All about the money

Economic Crisis - Desperate Measures

2008-12-29T21:11:00.011-05:00

In my last post "Lessons From A Recession", I said be careful of who you trust. In less than 24 hours I received this chain email from a credible, trustworthy person that I have known very well for over 40 years. I am not sure why he sent this to me, but I figured he thought he would give it a try...what does he have to lose? Creditability? Respect?
===================================================================
Subject: PLEASE READ! IT WAS ON GOODMORNINGAMERICA TODAYSHOW , JUST DO IT!! !!

This was sent to me by my accountant... if you think this is ridiculous
I have no problem giving you his contact information...

Read carefully...
THIS TOOK TWO PAGES OF THE TUESDAY USATODAY - IT IS FOR REAL

To all of my friends, I do not usually forward messages,
But this is from my friend Pearlas Sandborn and she really is
an attorney. If she says that this will work - It will work. After all, what have
you got to lose?

SORRY EVERYBODY.. JUST HAD TO TAKE THE CHANCE!!! I'm an
attorney, And I know the law. This thing is for real. Rest assured AOL and Intel will follow through with their promises for fear of facing a multimillion-dollar class action suit similar to the one filed by PepsiCo against General Electric not too long ago.

Dear Friends:

Please do not take this for a junk letter. Bill Gates sharing his fortune. If you ignore this, you will repent later.

Microsoft and AOL are now the largest Internet companies
and in an effort to make sure that Internet Explorer remains the
most widely used program, Microsoft and AOL are running an e-mail
beta test.

When you forward this e-mail to friends, Microsoft can and will
track it (If you are a Microsoft Windows user) for a two week
time period.

For every person that you forward this e-mail to, Microsoft will pay
you $245.00 For every person that you sent it to that forwards it on,
Microsoft will pay you $243.00 and for every third person that receives
it, You will be paid $241.00. With in two weeks, Microsoft will contact
you for your address and then send you a check.

Regards. Charles S Bailey General Manager Field Operations

1-800-842-2332 Ext. 1085 or 904-1085 or RNX 292-1085

Thought this was a scam myself, But two weeks after receiving this
e-mail and forwarding it on. Microsoft contacted me for my address and
within days, I received a check for $24, 800.00. You need to respond
before the beta testing is over. If anyone can afford this, Bill gates
is the man.

It's all marketing expense to him. Please forward this to as many
people as possible. You are bound to get at least $10, 000.00.

We're not going to help them out with their e-mail beta test without
getting a little something for our time. My brother's girlfriend got in
on this a few months ago. When I went to visit him for the Baylor/UT
game, she showed me her check. It was for the sum of $4,324.44 and
was stamped 'Paid In Full'.
====================================================================
Take a look at this...does the letter look familiar?

http://www.snopes.com/inboxer/nothing/microsoft-aol.asp

http://www.snopes.com/inboxer/nothing/billgate.asp

====================================================================

Unfortunately, as long as there is fear and greed, this kind of stuff will never go away. Things are likely to be worse in the future. The economy has created a desperate environment that have people searching for some once in a lifetime chance to save their financial situation. This is a play on those fears. It illustrates that fear can prompt good honest people into trying desperate measures.

I know this appears innocent, but chain emails can spread viruses or some other nasty thing that will destroy your data. They can spread programs that collect personal information. And what about the next scam? What will it contain? If it sounds too good to be true, it is. Don't let desperation cloud your judgment. Panic, fear, and greed can break the best of us. Learn to be disciplined and never stop learning. And by all means, be careful who you trust.

Lessons From A Recession

2008-12-28T15:34:00.020-05:00

As we come to a close on what has been a treacherous and punishing economic cycle, it is important that we all learn something from this economic cycle.

A recession is a cleansing process, and a painful one. But from the ugly, opportunities to prosper will be abundant again.

But first, in order to prosper, we must take a few lessons forward with us to prevent a repeat of history. The lessons are the same for business and individual success.

Lesson number one - Keep your balance sheet clean. Have little to no debt and keep an ample amount of cash for emergencies. Cash gives you the flexibility to ride things out and invest timely when things start to recover.

Lesson number two - Keep your credit clean. Part of this can be accomplished by having enough cash to ride out the economic downturns, but the other part is discipline (don't be too greedy). Keep debt manageable and borrow conservatively. Debt is burdensome and will strangle a company or individual quickly. Planning for debt repayment should be a plan based on worse case scenario. The 2008 global recession is a worse case scenario. Always plan for the worse.

When greed takes center stage it reminds us all to be careful who you listen to. From the Madoff debacle to the demise of companies like Lehman Brothers, trust is at a premium. So what is the third valuable lesson? Do your homework. Gain as much knowledge as possible and don't get into things you don't understand. Concentrate on what you know best. Blind faith is a bad strategy.

Finally, things can always be worse. Be prepared for the worst. Strive to be in the best financial position possible at all times. When times get good, take calculated risks, but realize the economy can change for the worst in hurry. An "all in" attitude is a gamble and often a move of desperation or greed. Avoid the urge to get greedy.

Here's hoping that you see the recent events as a learning experience and an opportunity to recover. Best of luck.

BIG OIL...the root of all evil, right?

2008-08-09T07:14:00.007-05:00

Well we have to blame someone for the high price of oil, don't we? Let's crack down on those oil speculators and oil companies for driving up the price of oil and all will be right with the world again, right? WRONG!

The price of oil or any other commodity is driven by supply and demand. Yes, speculators may drive up the price, but the higher prices will only hold if demand equals or exceeds the supply. If not, the speculators who got in late will run for cover and sell their positions driving the price down. Eventually the price will settle at the appropriate market level. This is basic economics, yet I hear people whine that the government should get involved to crack down on speculators. Even Obama is touting this in his ads to bring the price of oil down. Yeah, that's what we need, government involved in controlling those that invest in oil and those big oil companies like they are the root of all evil. The people who vote on these principals are absolutely clueless. If you trade or sell anything, aren't you trying to get the best price? Maybe the government should crack down on you for driving prices up on whatever you are selling because I want your product for a cheaper price! See how ridiculous this is?

Those people that speculate take on a great amount of financial risk. For example, attempting to ride piggyback on anything that is rising or falling in price at a dramatic rate to make money is a dangerous path if you don't know what you are doing. It is high stakes gambling. But, if they are willing to accept these huge risks they also deserve to reap the potential huge rewards. In the end prices will always settle at an equilibrium. The extreme prices are only temporary. Speculators are needed in the market (especially in the commodity markets) and trying to eliminate this group of investors will cause many undesirable issues. The high price of oil will be the least of our problems.

If you are really serious about lower oil prices or lower prices for anything, then reduce your demand for that product. There are always alternatives. Having the government controlling a free market and the price of anything is a recipe for disaster.

The US Economy - March 10, 2008

2008-03-09T09:12:00.007-05:00

You have to love the political rhetoric of the promises to fix the economy. The economy, like all things in life, is a cyclical process. The ebbs and flows are similar to the change of seasons. While policies and events help shape the direction, it is businesses and the consumer that ultimately moves the needle. Humans are greedy by nature and a recession is merely a cleansing of that greed. Government and the Federal Reserve react to put more money in the economy and eventually the pendulum will swing again.

In May, Americans will receive tax rebate checks to help stimulate the economy. And it will do just that. But, this is not a fix to the current conditions. It will provide a temporary spark but it won't be sustainable unless Americans find more discretionary income in their pockets to spend. And it needs to be noted that if the government knows this is a way to stimulate the economy, why are corporations and consumers taxed to death? Higher taxes will always lead to a depressed economy (eventually) because consumers and businesses drive economic growth and nothing is more powerful than the discretionary dollar that can be spent.

To key weapons to control the US economy are taxes and interest rates. Lower one or both and the economy will prosper. Raise both and the economy will suffer. It really is that simple and complex. It is complex because inflation works in the opposite direction most of the time.

So if Americans want to influence the economy, they will need to understand what impacts it first. Take universal health care for example. Where will the money come from to pay for this? Higher taxes? If so, this means less jobs and tougher economic conditions. We all need to ask these questions before voting for "change".

Time will heal the wounds of the current economic cycle like it has done in the past. Understand what impacts the economy and why and you will make more informed and prosperous decisions in the future.

NFL Network Wins

2008-01-21T19:19:00.000-05:00

Obviously this didn't turn out to be a week 2 exhibition game and now both teams face off in the Super Bowl. The NFL Network got some much needed exposure and fans were treated to a great game. Now, fans will have to decide if it is worth switching providers.

NFL Network caves in to pressure

2007-12-29T09:52:00.000-05:00

In an about face from the NFL, the Patriots-Giants game will be televised on NBC and CBS. Is there that much interest in this game? Why did the NFL cave in on this demand?

I read an article on CBS Marketwatch by Jon Friedman that suggested that the NFL did it because it was afraid of Congress. We don't want to rouse the sleeping giant of Congress, do we? Are you kidding me? Shouldn't Congress be concentrating on other things rather than worrying if some football fans are going to miss a game that will look like week two of the exhibition season. And do we really want the government to "fix" this so called problem? Why don't we just vote for communism and let the government run our lives? How ridiculous.

While the NFL Network will get some exposure, it did step on some toes of the companies that already support the NFL Network. It also has set a precedent that will only serve to heat up an argument on how the big bad NFL is cheating it's fans the next time a big game is televised only on the NFL Network.

We don't need Congress to have our backs. Fans have a choice on TV providers. This is a free market economy and it needs to stay that way. If fans want the NFL Network that bad, then they should change to a provider that has the station.

NFL Network: Satellite vs Cable

2007-12-24T12:25:00.000-05:00

As the Patriots inch closer to perfection, the battle between cable TV and satellite will intensify this week. But should you really blame NFL and the NFL Network for giving you the opportunity to see the game?

The last time I checked, this is a free market economy. As a customer, you are free to choose cable or satellite. Yet, the media and fans want to blame the NFL and the NFL Network for not giving them a chance to watch the game. Of course cable blames the NFL Network (and the Big Ten Network) for wanting too much money for the station to be included on their basic package. Besides, they don't want to "subject" all their customers to paying a higher cost for the basic package. But, it is OK to include (take your pick) other stations that many have little to no interest in watching, but that is another story.

What is interesting is that the satellite companies can offer competitive package prices that includes the NFL Network and Big Ten Network and cable companies like Time Warner can't. It is hard to understand why more people haven't made the switch. Perhaps they are fearful that their TV will go out on them every time it rains or snows. Cable companies can only hope that their customers hold on to these false beliefs.

For sports fans, satellite TV, like DIRECTV is far and away a better choice than cable. Offering the NFL Network is only part of the overall sports menu. As the NFL Network continues to grow, you can expect more live games to be offered. You can also bet that the TV providers that do offer the NFL Network will continue to hammer the airwaves to get people to make the switch. If the cable companies continue to be arrogant and not give customers want they want, cable prices will continue to increase in order for them to absorb their lost in market share.

Regardless of what side of the argument you are on. The fact is this. You have a choice. You do not have to whine and blame the NFL and the NFL Network for being greedy. They are running a business. If it is something you want, it IS available to you. You just need to change your provider.

CITI

2007-11-04T14:17:00.000-05:00

Back in April, I wrote that Citigroup must have been mismanaged for quite awhile when they announced 17,000 job cuts. Doesn't look like that did the trick. The stock has plummeted since then. Of course the company can mask their ineptitude and blame it on the credit crisis. But is it really the credit crisis? Or might it have something to do with how they treat their employees? Time will tell.

Team Chemistry

2007-06-10T09:44:00.000-05:00

Looking for a way to improve results in your department or company? Try team chemistry.

Employees are your greatest asset. They can also be detrimental to your overall business plan. One bad apple can negate the hard work of many.

If you want more from your employees, you need to spend more time developing them. More importantly, you need to have the right players on your team. Team chemistry can elevate a group of employees to new heights. It isn't about having 10, 15, or 100% of your team as superstars. It is about getting the right players and having them all work together to create efficiencies, develop one another, and increase productivity.

So how do you get team chemistry?

It begins first with strong leadership. As a leader, you must find the right players to play on your team. They must be able to get along and create strong bonds with one another. Hiring a pompous superstar that has an MBA, but is selfish and lacks people skills is not the right type of player to have on your team. Do you ever wonder why some of the most talented teams in sports fail? Big egos, selfishness, and a cancer to the team all play a part. You don't need superstars to create a winning team. You need great team players with great people skills.

Second is open communication. Employees need to be able to tell leadership when they disagree. Leaders need to listen and play as part of the team. This fosters learning and development. Ever watch a sporting event and see a rookie sit next to a veteran or superstar and just listen? This sharing of ideas creates better players and a better team.

In sports you will often hear about teams playing "loose" or " tight". Playing "loose" is a result of great team chemistry. They play with less pressure creating an environment that is conducive to producing winning results.

If you want a winning organization, quit looking for selfish players who have "credentials" and starting building your team with team players.

Good Worker does not equal Good Manager

2007-05-20T09:20:00.000-05:00

How often have you seen it? A great worker gets promoted to manager and the results are disastrous. So, how can you or your company avoid hiring bad managers?

Most employers look for employees who are the cream of the crop. They want the employee to have a college education, preferably an MBA. By hiring the smartest people (so they think) it is a ticket to increased profits and better talent for the company. Yet in so many instances this line of thinking fails miserably.

A good worker is not necessarily the best choice for manager. The fact the employee excels at their current position does not give them the entitlement to become manager. Yet many companies do just that. It becomes a reward for doing a great job.

To be a great manager and leader, the first asset you must have is great people skills. Job skills can be learned through proper training, but people skills are part of a person's character. Find a person with good character and you will likely find the right person to become manager.

Superior management is the greatest asset a company can have. It takes a unique individual to manage people effectively. Don't limit your search solely based on education and look for solid, well respected individuals. You won't be disappointed.

Ecomonic Lesson

2007-04-23T18:12:00.000-05:00

The following is a chain email I received recently. I applaud the passion to stand up and fight for a cause, however before taking any action it is important to understand a little about economics and how it can help (or hurt) the action being taken.

Here is the email:

GAS WAR - an idea that WILL work

This was originally sent by a retired Coca Cola executive. It came from one of his engineer buddies who retired from Halliburton. It ' s worth your consideration.

Join the resistance!!!! I hear we are going to hit close to $4.00 a gallon by next summer and it might go higher!! Want gasoline prices to come down? We need to take some intelligent, united action. Phillip Hollsworth offered this good idea.

This makes MUCH MORE SENSE than the "don't buy gas on a certain day" campaign that was going around last April or May! The oil companies just laughed at that because they knew we wouldn't continue to "hurt" ourselves by refusing to buy gas. It was more of an inconvenience to us than it was a problem for them.

BUT, whoever thought of this idea, has come up with a plan that can really work. Please read on and join with us! By now you're probably thinking gasoline priced at about $1.50 is super cheap. Me too! It is currently $2.79 for regular unleaded in my town. Now that the oil companies and the OPEC nations have conditioned us to think that the cost of a gallon of gas is CHEAP at $1.50 - $1.75, we need to take aggressive action to teach them that BUYERS control the
marketplace..... not sellers. With the price of gasoline going up more each day, we consumers need to take action. The only way we are going to see the price of gas come down is if we hit someone in the pocketbook by not purchasing their gas! And, we can do that WITHOUT hurting ourselves. How? Since we all rely on our cars, we can't just stop buying gas. But we CAN have an impact on gas prices if we all act together to force a price war.

Here's the idea:

For the rest of this year, DON'T purchase ANY gasoline from the two biggest companies (which now are one), EXXON and MOBIL. If they are not selling any gas, they will be inclined to reduce their prices. If they reduce their prices, the other companies will have to follow suit.

But to have an impact, we need to reach literally millions of Exxon and Mobil gas buyers. It's really simple to do! Now, don't wimp out at this point.... keep reading and I'll explain how simple it is to reach millions of people.

I am sending this note to 30 people. If each of us sends it to at least ten more (30 x 10 =3D 300) ... and those 300 send it to at least ten more (300 x 10 =3D 3,000)...and so on, by the time the message reaches the sixth group of people, we will have reached over THREE MILLION consumers. If those three million get excited and pass this on to ten friends each, then 30 million people will have been contacted! If it goes one level further, you guessed it..... THREE
>>>>HUNDRED MILLION >>>>PEOPLE!!!

Again, all you have to do is send this to 10 people. That's all. (If you don't understand how we can reach 300 million and all you have to do is send this to 10 people.... Well, let's face it, you just aren't a mathematician. But I am, so trust me on this one.)

How long would all that take? If each of us sends this e-mail out to ten more people within one day of receipt, all 300 MILLION people could conceivably be contacted within the next 8 days!!!

I'll bet you didn't think you and I had that much potential, did you?

Acting together we can make a difference. If this makes sense to you, please pass this message on. I suggest that we not buy from EXXON/MOBIL UNTIL THEY LOWER THEIR PRICES TO THE $1.30 RANGE AND KEEP THEM DOWN.

THIS CAN REALLY WORK.

Do you think this will work?

Here is the problem. The price of any item in a marketplace is determined by what what the consumer is willing to pay for the item. More importantly, the price is a direct result of the supply and demand for that product. When supply exceeds demand, prices will eventually come down. The opposite is also true. When demand is high for a product and exceeds supply the price for the product will increase. Shifting demand (as suggested in the email) for the same product to another company will only hurt the company the consumer refuses to buy from. Meanwhile, all the other competitors will start raising their prices to keep up with the increase in demand for their product.

If the author really wants lower gas prices, then the effort should be directed at reducing the overall demand for gas and oil. More supply and greater inventories with a decrease in demand will bring the price down.

This is basic economics.

Citigroup

2007-04-15T11:04:00.000-05:00

Yesterday's post was on shareholder value. Here is another example of a company who values the shareholder (and themselves) above their employees.

Citigroup (C) announced a massive restructuring earlier last week. The headline from this restructuring is 17,000 job cuts! Wow, is this because the company has been mismanaged for so long? So one day you need 17,000 employees and the next day you don't? The company rids itself of "back office" employees like they are some sort of a disease. These same people are the workhorses that make people like the CEO, Charles Prince, as rich as he is.

So, who is going to do the work that is left behind? They certainly didn't get rid of all that work overnight, did they? 17,000 full time employees equates to 35,360,000 hours a year. It begs the question, what were these people doing and how will it effect the customer? Work doesn't just disappear. Less people doing the same, or even close to the same amount of work means mistakes and inefficiencies. With these mistakes come increased costs of doing business. Of course Citigroup won't tell you this. For them, it is all about the stock price.

Why all the job cuts? Well, Charles Prince was quoted as saying "nobody is more upset about the stock price than I am". I wonder why. He owns 1.6 million shares worth about $83 million. Maybe he is trying to get to $100 million. Why not upset 17,000 lives in the process to squeeze a few extra million to line his pockets.

Prince may get his wish in the short-term as the fools rush in to buy on the promises of the company. But will this provide long-term value to the investor? Does owning 1.6 million shares affect the decision making ability of a CEO? What do you think?

Shareholder value

2007-04-14T17:48:00.000-05:00

Dell recently announced that they had identified a number of accounting errors and evidence of misconduct at their company. This news follows a bonus takeaway I talked about in a previous post. http://givemebigmoney.blogspot.com/2007/02/opportunities-in-guerilla-recruiting.html
The news just keeps getting worse at Dell, but Dell is similar to many other companies in corporate America. The difference is, Dell got exposed. Others won't be far behind.

So what drives this sort of behavior? One of the major culprits is executive compensation. Incentive plans that reward top executives based on the value of the share price is a recipe for disaster. The temptation to manipulate the books to prop up the stock price is very real when the executive stands to lose a boat load of money from reporting a quarter that missed "expectations". Yet most companies continue to reward their executives with stock options and restricted stock forcing executives to focus primarily on the stock price.

While it is important to continue to provide value to shareholders, short-term solutions that put the company at risk is not the answer. Top executives should be rewarded on revenue growth, employee retention, profit, leadership skills as determined by their employees, and ethical behavior as determined by an independent firm. These are things that will provide long-term value to the shareholders.

Taking care of the business will take care of the share price. A lesson many companies have failed to learn. It has already caught up to Dell, who is next?

Bonus Pay??

2007-03-31T08:39:00.000-05:00

Do you know the difference between bonus pay and variable pay? Chances are your bonus pay program is truly a variable pay program. Why does it matter? Variable pay that consistently falls short of the target is another way to tell you that you are being underpaid for your position.

A bonus is something paid to you that isn't part of your regular salary. It is an extra form of compensation (an addition to your regular salary).

Variable pay IS part of your regular salary. It is the portion of your regular salary that is "at risk" every year and often dependent on company and/or employee performance during the plan year. Of course your employer won't tell you that you have pay at risk. Instead they will often disguise this portion of your salary as a target in a bonus, incentive, or performance pay plan. Bonus, incentive, profit sharing, and performance pay programs are all just other names for a variable pay program.

To illustrate, company XYZ is creating a new position for a Director of Finance. The HR department at XYZ will determine how the new position fits within the company's pay structure. They then will recruit and hire for this position offering the new employee a compensation package and within that package will be a base pay component and a variable pay component.

Let's assume that the HR department at XYZ values the new Director of Finance position at $120,000 a year. Of the $120,000, the company will pay $100,000 as the base salary and the other $20,000 will be a "target" in a variable pay program. If the employee in the position averages $10,000 a year over a five year period in variable pay, then the employee is being underpaid by $10,000 a year.

It is important to know your compensation structure or the worth of your job in the open market. Consistently being underpaid is a bad career choice and a lost opportunity. If the company you work for makes it difficult to earn your pay at risk, then you are being underpaid for your position. Goals to make the variable portion of your pay need to be obtainable. Unfortunately, many companies do the opposite and put stretch goals in place for employees just to earn the variable portion of their pay. This allows them to underpay their employees year over year.

To learn a little more on compensation or how getting that little extra a year will increase your overall wealth, visit http://www.givemebigmoney.com/base_pay.html
and
http://www.givemebigmoney.com/pay.html

Goodyear

2007-03-19T05:43:00.001-05:00

As a follow up to a previous post - http://givemebigmoney.blogspot.com/2007/03/guerilla-recruiting-goodyear.html

Here is an excellent example of a company who puts the shareholder above the employee. Of course, the president owns quite a few shares so the decisions made by the Board that he is on impacts him in a positive way. To top it all off, Goodyear is on Fortune's "Most Admired Companies" list. Their industry rank for people management is 2nd! After reading this story, you decide if they really are doing a good job for their employees or a better job at brainwashing the public.

Goodyear Tire & Rubber Co. (GT) Chairman and Chief Executive Robert J.
Keegan received executive compensation valued at $11.7 million during 2006 even though the company lost $330 million last year. Yes, a 3-month strike contributed to this loss, BUT when a company decides to do away with their pension and make retiree health care more expensive, do you think a CEO deserves $11.7 million?

Keegan received a base salary of $1.13 million, a bonus of $2.24 million (for losing $330 million), equity awards valued at $220,800 (nice bump in net worth from cutting benefits for the employees) , and $8 million through Goodyear's executive performance plan ($8 million on a performance pay plan.....for what?) for the period Jan. 1, 2004, through Dec. 31, 2006.

When the company loses a good portion of their talent pool and doesn't perform as Wall Street expects, what's next? A big fat severance package? And how will they pay for that?

He also received other compensation worth $93,377. This includes $32,760 for a
home security system installation and monitoring expenses, as well as the cost
of an annual physical exam, personal use of company aircraft and annual dues
for club memberships. Again, Goodyear did away with their pension plan for non-union employees and increased the cost of retiree health care. Perhaps the CEO could have taken a cut in pay and eliminated some of his fringes to save the company some money rather than shoving all the costs to the employees. What kind of message does this send to his current and former employees?

Here is what the company is changing for the employees. Make sure you read the quote below about retaining talent.

 Benefit plan changes effective Jan. 1, 2008, include:

-- Increasing the amounts that current and future salaried retirees
contribute toward the cost of their medical benefits,
-- Redesigning retiree medical benefit plans to minimize cost impact on
premiums,
-- Closing the company's Medicare supplement plan to new entrants and
-- Discontinuing company-paid life insurance for salaried retirees.

The   pension changes include:

-- Freezing the current salaried defined benefit pension plans as of Dec.
31, 2008,
-- Replacing the defined benefit pension plans with enhanced 401(k)
savings accounts with varying levels of company contributions for
current associates beginning Jan. 1, 2009 and
-- Introducing company-matching contributions for the salaried 401(k)
savings plan at 50 percent of the first 4 percent of annual pay
beginning Jan. 1, 2009.

"These changes allow us to continue to provide the kind of compensation packages that are competitive and will attract and retain talented associates," said Kathleen T. Geier, senior vice president of human resources.

Really? So the company is going to reduce the compensation and benefit packages to save $90 million a year and they expect to attract and retain talent. Wow! What part of this math equation adds up to more for the employee that will make them want to stay? As far as attracting employees, if a company is "struggling", why would someone want a job at Goodyear? When they fail to please Wall Street, what will they cut next?

Brainwashing or looking out for their employees? You decide.

Floor Burns

2007-03-04T22:17:00.000-05:00

What are floor burns? Watch a college basketball tournament game and you will see players willingly suffer floor burns diving for loose balls. This is maximum effort.

Are your employees willing to suffer floor burns for the success of your company?

The competition for top notch talent is fierce. You need to go above and beyond as an employer if you want employees to do the same. So what can you do to get maximum effort from your employees?

Here are a few tips:

1. Recognize them for what they do. A simple thank you goes a long way.
2. Reward them with little extras. A gift card, a luncheon, or anything that simply says thank you is a very small investment. Don't bombard them with these types of extras or they will be viewed as an entitlement rather than something a little special.
3. Ask them, rather than directing them to do something for you. This style of delivery will earn you their respect. Employees want to do things for their boss. By asking them, they feel valued. Telling them what to do because you're "the boss" does not have the same touch.
4. Be upfront and honest. Your trust and credibility is at stake. People work harder for someone they trust.
5. Support and encourage their career development. The more people that get promoted from your team, the better you will be viewed as a manager.

As a leader, you have the opportunity to maximize what you can get out of your workforce.

These five little tips will have your employee's willingly diving on the floor for loose balls and suffering floor burns all for the success of the company.

Guerilla Recruiter

2007-03-03T09:12:00.000-05:00

Many recruiters are uncomfortable with Guerilla Recruiting. Why? They feel it is crossing the ethical boundaries of fair play. As a recruiter, you can' t think this way. To be a great recruiter, you need to be a Guerilla Recruiter.

Guerilla Recruiting is simply about taking talent from your competitor. Would you hesitate to take a big customer from a competitor? Why would you hesitate taking talent from them?

To survive and prosper in the business world it takes shareholders, customers, and talent. If you lack talent, you will lack customers and shareholders.

To illustrate my point, take a look at the baseball world. What team over the course of baseball history has the most championships? What team draws the most fans (customers)? Even if you are not a baseball fan you should know the answer is the Yankees. How can a team continue to excel year after year? What can a company learn by looking at the Yankee business model?

For starters, the Yankees pay their employees well and know how to hold on to their key players. They are a classic example of how an organization can utilize their pay programs to attract the best talent. If they want a player, they have the compensation plan to attract them. They offer players the opportunity to win a championship by employing a talented workforce around them. Add one of the best managers (strong leadership) in baseball and a great customer base (the fans) and you have an organization everyone is trying to catch up to. This is Guerilla Recruiting in the baseball world.

So what does it take to employ Guerilla Recruiting at your company? First and foremost you need to have great leadership. The leadership must have a strong commitment to make your place of business the best place to work at. Employees must have opportunities for advancement. You need a great compensation plan that includes lucrative bonuses for hitting realistic goals. Tack on superior benefits and you have all the tools necessary to attract the best talent.

Don't be afraid to employ Guerilla Recruiting. Business is about building a strong winning team and whipping your competition. Get the right players on your team and you will be the team to beat. You will reap the rewards by gaining market share and increasing your bottom line. Customers and shareholders will follow and want to be associated with your winning team.

Going back to the baseball analogy, who do you think draws more fans to the ballpark? The Yankees or the Royals? How do you turnaround a losing team into a winning team. Ask the Tigers. They hired a great manager and they aggressively recruited and paid for talent. The result was a winning team. Do you think their attendance increased any? You bet it did! The Tigers experienced a 27% increase in customers (attendance). What changed? They put a better team on the field. Winning starts with TALENT.

Talent = Winning = Customers = Shareholders. Notice what comes first in the equation.

Unfortunately many companies think it starts with the shareholders. They end up in a constant cost cutting mode to improve their bottom line. Eventually the team is depleted of their talent pool and the company ends up being a losing team that loses customers and shareholders.

Be bold and be different. This will set you apart from your competition. Be a Guerilla Recruiter and put your team on the path to winning.

Guerilla Recruiting - Goodyear

2007-03-02T19:04:00.000-05:00

Guerilla Recruiting is all about opportunity. Knowing where and when to cultivate your talent is the key to your success.

Here is a solid opportunity that a good recruiter will seize.

Goodyear decided to do away with the pension plan for their salaried workforce. That was great news for shareholders as it will save the company somewhere in the neighborhood of $90 million a year. BUT....how do you think the workforce is feeling? Tack on the news that they will have to pay more for retiree health care and you have a bunch of disgruntled workers looking to get out.

If you are a competitor of Goodyear, you have just been given a terrific opportunity to recruit talent away from them. Employees who have benefits reduced or taken away from them are prime candidates for the Guerilla Recruiter. Top notch employees with strong marketable skills will be available for the taking. Why? It is basic human emotion. No employee wants to feel under appreciated.

Need some ammo to fire up a recruit? Show them the Goodyear 2006 proxy and point out the current president has beneficial ownership of about 650,000 shares and he just increased his net worth by $1.6 MILLION in the last couple days by taking away the employee's benefits. Play this card to your advantage! The president and the Board get richer off the backs of their employees. Nothing will fire a recruit up more than that.

Stealing talent from a competitor offers three huge advantages over "regular" recruiting. You gain experienced talent in your industry, Goodyear loses it. You gain market share, Goodyear loses it. Finally, you gain a highly motivated employee who wants to crush one of your main competitors (Goodyear).

As companies continue to cut costs, opportunities to recruit top talent from your competitors will remain bountiful. Stay tuned.

Greenspan & The Economy

2007-03-01T06:11:00.000-05:00

On Thursday, March 1,2007; Alan Greenspan was quoted as saying that a recession in the U.S. economy is possible, but not probable. Way to take a stand Mr. Greenspan! Nice to see he hasn't lost his touch. So which is it?

It is inevitable that the U.S. will go into recession. The question is how deep into recession will it go and when will it happen?

The Federal Reserve has taken an aggressive approach on interest rates. History shows that rarely do they ever achieve a soft landing. At some point the multitude of variables that make up the U.S. economy will hit a rough patch and the economy will dip into recession.

So when will it happen? Greenspan has covered his bases well, but does offer some advice on where the US economy is headed. Reading between the lines, he is cautious on his outlook for the U.S. economy in 2007. The recent sell-off in the world markets is also flashing caution.

Will this be the year the economy finally goes into recession? It is possible...

Saving Money Using Direct Deposit

2007-02-28T19:06:00.000-05:00

Do you have trouble saving money? Do you live paycheck to paycheck?

Here is an idea that can help.

Have your employer direct deposit part of your paycheck into a separate account.

For example, assume you have a weekly net pay of $500. Take $10 a week and have it direct deposited into your savings account and put the remaining $490 into your regular checking account. Forget about the $10, you probably won't even miss it. After one year you will have saved $520 plus interest. Keep this up for two years and you will have over $1,000 socked away.

Take this idea a step further and set up a total of three extra accounts. Divide up your $500 paycheck. Deposit $10 in an emergency account, $10 for a Christmas savings account, and $10 into a regular savings or investment account. Each time you get a raise, put 20% of your increase in net pay towards your extra accounts.

Saving money this way is easy because it allows you to mentally separate your paycheck. Think of the extra accounts as a withholding tax to yourself. It may take a few weeks to get used to it, but you will learn to live without the money that is being "withheld" from your check.

This method of saving can get you ahead of the constant grind of living paycheck to paycheck. Give it a try!

Tax Refunds (Part 2)

2007-02-25T11:27:00.000-05:00

Big tax refunds are considered normal. Truth be told, they are a refund of what you overpaid on your tax bill for the year.

Do you overpay your electric or gas bill? How about your phone bill? Well, you shouldn't overpay your tax bill either.

Do you feel this is the only way you can save money? Will you spend it if it is in your normal paycheck?

If so, here are a couple of ideas that you can set up for yourself to "withhold" the money to you instead of Uncle Sam.

1. If your employer allows you to direct deposit your paycheck into more than one account, set up an account to have an equal amount deposited each pay into this separate account.

2. Set up a second account with your bank and have an equal amount automatically transferred to the second account each payday.

Either way, you won't see the money in your normal account. Ignore the fact you have a separate account set up. Instead of loaning the government money interest free, you will be putting it into your account to use later. You won't have to wait for a refund each March. It will already be there waiting for you to use anytime you want.

To calculate how much you should have withheld for yourself, have your tax preparer estimate your taxes for the upcoming year and change your w-4 with your employer. Take the extra amount that resulted from your w-4 change and put it in your second account. You are still having the money withheld, but this time it is to yourself.

Electronic Filing with Turbo Tax

2007-02-25T08:32:00.000-05:00

If you electronic file with Turbo Tax, be careful on what payment option you select.

At Turbo Tax, you have two options to pay your electronic filing fees. DO NOT select the option of having it automatically deducted from your refund. It will cost you an additional $29.95 to file your 2006 taxes this way.

Choose the payment by credit card option.

If you owe taxes, file it by mail....what's the rush?

Employee Loyalty

2007-02-12T06:29:00.000-05:00

People have a tendency to be loyal to the company they work for. And most do not want to hop from job to job. Those that leave on their own generally do so for a better opportunity, more money, or to get away from a bad boss.

While some companies discount the power of loyal employees, the smart companies embrace the idea. Experience in the job is invaluable. When something goes wrong, an employee can draw on that experience to quickly rectify the situation. The bank of information that they carry with them makes them much more efficient than a new employee. This cost is never quantified, but common sense will tell you that it can be significant.

Unfortunately in this era of lean and mean, experienced employees are seen as a big liability. Companies would rather pay a younger worker less money and lower benefits than to continue to pay more for an experienced worker in the same position. While they think they are saving money, in reality they are typically losing customers and productivity at an alarming rate.

A strong, dedicated workforce is a key ingredient to improve the overall health of a company. Sure you may pay more in wages and benefits (you get what you pay for), but would you rather lose productivity and customers? Treat your employees right and they WILL be loyal to your company and everyone will benefit.

Corporate Warfare

2007-02-10T08:13:00.000-05:00

Are you sick and tired of power hungry, big ego, out of touch people ruining the company you work for? Are you fed up with having money taken out of your pocket to make the rich even richer? What can you do about it?

Here is a tactic that may pay some dividends.

Write a letter to your top five shareholders. Explain to them what is wrong with your company and why.

Don't think they will listen? If you had millions invested in a company and disgruntled employees are complaining to you with facts on why their investment is under performing, wouldn't you listen?

You don't want to identify yourself in the letter because the employer will likely retaliate against you. Sign the letter as a concerned employee. Be genuine and stick to the facts. Stay away from name calling and write the letter intelligently.

The shareholder is THE boss. The CEO and Board of Directors must answer to this group of bosses. Keep them informed and it will help keep your senior leadership in line.

Opportunities in Guerilla Recruiting

2007-02-05T20:40:00.000-05:00

You won't find a much better opportunity to steal talent from the competition.

Dell - Here is a company that made almost $10 BILLION of gross PROFIT and 4.3 BILLION in operating income. So what does that earn the employees? Nothing! That's right, no employees are going to get a bonus this year. So, $4.3 BILLION isn't enough money to allow bonuses for the employees who put the hard work in and produced this profit for Dell? Talk about greedy. What is enough?

This is an example of a company who is punishing their employees to come up with a short-term solution to please their shareholders. Taking money out of the pocket of an employee is one of the worst moves management can ever make. Unhappy workers equal trouble for shareholders and great opportunities for the recruiter.

Dell employees have to be fuming over their lost bonuses. Strike while the iron is hot.

http://www.givemebigmoney.com/index.html

Guerilla Recruiting

2007-02-03T08:40:00.000-05:00

Do you know how to steal talent from a competitor? Great companies recruit talent from their competition. Not only do you get an experienced and hungry employee, you get your competitor's inside information along with their customers. It is a huge win in the recruiting war for talent.

Here are five top tactics that will destroy your competition and build you into a powerhouse organization.

1. To get someone to consider leaving an organization, you need to step up to the plate in the form of cash. Offer more than the other guy. This should be obvious. You may have to pay a premium to attract top talent if your competitor has a good base compensation program, but it will be a great investment. If your base compensation program is lacking, fix this problem first. Compensation is not a cost, it is an investment in talent. If you view compensation as a cost, rather than an investment, STOP READING. Nothing else in this article will help you.

2. Focus on the bonus program and fringe benefits. Bonus programs carry tremendous value with employees because the money is discretionary and improves their quality of life. Bonuses should not be entitlements, but the measures used to obtain bonus money should be reasonable and attainable. They also must be paid on time and in accordance with your plan parameters. Top it off with a great health care plan and a generous vacation policy and you will have the elements to attract the best talent around. Like base compensation, if these programs aren't world class, you must fix this problem first if you want to recruit the best talent. One thought on vacation policy, don't expect an employee with 5 weeks of vacation at their current employer to leave and than follow your policy as a new hire. This is idiotic. Give them as much, or more, than what they have now. Offering them less will make them reject your offer. To make matters worse, they will spread the spread the word at how cheap you are. Not exactly the image you want to portray for a world class organization.

3. Find the best middle manager at your competitor. This person may be disgruntled or they lack the opportunity to move up in the organization. You may ask why would I want a disgruntled employee? Revenge! Chances are that this manager is in a situation that is far different than what they believe is right. These people are great employees that are simply frustrated with their current situation. They could be disgruntled because their current employer isn't compensating them fairly, not paying earned bonuses, oppressing their creativity and suggestions, not treating other employees fairly, etc. This is your diamond in the rough employee. You pluck this one from your competitor and you will hit the big one and gain a serious advantage. Why? Not only will this manager be extremely motivated for a better opportunity to employ their ideas and get paid for it, they will bring their best employees with them. You will cherry pick your competitor's best talent and bring them to their knees! You will have to pay a premium to get this type of employee, but the return on investment will be astronomical. Imagine gaining your competitor's secrets AND taking their best employees from them. JACKPOT!!

4. Find a top sales person at your competitor. Steal this employee from your competitor and you get a big book of their business. You pick up market share and get a top sales person. Again, you will have to pay a premium for this employee, but the return on your investment will be tremendous. Here is another opportunity to steal multiple top sales reps from your competition. ANOTHER JACKPOT!!

5. Hang on to your good employees. Pay them well and give them the FREEDOM to make things happen. Great employees are like owners of the business. Treat them like gold and you will have a pot of gold for profit. Micro-manage them and watch them leave. It doesn't do you any good to bring top talent in and run an organization poorly. You must provide ample opportunity, money, and great leadership. These are the top reasons why people leave a company. They will leave yours just as fast if these things are not part of your organization. Money, opportunity, and great management will build a fortress around your organization. Don't let your competition steal talent from you.

An aggressive recruiter needs to have the right tools at their disposal. If your company is struggling in the talent department, you need to examine and build programs that are better than your competition. You need to have the best compensation plans, ample opportunities for growth, and great management. If you don't, no recruiter can help you. Great employees will leave for better opportunities.

Win the war on recruiting and ascend to new heights as an organization.

Make money when the stock market goes down

2007-01-30T19:38:00.000-05:00

Ever wonder how people make money in the market when the stock market goes down?

One way to do this is to execute a short sale. A short sale is just the opposite of buying a stock. You are speculating the stock is going to go down rather than up.

Let's say you are looking at ABC stock and it is trading at $50 a share. Maybe it has had a nice run up or you think the stock price is too high. To take advantage of the decline in share price, you would execute a short sale. If the price declined to $45 a share, you would profit $5 per share (less commissions).

In order to sell a stock short, you first must open a brokerage account and be approved for a margin account. Once you are approved you would place an order to "sell short". The broker will then borrow the shares for you to sell in the open market. The selling proceeds go to your account.

When the stock declines (hopefully), you purchase the shares back from the market and return the borrowed shares to your broker. You enter an order to "buy to cover" your short sale to execute this transaction. The difference between the selling proceeds and what you bought it back for will be your profit or loss.

That is just one of many ways to profit from a declining stock market.

Investment Options

2007-01-29T06:27:00.000-05:00

Do you understand all the investment options that are available to you?

Before you invest a dime of your money, you will need to understand that each investment has a risk/reward value tied to it. Below is a summary of investment types from conservative to aggressive.

Money market accounts, bank savings accounts, and CD's. These investments are very stable investments that protect your principal.
Bonds carry a little more risk/reward value. The best time to invest in bonds is when interest rates have peaked and are on their way DOWN. Sounds strange, but bonds increase in value as interest rates decline. Bonds have varying degrees of risk depending on who issued the bond and their ability to make good on the debt.
Real Estate can be a great investment, but contrary to what many people think, this investment can be very risky. Real estate is subject to market conditions like any other investment. Unlike many investments, liquidity (ability to convert to cash quickly) is a problem.
Stocks (or equities) can be conservative to very risky. There are many strategies out there for investing in stocks. If you don't have a lot of money to invest , your best option is to purchase shares in a mutual fund that invests in stocks.
Options are becoming a more popular investment. This should not be confused with "stock options". Stock options are a form of compensation that an employer grants. With options you have a multitude of ways to make or lose money. The beauty of an option is that you have limited risk (the price of an option). The negative side to this type of investment is that it expires at some date in the near future. If you would like to learn more, visit http://www.cboe.com/
Currency trading is something most people are unfamiliar with. You can pile up gains and losses very quickly because it is a highly leveraged investment. For the beginner, the "mini" account will allow you to trade currency for as little as a $50 investment. The leverage on the investment can be up to 200 to 1. For $50 you can control a $10,000 "mini" contract. If the $10,000 mini contract were to gain 1% in value, you would triple your $50 investment. Of course if the contract lost 0.5%, you would lose your $50. Learn more about currency trading at http://www.fxcmtr.com/index.html
Commodities trading is at the bottom of the list. Not many people can afford to invest in things like oil and orange juice. These investments can produce substantial gains and losses. Like currency trading, you can control a very large investment for a small outlay of cash. This is not an investment to put your nest egg in. Someday when you have built a substantial net worth, you may want to give it a try. This type of investment is not for beginners or those with a weak heart.

If you don't have a lot of time to devote to researching good individual investment opportunities, you should invest in a mutual fund or two. The advantage to investing in mutual funds is that you have a professional team of investors working for you.

A mutual fund pools money from many investors and purchases a basket of investments based on the intent of the mutual fund. The investments can be very aggressive, very conservative, or somewhere in between. They can invest in bonds, stocks, real estate, etc. , or a particular sector, like health care. The overall risk of a mutual fund is dependent on what they invest in and how well it is managed. Morningstar is a great place to learn more about mutual funds and their performance. Visit http://www.morningstar.com/Cover/Funds.html to view more on the subject.

Depending on your goals and your tolerance for risk, there is an investment that can fit your personality and needs. Before investing, make sure you understand all the risks. All investments have the potential to lose money. Keep an eye on fees, penalties, and commissions as they can erode away at your profits or add to your losses. Practice good financial habits and you will be on your way to saving some big money.

To learn more about investments, try this site out. http://www.investopedia.com/

For more ideas visit http://www.givemebigmoney.com/

Tax filing status

2007-01-24T22:53:00.000-05:00

Many people have more than one filing option available to them. Choosing the wrong one can cost you a bundle.

Single - This one seems pretty simple, but if you are married and separated, this filing status could apply to you. You can be legally married, but for tax purposes you could be considered unmarried if certain conditions apply. The parameters that consider you unmarried are contained in IRS Publication 501. Visit this link for more information.
http://www.irs.gov/publications/p501/ar02.html#d0e1485

If you are married for tax purposes, you have two choices on your filing status. Married filing jointly and married filing separately. In most cases, filing jointly will provide you a much better benefit. The status of filing separately is restrictive and eliminates or reduces some common deductions and credits.

There will be instances where filing separately will produce a better benefit. For example, in the state of Ohio you will generally get a better benefit on your state taxes by filing separately. Your Ohio filing status has to match your filing status on your federal return. You may pay more in federal tax, but what you saved on your Ohio taxes could be enough to offset it providing you with a greater overall refund or lower overall tax bill. Ohio has a progressive rate structure with no penalty for filing separately. They actually encourage it for the savvy tax person. I am not sure why Ohio lets this happen because the net result will mean more tax dollars for the Federal government and less for Ohio.

The last filing status, and this one causes the most confusion, is Head of Household. You must be unmarried for tax purposes and have a "qualifying person" in order to use this filing status. The most common use of this status is for a single mother or father with a child that fits the definition of a qualifying person. A lesser known use is if your parent is a qualifying person. If you are taking care of a parent and qualify for the Head of Household filing status, make sure your Tax Preparer is aware of you situation. The tax rates are significantly better for Head of Household than it is for the Single filing status.

Life insurance

2007-01-24T22:41:00.000-05:00

Do you know why you need life insurance? So many people buy life insurance for the wrong reasons and most people that truly need it rarely purchase enough.

Life insurance is not for yourself. If you are single and have no dependents, spending money on a huge amount of life insurance is a waste of money. If you have a family with young children, then you should be heavily insured on life insurance.

Life insurance is for your family to replace the loss of income that the household unit will lose if something happens to you. It should be able to cover your outstanding debts and provide living expenses for your family.

What is the best type of life insurance to buy? TERM life insurance is the cheapest and the right product to buy. Do not buy policies that have a cash value or some sort of "investment vehicle" built into it. Keep your investments separate. There are plenty of great mutual fund companies out there that will provide a substantially better return on your money. See an example of how a better return on your money will add up to a fortune in the long run. Visit http://www.givemebigmoney.com/pay.html

When shopping for life insurance make sure that the company is financially strong. Click here http://info.insure.com/ratings/ to check out the financial strength ratings for over 4,000 companies.

How should you calculate what you need? Here is a good place to learn more.
http://www.smartmoney.com/insurance/life/index.cfm?story=intro

Adjustable Debt Instruments

2007-01-24T19:48:00.000-05:00

Have you ever gotten a credit card bill or your mortgage statement and had the interest rate or payments go up? Unless you pay close attention, you may not notice it on the credit card bill, but I can bet you would if your house payment went up.

Adjustable or variable rate credit cards and adjustable mortgages can put you in a world of hurt if interest rates go up quickly. The low interest rates that teased you to apply, can turn your payments into an albatross.

Adjustable or variable debt instruments are tied to an index, such as the LIBOR or Treasury Bill. As interest rates rise, so will your adjustable mortgage and variable rate credit card. If you don't understand how these instruments work and what makes them move up or down, you will be better off with a fixed interest rate.

Do your homework prior to applying for a credit card or any other type of debt. Understand what type of debt you will be taking on and how your payments will change over time. Pay it off in the shortest amount of time and limit your exposure to any long-term debt. Good discipline and good habits will result in a stronger financial future.

For more ideas on getting the most from your money, visit http://www.givemebigmoney.com/

Cost Basis

2007-01-24T19:14:00.000-05:00

What does cost basis mean? During tax time, this is one area where taxpayers make mistakes. Some of these mistakes will even garner a visit from the IRS. If you invest in anything, you need to know how to accurately calculate your cost basis. You also need to keep accurate records to prove how you calculated your cost basis.

The cost basis is what you paid for your investment, plus any commissions and any other purchase costs. If your investment is subject to depreciation (i.e. rental real estate), this would reduce your cost basis. Your taxable gain or loss on the sale of the property will be calculated as your selling proceeds selling costs less your cost basis.

Especially troublesome is when an investor participates in an employer sponsored stock purchase plan or decides to put a monthly amount into a mutual fund. Ten years later when they need the money, they sell their shares. The taxpayer takes their tax return in to be prepared and the Tax Preparer will then want to know what the cost basis is so the gain or loss on the sale of the investment can be determined.

Let's say you have an automatic deduction taken from your paycheck each pay period and you are investing in your employee stock purchase plan. Each deduction from your paycheck will result in a separate purchase of shares of stock. It is your responsibility to keep accurate detailed records for each purchase. You will need this information when you sell the stock. Don't assume the company will keep these records for you. It isn't their responsibility to do so. It is in your best interest to keep records of each purchase so that you don't pay too much tax when you sell the shares.

If you have to reconstruct 500 tiny purchases over a period of 10 years....well, it won't be fun. Remember to keep all records of purchases and sales of any property. It will serve you well, keep you from paying too much tax, and protect you in case of an audit.

Telephone Excise Tax Refund

2007-01-19T06:52:00.000-05:00

A little extra bonus will be added to our tax returns this year. This is a one-time payment available for the 2006 tax year. It is a return of previously collected long distance telephone taxes.

For more information, visit http://www.irs.gov/newsroom/article/0,,id=164032,00.html

Do you want to know why we are getting this refund? Check out these stories.
You might be interested to know the reason!
http://www.marketwatch.com/news/story/end-long-distance-tax-brings-up/story.aspx?guid=%7B932C0308%2D78A4%2D48B4%2DBAA7%2DB719EF9897E6%7D

http://www.marketwatch.com/news/story/long-distance-callers-have-some-money/story.aspx?guid=%7B30B70EC3%2D2344%2D4635%2DB8FC%2D879B638AD8D9%7D

For more information you can use, visit http://www.givemebigmoney.com/

Tax Terms for Beginners

2007-01-16T19:25:00.000-05:00

Are you confused by tax terminology? Here are a few basic terms to get you started.

Adjusted Gross Income [AGI] is all of your income adjusted for a handful of items. If you contributed to an IRA, paid alimony, or have school loan interest. These items are reductions to your AGI.

A standard deduction is based simply on your filing status (joint, single, etc.). Alternatively you can itemize your deductions. You use the deduction that provides you the greatest overall benefit.

Itemized deductions are deductions that are allowed in the tax code to reduce your taxable income. Examples include your mortgage interest, real estate taxes, state and local taxes paid in the current tax year.

Exemptions are like deductions. You generally get an exemption for yourself. If you are married, have three small kids and you file jointly, you will get an exemption for each person. In this case you would have 5 exemptions. Exemptions, like deductions, reduce your taxable income. Each exemption is assigned a value. You multiply the exemption value by the number of exemptions. The total will be used to reduce your taxable income.

Taxable Income is your Adjusted Gross Income less your deductions and exemptions.

Tax - Once your taxable income is determined you then compute the tax owed on this income. The IRS provides tax tables for this. It is simply a matter of locating your taxable income amount on the tax table.

Credits reduce your tax. They are different than deductions and exemptions. For example, if your tax is $2,000 and you have a credit of $500, your tax will be reduced to $1,500. Common credits are the child tax credit, education credits, and the credit for child care expenses. Credits reduce your tax, dollar for dollar.

The most important concept to know is that a tax return filing is a reconciliation of what you owe for the year versus what you paid in. A large tax refund means that you loaned the government your money interest free. See my earlier post [Tax Refunds] on 1/13/07 for an idea of what you can do with your refund.

For more ideas, visit http://www.givemebigmoney.com/
For more tax information, visit the IRS website at http://www.irs.gov/

Management skills 101

2007-01-15T18:41:00.000-05:00

Are you a manager, but not getting the type of results you want? Not sure what the problem is?

How do you treat the people that work for you? Do you know what they think of you as a manager? Are you leading them or just telling them what to do? Your employees will make or break you. If you don't have the support of your people, you won't get the most out of them.

Forget the textbooks and seminars. Management is all about how you interact with people and how you treat, support, and develop them.

Every employee is different. Each one needs to be managed in a different way. They have different emotions, passions, and thoughts. Some are creative and some like to work in their cube and be left alone. Some hate to be micro-managed, while others will need your constant attention. Your employees are your center of the universe. You, as a manager, need to understand them. Get to know them inside and out. Find out what makes them tick. Delegate work to them and give them a chance to grow. Remember you are managing them. Be there for them when they make a mistake. Let them make mistakes. Let them learn and grow.

Your primary job as a manager is to motivate, empower, and engage them in the success of the company as well as the success of whatever you are responsible for. You need to cultivate ideas, give them credit, back them up, and stand behind them. You need to be honest and sincere and they must know and believe that you are.

Finally, never lose your credibility, NEVER! The minute you do, you will lose the most valuable resource you have as a manager....YOUR PEOPLE!

How to save money

2007-01-15T06:03:00.000-05:00

Do you have more debt than you want and a lot less saved than you want? Do you want to know how to get out of this trap?

First of all, write down what you want to accomplish and set a series of goals. Why write? Because that piece of paper will act as a reminder of the commitment you made to yourself. Post it where you will see it each and everyday. This constant reminder will help keep you on the right path.

OK, what should you be striving for? Look at your debt. List each bill by interest rate in order from highest to lowest. For example, if you have three credit cards, a car payment, a school loan, a home equity loan and a mortgage, the three credit cards would more than likely be on top and followed by the car loan, home equity loan, mortgage, and school loan. You also need to take into consideration which of these payments are tax deductible. A mortgage payment at 6% is not really 6%. If you have a marginal tax rate of 25%, the rate is really 4.5%.

Next write down what bills you have to pay. This would include such things as your utilities, insurance, real estate taxes, etc.

Now list the items you commit monthly payments to that are discretionary. Items might include your gym membership, Internet service, and magazine subscriptions.

What's next? You will need to set aside a budget for groceries, gas, and entertainment.

Finally, what is left? All the previous steps include opportunities to reduce your overall expenditures. But you are just trying to get organized for now. From what remains, you will need to have an emergency fund equal to 3 to 6 months of your take home pay. You should also be contributing as much as you can to your 401k. Once you have an emergency fund, you need to start directing money to an intermediate savings fund. In this case, intermediate is between emergency and retirement.

Take what is leftover each month and assign a percentage to go to your short term emergency fund, your 401k, and debt reduction. For example, you have $100 left at the end of every month. Take $33 and apply it to the emergency fund, take $33 and pay extra on your highest credit card bill until it is paid off, and put the remainder ($34) in your 401k. In the meantime, look for ways to save on what you owe. When you get your tax return, a raise, or an annual bonus, apply it in this manner. Soon, you will be on your way to financial freedom.

TIP - What is the best way to force yourself to save? Does your employer allow you to split your direct deposit into multiple accounts? Setup another account for emergency funds and direct deposit a portion of each check in that separate account until you reach the desired balance. Then do the same for getting your intermediate savings fund started.

Stay tuned for more money management tips that will improve your overall financial health.

Increase your 401k

2007-01-14T20:35:00.000-05:00

OK, so you managed to get a 5% annual pay increase. Wonderful! Now what do you do with it?

Here is a simple strategy that can reap huge rewards.

Each year you receive an increase, add 1% to your contribution rate until you are contributing the maximum amount every year. You won't miss the portion of your raise from your paycheck because it was never there to start with. Don't wait to implement this strategy because once it gets into your paycheck it will likely stay there. If this happens, you will miss your best opportunity of the year to increase your 401k contribution rate.

Commit to this strategy and someday you will be glad you did. With pensions disappearing and the future of social security looking dismal, the 401k will be far and away the most important vehicle for retirement planning. This puts much more pressure on you to develop a solid savings strategy. This one is simple.

Always look to gain that extra percent. See an idea of how saving a little extra now adds up big later.

Visit www.givemebigmoney.com/pay.html

Pay raises

2007-01-13T18:11:00.000-05:00

What was your annual increase this year? Is it what you expected? Do you want to know how to improve your performance rating and get a bigger pay increase?

As an employee, you have to be pro-active and be prepared to tell your boss exactly how you have performed for the year. I know what you are thinking, isn't that the responsibility of my manager? Here is the problem with that kind of thinking. Your boss only knows how a fraction of your day is spent. You need to fill in the blanks.

How can you improve your chances for a higher rating and a better pay increase?

First, understand what you are being measured on. Ask your manager questions on how each measure will be evaluated.

Second, get your manager to explain in detail what you need to do to get the highest rating for each measure. Your goals should be specific and give you the opportunity to exceed them. Get your boss to be specific. By doing this, you help eliminate the gray area in a very subjective rating process. You will know exactly what is expected and how to exceed those expectations.

Third, and the most important, keep a file (don't rely on your memory) that supports how well you did at each measure. When you are reviewed, your manager will be amazed at how well prepared you are. This tells your manager how serious you are about your performance and career development. It will also give you the necessary ammo to persuade your manager to rate you higher.

Fourth, accomplish your goals and be prepared to remind your manager that you accomplished exactly what was expected of you in order to exceed expectations.

By following these steps you will greatly improve your odds for getting a better performance review and higher pay increase.

Don't think a percent or two will make that much of a difference? See the example on: www.givemebigmoney.com/pay.html

Tax Refunds

2007-01-13T12:55:00.000-05:00

Well, it is that time of year again. Time to start thinking about filing your tax returns. If you typically get a huge refund, it is time to change your ways. I know, you wouldn’t be able to save the money any other way, right? Read on my friend.

If you typically have trouble saving money and use your tax refund as a savings vehicle, consider this alternative.

Assume your typical refund is $2,000 a year. Instead of loaning it to the government, put it to work for you in your 401k plan. By increasing your 401k contribution rate enough to invest an extra $2,000 each year you will increase your retirement nest egg considerably and save money on your taxes.

EXAMPLE: You are paid twice a month and earn an average of 9% on your 401k. After 20 years, the $40,000 you added to your 401k plan will grow to $106,688. After 30 years, your $60,000 would grow to $284,253. Not too bad, huh?. Oh by the way, if your federal and state marginal tax rate is 30%, you will save an additional $600 a year in taxes.

Tax services that promote huge refunds are doing you a disservice. When you file your taxes at the end of the year, it is a reconciliation of what you owe for the year versus what you paid. You should come as close to zero as possible.

Refunds are nothing more than repayments of a loan (WITHOUT interest) that you made to the government. If you are in the business of loaning money for free, I will be happy to hold your money for a year and return it to you the following March.

For more information on how to get the most from your 401k, visit www.givemebigmoney.com/401k.html

PBGC

2007-01-13T12:47:00.000-05:00

OK, who has heard of the PBGC? Anyone?

If you have a defined benefit pension plan, you should know what the PBGC is. It stands for the Pension Benefit Guaranty Corporation. This organization helps protect pension plan participants from companies who do not live up to their promises.

There are 1,111 companies that are more than $50 million underfunded in their pension plans. Many employees won’t find out about their pension problems until it is too late.

When a plan is taken over by the PBGC, you stop accruing benefits. So if you are still 15, 20, 25 years from retirement, you will only get a fraction of the benefits you were counting on. There are limitations to what the PBGC will be responsible for. To make matters worse, for the fiscal year of 2005, the PBGC had a net financial position of negative $23 billion! What happens if the PBGC doesn’t recover from this deficit?

Pensions are quickly becoming a thing of the past.
When will the American worker say enough is enough? Aren’t you tired of being taken advantage of by corporate America? How did companies continue to underfund their pensions and get away with it? Look at the latest news, the Delta Air Lines Inc. Pilots Retirement Plan covering 13,000 active and retired pilots was just absorbed by the PBGC. This plan was underfunded by $3 BILLION. How can these things happen? When is enough, enough?

To learn more about pensions, visit www.givemebigmoney.com/pensions.html