning money requires an ability to pay back the loan. Those loans were then bundled into securities packages and sold as investment instruments to people who should have known better than to buy poor securities. Ah, well, hindsight.

   Businesses can’t spend money they don’t have, either. It is particularly painful for small businesses now because lenders clutch their assets tightly to their chests. Loans are hard to get, making expansion difficult. Business owners feel the squeeze. There are some things you can do to increase your financial stability.

   First, you need to work on a realistic budget for your business. You must take the time to devise a budget that is based on actual numbers and projections. John Maxwell says, “A budget is people telling their money where to go instead of wondering where it went.” Your budget has to include all expenses, not just the major ones such as rent, utilities and insurance. You have to have cash flow, emergency funds, equipment repair and replacement, labor costs, and so on. Write down every thing you spend money on during the year…including the coffee, cream and toilet paper! Denying what you spend will not save your bacon. It will burn it.

   After your budget is finished, establish your savings account if you don’t have one. Make sure you pay yourself in the savings account first. If you do not follow this simple rule of money management, you will continue to sink. You need a personal and business savings account. Emergencies arise, things go wrong, life happens, as they say. You need money to take care of the problems. Don’t be foolish about this. This is the foundation of your new financial life. If you need to hire a professional to help you get your business financial house in order, do so. You don’t want to lose your business or continue to suffer needlessly.

   If you aren’t setting goals and making plans for your business and how your business financial needs are handled, you’re setting yourself up for failure. The only way to get out of this task is to die.

   In our personal financial lives we need to live on cash, and as much as possible, so do our businesses. Business owners can get themselves in real financial trouble borrowing far more than they can reasonably repay if there is a downturn in the economy. Ramsey makes the point in his book that when you pay with cash, you spend less money. The same holds true in your business. Paying cash saves you hundreds, thousands, or millions of dollars, depending upon your business and its size, and that is real money you can keep in your account, where you need it.

   Believe it or not, making a budget and paying cash are part of your cost containment strategies. You need to know how much money is going out, where it’s going, when it’s going, and how it’s going. You need to track every cent you spend and make sure you aren’t paying more than you need to because you don’t pay cash. Using credit unwisely leads to losing everything. When your budget is finished, your savings set up, your expenses paid for in cash, you can understand clearly just how much money you need to bring into the business to pay bills and have a profit.

   If you have lines of credit, or credit card balances, for your business, work on paying off all balances as quickly as possible. Start small, paying off the smallest amount first. As you eliminate each debt, your sense of freedom and accomplishment will grow. And the best part is that your business will gain stability and solvency. That’s a great business practice!

Have a terrific day.

Patricia

Get a Grip on Your Finances Part Two

   In the dedication page of his book “Total Money Makeover” Dave Ramsey praises all the people who have had the courage to change their financial habits to transform their lives. They did this because they “lived like no one else so later they could live like no one else.” This is the secret, if you will, to get financially fit. You must change your habits and live like no one else. That means you will stop living like your family, neighbors, coworkers, and most people you meet. You will have to resist the siren song to spend, spend, spend and the seduction of material goods. You will have to find out who you are and know your self worth somewhere besides your finances.

   Ramsey begins his book declaring that it is not a complicated scheme, a guide to investing, a get rich quick idea, a new idea, written by someone with no academic credentials, politically correction, wrong, or the same as his other books. He also modestly points out that the book is not getting complaints or criticisms from the people who have read the book, followed its principles and chosen to live their lives differently. After all those caveats, he gets to the actual steps involved in how to get a grip on your finances.

   The chapters in the book are as follows:

1. The Total Money Makeover Challenge
2. Denial (I’m Not That Out of Shape)
3. Debt Myths: Debt is (Not) a Tool
4. Money Myths: The (Non) Secrets of the Rich
5. Two More Hurdles: Ignorance and Keeping Up with the Joneses
6. Save $1,000 Fast: Walk Before You Run
7. The Debt Snowball: Lose Weight Fast, Really
8. Finish the Emergency Fund: Kick Murphy Out
9. Maximize Retirement Investing: Be Financially Healthy For Life
10. College Funding: Make Sure the Kids are Fit Too
11. Pay Off the Home Mortgage: Be Ultrafit
12. Build Wealth Like Crazy: Arnold Schwarzedollar, Mr. Universe of Money
13. Live Like No One Else

   The reason I listed the chapter titles is to give you a peek at the topics Ramsey covers in his book. Rather than giving you dry statistics about money, debt, stress, divorce, and all the other ills associated with money madness, he writes clearly and simply about how to get out of the slavery of debt and financial stupidity. He doesn’t lecture about the results; he includes testimonials of real people who have used the system to change their lives forever. The people giving the testimonials are ordinary people who got in over their heads in ordinary ways. These aren’t compulsive gamblers, people with mental problems that caused them to throw money away, or some other pathology. Most people in this country got into trouble one poor decision at a time.

   There is reason to have hope if your life is in turmoil over finances. The first thing you have to do is stop saying you don’t have a problem. I would say to you that if you have consumer debt other than a mortgage, you might have a real problem on your hands. Unless you’ve been living under a rock the past four years, it should be abundantly obvious to you what happens to people who are in over their hands with their money. If you lack financial stability and disaster strikes in your work life, such as losing a job or losing hours, your life quickly becomes a nightmare. But you don’t have to spend your life in darkness. There is a way out of the mess, it is a proven method, it works for everyone, and the underlying concept for it is simple.

   Ramsey’s method does not involve consolidating debt (something that usually brings the debtor into more trouble) or declaring bankruptcy. What is involved is a total commitment to follow the system, get out of debt, and stay out of debt. People who pay out all their income to cover debt are not putting aside money for investments in their future, their children’s future, or the ability to help anyone else. People living from paycheck to paycheck, whether they are very poor or very rich, suffer the same problem: they are not living, they are enslaved to the debts they owe.

   If you are in bondage to your mortgage, car payment, credit cards, loans and your life is miserable, take heart. You can stop the madness. You can control your financial life. Begin by taking small steps. Freedom is in your future. Get a system, stick to it, and free yourself to actually live and enjoy your life instead of constantly stressing and suffering. Get Dave’s book and read it. Make the decision to change your life, make the commitment to stick to a plan and a budget, and find a new way to live.

Good luck and have a terrific day!

Patricia