Who’s to blame for the worst economic crisis since the Great Depression?

Warning… long rant ahead.

Have you heard the latest bad joke around? Okay not this bailout crisis joke I wrote about a week or so ago but the one on how we’re socializing our financial markets by making the taxpayers bail out all our financial institutions. As someone put it, “this is a form of wealth distribution alright, the government robbing from the poor to give to the rich….”.

So when will this nightmare of a crisis end? Sure we’re shoring up our failing banks and institutions right now, and even possibly certain vital industries that are the heart and pulse of our nation. But, I also see the flip-side, which is the fact that we (and our kids, and maybe even our grandkids) will be paying off for this till kingdom come, with the whole thing financed by our debt to foreign interests (e.g. Chinese).

This soap opera can’t be without its sorry cast of characters.

Golden Sach’s Bailout Man: Henry Paulson and George W. Bush, by Buckfush

Big 3 take private jets to grovel for cash, by Daily News

Capitalism Gone Awry

I wonder: how naive have I been? I am big on capitalism and believe wholeheartedly in rewarding anyone for the work they’ve done and value they’ve produced. I’ve always been of the mind that, if a CEO does well by his company and makes me happy as a stockholder, I have no qualms in approving a commensurate pay package for the geezer.

I’ve always been a proponent of self-regulation and a laissez faire economy, but this very thing has led to the disasters we’re seeing today. Now with the government sweeping in to save “the big guys” from themselves and their gross mistakes, I see that apparently, self-accountability is optional in this free market. Very interesting what this blog has to say:

Now consider: finance is a necessary function, but is represents a tax, a drain on the productive economy, just as defense and lawyers do. It is ironic that free market fundamentalists have so vociferously argued for unfettered markets, without understanding (or perhaps understanding all too well) that the house always wins.

The whole crisis has caused a very large swing from one extreme to another, the moving pendulum leaving behind much collateral damage: credit’s gone from very loose to extremely tight overnight.

Some people who had access to a lot of credit will correctly have a lot less, and that on dearer terms. But there are also perfectly worthwhile businesses and individuals who are also caught in the meat grinder of indiscriminate reduction of loan balances. Times are bad, and any efforts to extract more revenues from customers, even if it is blood from a turnip, or worse, even if it puts a viable business under, is warranted.

Silly me to have been so gullible, as I now stand confused about what should be done and how the economy should be run. It doesn’t help that I keep reading stuff like this to feed my migraines and sour stomach bouts.

How This Economic Crisis Is Breaking Financial Rules

What stance do I take now, as a die-hard pro-business supporter? I had placed my faith in the “powers that be” and didn’t think I’d ever see these levels of corruption, unchecked greed and blatant mismanagement in a first world country on this grand a scale (yes, I say this as someone who’s no stranger to the machinations of the third world, where corrupt ineptitude is rampant). This stuff happens, sure enough, but it happens in another world, and under the covers.

But there’s no hiding the ugly anymore. All I can see now is just how the ruling class has done a number on the working masses. And for the millions of people who followed the financial rule book throughout their lives to meet a horrible end to their futures because of the incompetent, morally degenerate few — well, I can say I’m beyond disappointed, and have crossed the line to feeling outrage and disgust.

Yes, this crisis is breaking all sorts of rules, including those I’d consider as long-standing successful personal financial tenets. Responsible approaches to personal finance don’t have a chance against a crisis of tsunamic proportions:

So let’s see — doing the right thing by scrimping, saving, investing, diversifying, doing proper asset allocation, avoiding market timing, indexing, and hedging against inflation through equities, even doing your job well will no longer guarantee you a splendid, worry-free financial future. Not when a “once in a century financial event” can just come by and rob you off the stuff you worked so hard for; not when someone “up there” can change the rules for you, just like that.

I didn’t necessarily see it coming, but some of my readers here have: I see just how observant readers have been, as they’ve shared their insights on the causes and consequences of the subprime mortgage financial crisis, the pros and cons of financial bailouts, and the relevance of market timing during a stock market bear and the current investment climate.

The Economic Crisis Calls For Faith: Do You Have Any To Spare?

Perhaps I’ve placed far too much faith in the integrity of our political and business leaders and trends in modern history to believe that our financial system was strong enough (and people were smart and honest enough) to absorb any shakeups, shocks and imbalances that happen. I still have hope, but recent events continually call to question my position in this matter.

Not long ago, I had asked: who’s to blame for the subprime mortgage mess? I said then that everyone here had a hand in this (from the mortgage lenders to the developers to the Fed to ignorant homeowners), but in reality, I’m now seeing where the bulk of that blame should go. It should be clear by now who should bear the brunt of your harsh judgment: follow the money.

Sure we (as the little people) can’t really do much about this (except whine, rant and call the villains out), but with more discussion, we can spread awareness of these ridiculous affairs. What I got out of this is that there’s little out there we can count on and few people we can trust when it comes to our finances. A sobering thought. Do you think there are really any lessons and takeaways here for the future? Do we even have much of a future the way it’s been mortgaged?

I welcome your thoughts on this matter. Fire away!

This is a post from The Digerati Life.

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From Seeking Alpha’s Sound Money Tips . . .

” . . . Don’t put originals wills, trust instruments, or powers of attorney in a safe deposit box. Instead, keep these in a fireproof safe at home or at your attorney?s office.

Why? When someone dies, a safe deposit box may be sealed for weeks, which could result in result in delays. You might even have to spend money securing a court order to open the box. Further, and here’s the Catch-22: the will’s executor will not be able to get to the box without the will that shows that he is indeed, the executor, resulting in headaches and delays.

So, just to be clear: Don’t put original copies of legal documents in a safe deposit box if they will be needed by anyone who cannot gain access to them. As we said before, feel free to put copies of legal documents in the safe deposit box . . .”

Good info. Of course, if you don’t have a will, that’s your first priority!

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Below is an email interview with Brent Kessel, author of It’s Not About the Money: Unlock Your Money Type to Achieve Spiritual and Financial Abundance*, a book that I reviewed earlier this week.

Why did you decide to write a book?

Without wanting to sound cliché, I never really feel like a made the decision. I had observed so many people suffering around financial issues, and barking up the wrong tree, as it were, that I felt compelled to write it. It was one of the easiest things I?ve ever done professionally.

What do you think is the number one reason people fail financially?

They don?t understand what payoff their financial habits are giving them. If they?re chronic overspenders, there?s a need that their purchases are filling, an emotional need, and buying purses or cars or new furniture allows them to feel good about themselves for some time. In order to change the financial habit, they have to replace the payoff with some other payoff that fills the same need. But most people never question what?s motivating their financial habits.

You say in your book that the ideal person would be balanced among the eight financial archetypes. How do you recommend a person obtain that balance?

It?s very difficult work, but very rewarding. It?s very hard to answer this question in a generalized way, which is why there are about 60 highly customized exercises in the book, so that each archetype can create the balance that they need. One way to say it, is that we often need to cultivate the positive attributes of the archetype which is most dormant in us. So for me, that?s mostly been the Innocent. Being willing to have faith and trust that things will work out, without putting quite so much focus on the numbers, given that I?m a Guardian/Saver/Empire Builder predominantly.

Which of the eight archetypes do you think is most prevalent in today?s society?

Pleasure Seeker and Innocent were prevalent until Summer 2008, which is why we?re in this mess. Today, it?s much more Guardian and Saver. People seem to be returning to the values of the ?30?s ? 50?s, but we?ll see how long that lasts.

How do you explain the archetypes to your clients?

I usually don?t. This is part of why I wrote the book, so that they could read the complete story about each archetype in there. As an example, I?ll more intuitively give a client ?homework? to spend more money on things which bring sensory pleasure, in the case of an overly frugal Saver, or have an Innocent hire a bookkeeper or sign up for an internet-based service like mint.com which shows them where the money?s all going.

What is the typical response from your clients once they learn about the different archetypes?

?Wow, I had no idea you had me so pegged.?

Do you ever have clients who deny the findings?

?Not really. The most I?ve had is someone who felt they couldn?t find themselves in any of them, which is usually a sign of the Innocent. Some people feel that they?re a balance of many, or that it?s constantly changing. Both of these are good signs.?

Once you know a client?s financial archetype, how do you cater your financial advice to fit the archetype?

Again, this is very customized. The Appendix of the book has specific financial planning recommendations tailored to each archetype, and it?s many pages, so it?s hard to summarize. But one example might be to have a Pleasure Seeker sell their vacation home and art collection and deploy that money in more income-producing assets (which don?t produce sensory pleasure), like stocks, bonds, or income properties.

Since writing the book, do you find yourself trying to figure out the archetypes of the people you meet?

Sometimes. It?s mostly intuitive though. If you go to my first MSN story, there?s a video of me walking around Central Park interviewing people and guessing their archetypes. Kind of humorous. The other stories there may give you some good blogging ideas too.

Finally, is it natural for a person?s archetype to change over the years or do people tend to stay the same throughout their lifetimes?

The healthiest people I?ve met with money are able to express different ones at different times. But there?s a whole class of people who, especially when the going gets tough, go back to their tried and true archetypes. Financial habits are hard to break, because unless we very intentionally try to cultivate those which have been dormant, they?ll stay dormant.

Thanks, Brent!

Also, I want to go ahead and announce the winner of the “It’s Not About the Money” book giveaway. There were forty-nine entries and the randomly-selected winner was commenter #31, Walter. Congrats, Walter. I hope you enjoy your book!

I have another giveaway coming up soon. Stay tuned…

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My wife has wanted to move into town for quite some time so that she can be a little closer to friends and to our other activities.  I’ve been reluctant to move for a few reasons.  First, I think if we bought now, it would be like trying to catch a falling knife.  Second, it would be a longer drive to work for me.  Third, I don’t like change.  (None of these are her fault. )

And just as much as I feel pressured when my wife tells me about a good house that’s come up for sale, she probably feels frustrated by my reluctance to take any serious action on it because “this is just the beginning of the downturn” and “there will be more, and better, deals later.”

Actually, regardless of how far I feel the housing market is going to go down, I don’t really know.  I can get warm fuzzies that it’s getting to be more of a buyer’s market, but I won’t really know until I start tracking home prices.  Tracking prices is pretty straightforward, and has some advantages:

• It’s easier to recognize a deal when it comes along.  There is a huge amount of information literally a mouse click away, and tracking the price of desirable houses over time shows clearly what these houses were being offered at.  Rather than sensing that a house is a good deal, I can see that it is.
• It’s active.  It’s searching with a purpose.  It’s still basically window shopping, but I know which stores I’m going to. 
• It’s focused.  We’re looking for a house to move into.  This narrows our search and makes it more time-effective.

Here’s how we’re going about it now:

1. I signed up for an account at Realtor.com.  This allows me to save searches — and have daily or weekly e-mails sent to me — filtered by ZIP code, price, number of bedrooms, etc.
2. Since my wife is pickier (!) she chose the acceptable candidates among the few dozen houses that met the search criteria that Realtor.com allowed.  We could have fewer results to go through if we filtered by square footage, but not all of the listings include a square footage.  So, we pile through some more listings but turn up a few more candidates.  We eliminate most split foyers since she really doesn’t like those.
3. We build up a spreadsheet with the following columns:  ZIP Code, Address (to identify the house), Subdivision, Bedrooms, Bathrooms, Square Footage, Basement (no, yes, or split level), Garage (no, one-car, or two-car), and Asking Price.  We make one row per house, and add columns at the end to track the asking price over time.  We also list the houses that meet the search criteria but don’t meet our criteria so that we don’t have to re-visit those listings each week.  The columns are the criteria that are important to us; if you do this, you may have other columns you want to consider.
4. Houses keep getting prices added as long as they’re listed.  If they’re taken off, then we keep them to see if they come back on again.
5. Later we may add houses listed for auction or on other services, since some sellers are going the route of national real estate listing without the commissions.

Here are some of the measurements that can be done from these numbers:

• Number of listings.  The number of listings can fluctuate with the seasons (winter is slower).  If prices are going down for similar properties, or if the prices for properties we’re following are going down, then an increase in the number of listings could be good, as it means people are coming to their senses and trying to sell for what they can get.
• Time on the market.  We’ve gotten a few new listings, so we can see how long they stay on the market.  Knowing this would help us should we want to make an offer.  If the house has been on for a good long time, we can offer more aggressively (lower).
• Price per square foot.  This is a rough measure but a useful one.  If we really can buy more house for our money, we should see a reduction in the price per square foot.

The nice thing about this method is that it’s free.  Once we get the hang of this and get closer to making a decision we may sign up for www.RealtyTrac.com to get a handle on foreclosed and bank-owned properties.  We’ll probably pull the trigger on this when we are in a better position to make offers.

Tracking prices takes a little time but I’m sure this will help us to make a wise decision when we decide to look in earnest.

Frugality is quickly becoming a buzzword in America with people’s retirement dreams taking a bit of a detour into a ravine — and right before the holidays, too.  How very inconsiderate.

Here are a few tips and tricks for descroogifying what might be more modest holidays:

• Check out the library and paw through some December family-oriented magazines. Ones like Redbook, Family Circle, and Ladies Home Journal regularly have articles with lists of frugal tips, especially around the holidays.  These magazines also have the advantage that the tips don’t get terribly outdated the way some other magazines might.
• Hit thrift stores for little kids’ toys. (And for big people’s toys, too.)  When giving a gift, consider whether “new” can be extended to include “new to them.”  Antibacterial soap and water for plastics, or a gentle wash for cloth, can do wonders.
• Resist the temptation to buy inflatable holiday lawn ornaments. I’ve long thought that big huge inflatable snow globes and the like are tacky, and if you don’t have them, consider yourself all the richer.  (As will I.)
• Put up a website with pictures instead of sending out Christmas cards. If you already have your own web space, most hosting providers will allow you to password-protect a directory.  Then you can e-mail the link, and the username/password, to your friends and family.  Well, you can e-mail it to most of your friends and family, but your 97-year-old great uncle might still appreciate the snail mail.  If you don’t have a website or if this is too much trouble, then DropShots.com lets you upload up to 500 pictures and 20 two-minute videos for free, without ads, and lets you decide who you want to see them.
• Try your hand at cinnamon-applesauce ornaments. My wife tried some of the recipes over at HandMadeCountry.com and found the second recipe to work pretty well.  You might be the only one in your circle of friends who does this, and they’re inexpensive (especially if you get the cinnamon at Costco).
• Speaking of cinnamon, it’s really good for you, and it adds flavor to a number of ordinary drinks.  Sprinkle a little bit of cinnamon on top of the coffee before brewing.  Or, warm some apple cider on the stove with a cinnamon stick.
• Attend a school holiday chorus/band concert. The music is better than you might think.  If the rehearsals are anything like when I was in high school, there’s probably at least 30 hours of solid preparation that goes into these concerts from the beginning of the year to December.  There’s at least a little bit of magic that happens during that time.  And you can’t beat the price.
• If you’re going to give money as a gift, you might be able to get by with giving a little less for the same “wow” factor if you give shiny Presidential dollar coins instead of regular bills. (One for each President issued so far only sets you back eight bucks right now!)  Or, if you’re a really big spender, a full assortment of state quarters is only $12.50!
• If you’re after one of those “hot, must-have” toys that you’ll fight tooth and nail for, stop. Take a deep breath, and step away from the shopping cart.  You might even consider not going on eBay, because there will be opportunities for you to pay way more than retail for it.  (I did this with Wii Fit but I felt I had a better excuse.)  Instead offer it to your kids after Christmas when there will probably be plenty of them around.  Maybe wrap a picture of it with a note.
• Through all of this, remember that the greatest gift of all is freely given for anyone who asks for it.

(Photo credit: shutter.chick)

The other day I picked up a copy of Malcolm Gladwell’s newest book, Outliers: The Story of Success. I’m only a third of the way through the book, but here’s my take on what I have read so far.

Gladwell believes that success is more than just “pulling oneself up by their bootstraps.” He tells the story of Bill Gates and that the real reason for his success was that his private school (Gates came from a well-off family) purchased a computer before computers were widely-used and that Gates was naturally drawn to it. In other words, had Gates gone to a different school, I might not be typing this blog post because computer software might not exist as it does today. In other words, circumstances matter.

The problem I have with the book is that Gladwell seems to take the approach that success is simply too hard for the poor to achieve. Yes, I’ll admit that it would be harder for a poor person to achieve success in life but that doesn’t mean it’s impossible. I think half the battle in achieving anything is mindset. If a person or class of people is constantly told they CAN’T do something, they end up believing it.

How would I level the playing field? My solution:

1. Allow parents vouchers so that they can send their kids to any school they desire. Not all parents would take advantage but some would.

2. Reinforce education and the importance of reading. Enlist the help of ‘famous’ athletes and musicians to get the message out to kids and PARENTS that EDUCATION IS IMPORTANT! Promote libraries and reading clubs. Offer reading classes to parents.

3. Don’t pass kids if they don’t make the grade.

4. Stop glorifying trash and stop filling our kids’ heads with hatred. Show kids how to respect themselves and those around them.

5. Require kids to watch The Big Idea.

Like I said, I’m not through reading Gladwell’s book yet. I don’t agree with some of his thoughts but I do like his style. There aren’t a lot of non-fiction books out there that are enjoyable to read.

GIVEAWAY

If you’d like a chance to win a copy of the book from me, leave a comment below explaining your thoughts on success. I’m going to make this my FIRST EVER subjective giveaway in that I am going to pick my favorite comment (and the comment doesn’t have to agree with me!) and the winner will receive a copy of the book. The deadline for entry is Friday, December 12, 9am CST. Just remember my rule:

1. you must be a resident of the U.S. or Canada (I won’t mail internationally).

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Geezeo joins the ranks of Mint.com, NetworthIQ.com, and Wesabe.com as a social personal finance site. The USP (unique selling point) of the site is their mobile accessibility.

It works like this:

Henry’s walking down the street. He stops and wonders if he’s got enough for a Big Mac. He sends a text message to the ether and waits. Moments later a text message comes back with all of my account balances that he setup at the website. Welp. Looks like Henry will have to go another day without food.

It’s targeting students or recent graduates for their service but anyone can use it. They target them because they’re more “connected”. It’s also US-only. Sorry Canada. They have compatibility with 6000+ institutions.

Here are a couple of improvements I would make:

1. Instead of texting the word “geezeo” to get current account balances, make it a common word that I can enter without switching to “abc” mode.
2. Instead of texting the word “geezeo update” to update my balances, it should already be updated when you retrieve your current account balances (see item 1).  Why would anyone want non-updated information?  Deprecate this.
3. Send a pie chart or graph or something via MMS if possible.

There are more things but here’s the one sentence summary: “Geezeo tracks your money automatically and there’s also discussion boards as well.”

Is it useful?  Sure.  Consistent awareness of your financial situation is very important for building wealth or getting out of debt.

Will I use it?  Probably not.  Calculating my net worth at the end of the month is good enough for me.

-h

PS - Sorry about the absence.  I was doing pull-ups this entire time.

Sponsor: Brohans Video Blog - It’s Like Binary Dollar. Except you don’t learn anything.

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The degree of online business success you experience will be directly determined by the amount of effort you put into your business. While many online businesses promote themselves as being the best and fastest way to achieving wealth online, not everyone will become rich operating an online internet business.

It makes no difference the type of online business you operate, there are still basic truths to turning it into a success. Compare your internet business to a small business on the side of a road that very few cars pass on a daily basis. You have a decent looking building, but it looks much the same as other buildings in the immediate area with nothing to distinguish it from dozens of others.

There is nothing on the outside of the building declaring what is inside and no indication that the products you sell, or service that you offer, is the best and least expensive. Add to that the fact you have no advertising in the paper, magazines or the internet. Basically, not a soul knows you exist. Undoubtedly you will be closing your business in a short period of time.

That could be your internet business on the side of the electronic super-highway, with the difference being instead of car slowly driving by, potential visitors are whizzing past your site at the speed of lighting, having no idea you are there. At least by the side of the slow road there is always the chance of someone stumbling into your parking lot. On the internet if your address is kept a secret, there is no chance anyone will find it.

This is where internet marketing and network marketing techniques can help put your site in front of the millions of daily internet visitors. Most people looking for a product or service on the internet start with a search for a specific word or phrase. Unless your website is set up to attract search engine spiders, you will be ignored. Think about when you are searching for something and how many times you went past the second or third page of search results before clicking on a link. You may seem satisfied that your site is showing up in the top 100 search engine results, but your potential customers still will not be able to find you.

How well you optimize your website to be found on search engines is up the knowledge and experience of the person building your website as well as the text content your site offers visitors to satisfy search engine requirements. Additionally, you may have the best optimized web site on the internet, showing up as number one or two on the first page of search results, but if your site does not reflect the quality of the product or service you are offering, your visitor numbers will fall, right along with your search engine ranking. Online Internet Business Success Depends On Your Dedication

The degree of online business success you experience will be directly determined by the amount of effort you put into your business. While many online businesses promote themselves as being the best and fastest way to achieving wealth online, not everyone will become rich operating an online internet business.

It makes no difference the type of online business you operate, there are still basic truths to turning it into a success. Compare your internet business to a small business on the side of a road that very few cars pass on a daily basis. You have a decent looking building, but it looks much the same as other buildings in the immediate area with nothing to distinguish it from dozens of others.

There is nothing on the outside of the building declaring what is inside and no indication that the products you sell, or service that you offer, is the best and least expensive. Add to that the fact you have no advertising in the paper, magazines or the internet. Basically, not a soul knows you exist. Undoubtedly you will be closing your business in a short period of time.

That could be your internet business on the side of the electronic super-highway, with the difference being instead of car slowly driving by, potential visitors are whizzing past your site at the speed of lighting, having no idea you are there. At least by the side of the slow road there is always the chance of someone stumbling into your parking lot. On the internet if your address is kept a secret, there is no chance anyone will find it.

This is where internet marketing and network marketing techniques can help put your site in front of the millions of daily internet visitors. Most people looking for a product or service on the internet start with a search for a specific word or phrase. Unless your website is set up to attract search engine spiders, you will be ignored. Think about when you are searching for something and how many times you went past the second or third page of search results before clicking on a link. You may seem satisfied that your site is showing up in the top 100 search engine results, but your potential customers still will not be able to find you.

How well you optimize your website to be found on search engines is up the knowledge and experience of the person building your website as well as the text content your site offers visitors to satisfy search engine requirements. Additionally, you may have the best optimized web site on the internet, showing up as number one or two on the first page of search results, but if your site does not reflect the quality of the product or service you are offering, your visitor numbers will fall, right along with your search engine ranking.

About the Author

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info@tatianaivanova.ws

Fidelity offers Age-Based 529 investments. Just pick a year.

The best time to save for your children’s college tuition is when your child is born. A small investment now will help them cover their college costs in the future. Say you invest $10,000 when they’re born. Assuming a 12% annualized return, it will grow to about $80,000 by the time the kid’s 18 years old and ready for college. $10,000 investment to pay for $80,000 in school costs? Not a bad price to pay for college at all.

Watch out though: You don’t want a bear market to challenge your kid’s future. You’ll want to secure that fund as cash as the child gets older. Use an age-based 529 investment to save for college.

Age-Based 529 Plans automatically adjust from aggressive (mostly stock investments) to conservative (mostly bonds and cash) as the child comes closer to their project college years. All you have to do is pick a projected year and the fund will handle the rest. The downside is that you pay a bit more in management fees since it’s an actively managed funds. The upside is that you get to spend more of your time playing with your kid instead of balancing their investments.

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Many small business owners reach a point in their career wherein they make the decision to reduce personal risk and maximize gains through the acquisition of their company. The process of selling one?s business involves a mix of strategically executed procedures which achieve the desired results without sacrificing confidentiality, risk management, mutually beneficial deal structure and optimum price.

In order to achieve effective results, business owners must (1) have a clear understanding of the metrics that govern their business, (2) realistic expectations of the marketplace and (3) a group of trusted advisors, comprised of accountants, attorneys and bankers, in place to provide guidance and structure to the acquisition process.

Steps To Prepare A Business For Acquisition

In order to maximize price and present an ideal picture of your business to the marketplace, key steps must be taken so that your business is properly developed and maintained. The financial and organizational structure of your company should be transparent to a buyer, so that he or she will be assured of the value and feel comfortable in assuming ownership.

Step1: Systematize and Document Your Business

The functions and procedures in your business should be concisely identified so that a buyer can clearly understand the chain of command and how results are achieved. Written agreements with vendors, customers and industry contacts can also bring substantial value to an acquisition. Documented agreements ensure that valuable relationships are concrete and will extend into the future. These assurances create confidence for the buyer and make the company more attractive in the marketplace.

Step 2: Maintain Organized Financial Data

Many business owners are heavily influenced by tax liability. The potential trap in focusing more attention on tax liability than profit performance is that it becomes difficult to prove the true profitability of the business to a buyer. Therefore, assuming greater tax liability in the short-term can result in increased value on the income statements. In addition, profit and loss reports should be generated and reviewed on a monthly basis, the company?s stock levels should be at full value and all capital expenditures should be clearly identified and booked on the balance sheets prior to an acquisition. [1]

Step 3: Maintain Accurate and Updated Corporate Documents

Due diligence is one of the most important elements of the sales process. Diligence items include corporate, legal and tax documents that define and validate the representations and warranties of a company. Business owners should be familiar with the issues and should attend to corporate maintenance on a quarterly basis.

1) Achieving realistic price expectations. A business has value to a buyer because of its anticipated future earnings and a demonstrated successful track record.[2] Businesses that show consistent growth, positive adjusted earnings and EBITDA and reliable financial projections are able to command high industry multiples and premium prices.

2) Accurately adjusting the net owner earnings. In order to accurately determine value, the balance sheet and income statements should be re-cast and items such as depreciation, owner?s salary and interest expenses can add-back significant value. The re-cast earnings will reflect the actual owner compensation in order to determine market value.[3]

3) Understanding deal structure. Sellers should be educated about possible alternatives for structuring a deal, such as earn-outs, non-compete agreements and long-term employment contracts. These items can add substantial value when combined with the negotiated purchase price. In addition, sellers need to be aware of how business liabilities, such as excess inventory and existing lines of credit, are assumed by the buyer and how liabilities are integrated into the final asking price.

4) Maintaining Confidentiality. Confidentiality is crucial in ensuring that existing employees and clients do not become aware of a potential transaction. If the sales process is not managed and the transaction is disclosed at the wrong time, key employees and valuable customer relationships could be sacrificed, thereby jeopardizing gross revenue if the sale is not ultimately consummated. Savvy buyers will use this as a tool to lower value.

5) Securing qualified buyers. A buyer?s material ability to consummate a transaction must be verified at the start of the sales process so that time and resources are not expended on inappropriate candidates.

6) Maintaining profits and growth during the sales process. Once your business has been introduced to the marketplace, it is crucial to continue to develop and maintain growth until the transaction is fully executed. It is the performance and productivity of the business that holds value in the eyes of a buyer. Therefore, a business that begins to drop-off in the months prior to a sale will incur difficulty in obtaining optimum price and qualified buyers.

7) Preparing proper due diligence. A thorough die diligence manual should be prepared in advance of bringing a business to market. Inaccurate or incomplete diligence materials can destroy buyer confidence and cause a deal to collapse. A seller must be able to defend the representations and warranties they assert during the sales process.[4]

8) Seeking professional guidance and consultation. Sellers should realize that it is nearly impossible to efficiently manage a transaction without the assistance of accountants, lawyers and bankers. These trusted advisors should work in tandem to help sellers achieve the desired results while limiting personal exposure and liability.

What now? I’ve put off writing this article for a while. Like many of you out there I’ve watched the Dow retreat in huge, wealth-destroying, multi-hundred-point chunks. Every time it looks like the end is in sight it takes another single-day 5% lurch in the wrong direction. Not a pretty sight.

A couple of weeks ago I attended the annual meeting of the National Association of Business Economists in Washington D.C.. The event featured some interesting speakers, including recent Nobel laureate Paul Krugman and Fed Chairman Ben Bernenke. After a day of hearing smart guys w/ lots of letters after their name wax poetic about credit default swaps, mortgage backed assets, and government bailouts I came away with a single conclusion: no one knows how this thing is going to turn out. There was some suggestion in using the word “bailout” the Treasury did a poor job in selling the $700billion plan to the American public – perhaps “rescue” would have been more appropriate. Krugman added some levity by suggesting some media-friendly nicknames: how about “Bailie May?” Or perhaps “Hanky Panky” after Treasury Secretary Henry Paulson.

So I came away from the three day event with a more profound understanding of my failure to understand this whole mess; but I don’t feel particularly bad about it because no one else really understands it either. Bernenke’s reassuring message: we don’t really know how we’re going to price these distressed assets that the Treasury is gonna be buying with your $700 billion, and we don’t know who we’ll by them from or how we’re going to do it. This will be a trial and error process. But we’ll work it out.

Mmmmmkay. But Bernenke delivers the message with such an aura of academic cool that the audience seemed assured that he’ll succeed in making the best of a bad situation.

So, generally speaking, I’m not feeling to great about all of this. Basically I think we’re headed into one of two possible scenarios:

• Scenario 1: We’re already in a recession but we’ll muddle through. The market is cyclical. This is a particularly brutal cycle we’re dipping into, but fundamentally no different than those we’ve slogged through before. We’ll get some discouraging GDP numbers, the Dow with flit around 9,000 for a while, but eventually the market will give back some of that money it’s taken out of your 401k plan.
• Scenario 2: The wheels are about to come off. The banking system is not just in a superficial funk fueled by poor investor-confidence; it’s really in trouble. As banks write down toxic mortgage backed assets their balance sheets will be fundamentally damaged to the extent that credit will continue to tighten, consequentially decreasing spending, chopping profits, raising unemployment, and fueling foreclosures – which in turn worsens the state of the mortgage backed assets which started the whole mess. Repeat. Deflating prices, which initially feel kinda good (who can argue with $2.50 gas?) accentuates the woes of the business community which will be unable to justify new investments at lower revenue levels, further cutting business spending and jobs, pushing down demand, and deflating prices further. Repeat. Once you’re in this spiral it’s tough to engineer an exit.

Now I think (hope) that we’re in scenario #1. That’s the best case. I don’t think we’re headed towards the meltdown case, but it is something that I worry about. As further evidence that I believe in scenario #1 I recently made two long term trades, buying exchange traded funds (ETF) that track the S&P (RSU) and the Dow (QLD). Someday we’ll look back at 2008 and realize that the dow in the 8,000’s was a buying opportunity.

A few observations:

• You know this already, but if you’re going to need your retirement money in the next few years then you can’t have it socked away in the stock market.
• If your company 401k plan automatically loads you up with company stock, then you need to periodically go in and rebalance. I never cease to be amazed at smart, educated folks who have 40% of their wealth in a single stock. This is goofy.
• Rethink “diversification”. I have stocks divided between small-cap funds, large-cap funds, value funds, growth funds, and international funds. They’re all in the same toilet now. One lesson of the current crisis is that markets are now linked like they’ve never been linked before.

And yes, this is a real estate blog, so a few thoughts here:

• Hooray for Texas: We didn’t run up during the boom so we’re not getting whacked right now, but I’m expecting flat prices for a while. My strategy for finding and investing in long-term value projects is treating me pretty well right now. Plus, that’s a hunk of money I have in properties instead of in the stock market. This is effective diversification.
• Some markets really are feeling the pain. I was in Minneapolis last weekend, and as I walked the streets of some of these neighborhoods it seemed like every third house was a foreclosure. It’s gonna take a while for the market to absorb this carnage.
• All real estate is local – that is, unless the economy is melting down. I won’t be feeling so smug about Texas property values if we got into the doomsday economic scenario that I outlined above. If the banking system goes into the tank then we’re all gonna be in the same boat.
• A buying opportunity? I’m nervous about our economy, but I’m not quite ready to bury my life savings in coffee cans in my back yard. Investors who can still get loans should think about investing now, depending on how your local market conditions look.

FNBO Direct Provides Great Rates and Great Service

With interest rates continuing to be slashed across the board, finding attractive yields on savings accounts is becoming even more difficult. At the very least, you’d like to have your savings try to keep up with inflation, but even that can be a tall order these days. Of course, interest rates aren’t everything, and you also want a bank that is secure, provides great service, and has a useful online interface. Luckily, FNBO Direct is a great opportunity to receive a competitive interest rate, remain FDIC insured, and have access to a pretty nice online interface.

FNBO Account Features

• No account minimum
• 3.25% APY as of this writing
• FDIC insured

Just like opening an account with most online, or even traditional banks, you will need to provide some information in order to sign up, verify your identity, and link to other existing accounts. To open an account with FNBO Direct, you’ll need:

• Your Social Security or Tax ID Number.
• Your Driver?s License or ID card issued by a state DMV.
• Employer information.
• Information about any loans or mortgages that you may have to help us confirm your identity.
• For instant funding, you will need your current bank account and routing numbers.
• If a joint account, the other applicant’s information.

Sign Up Today

There are obviously a lot of choices when it comes to savings accounts, but with rates continuing to decline, making sure your money is working its hardest is increasingly important. While I’m not a big fan of rate chasing, I think FNBO Direct is a good place to stick it out. In the past, they have been one of the last banks to drop rates when it was time for a rate cut, and the rates are consistently at the higher end of the spectrum. So, sign up today for your own FNBO Direct account.

FNBO Direct Savings Account Review - High-Yield Savings at 3.25%

You may or may not have heard the term ?ethical will?. But, for those who care about making their values and ethics part of their legacy, it is a tool to consider when planning your estate.

Unlike a ?last will and testament?, which provides for the distribution of a person?s material assets, or a ?living will?, which contains instructions for how you want to be treated medically at the end of your days, an ?ethical will? is designed to let someone preserve and share their values, principles and beliefs for heirs and future generations, though it?s not legally binding.

According to Personal Legacy Advisors? Web site, an ethical will is a letter that transmits the non-material assets that are also of great importance: your values, your story, the lessons life has taught you and the other information that is too valuable to risk being lost. Your ethical will is the tool that enables you to address the question, ?What do I want my loved ones to know??

As a concept, ethical wills are not new. The first written reference to ethical wills occurs in both the Hebrew and Christian Bibles. Examples are Genesis, chapter 49, and The Book of John, chapters 15-18. Over time, they evolved into written documents. While ethical wills were traditionally shared after death, along with the reading of an individual?s last will and testament, today they are often shared during the author?s life.

While exact figures aren?t available for how many people are writing ethical wills, they are on the rise, based on increased Web activity and sales of ethical will resources. They have gained impetus particularly in the wake of tragedies like the September 11 terrorist attacks.

Why create one? People are inclined to write an ethical will when facing a challenging event, or at a turning point in life. Some examples are facing the loss of a loved one, birth of a grandchild, expectant parents, becoming an empty-nester or approaching the end of life. Other reasons to create an ethical will include:

• Your reflections will confirm what?s important and renew appreciation of your life to date
• You will create a personal message to those you love, of priceless value in the event of your absence
• If you do not tell your personal (and family) stories, they may be lost forever
• Your material assets can be given within a personal context
• You will mitigate confusion and hurt feelings with a personal explanation of potentially controversial elements of your legal will
• Your spirit will be expressed on paper, living beyond you in a timeless way
• Your words will link the past, present and future generations of your family
• You will enjoy peace of mind knowing the most important things will have been said.

Pros and cons. The pros of an ethical include having an opportunity to influence future generations. Through the process of writing an ethical will, the writer can gain self-knowledge and come to an understanding of what?s most important to him or her. This is valuable information not only for their families but their professional advisers as well. Another pro is that ethical wills are private documents. Unlike a will, which if admitted to probate will become a matter of public record, an ethical will is a private communication and will not be made public unless the author (or recipient) so desires. The con is that an ethical will is not enforceable in a court of law. Those who want to provide specific instructions, such as who is to receive which asset or how assets are to be distributed and under what conditions, would need to put the instruction in a will or trust.

Setting up an ethical will. Ethical wills come in a variety of forms, from a short letter to a lengthy autobiographical statement, from an audio-recorded message to a bound album. There are three basic ways to create an ethical will.

1. Begin with an outline and list of suggestions. Once you?ve created a rough draft, you can review and personalize it as much as you wish.
2. Begin with guided writing exercises. For example, start with phrases such as ?From my grandparents, I learned?? or ?I am most grateful for??
3. Begin with a blank sheet of paper and write down whatever is relevant about your thoughts, experiences and feelings. This is an open-ended approach. Eventually you should be able to create a comfortable structure for your ethical will. For one-on-one help, an organization like the Association of Personal Historians may be of assistance.

Other tips from Personal Legacy Advisors include the following:

• Start today: If you were not here tomorrow, what is the most important thing you would not want left unsaid? Write it down - now you’ve begun
• Relax: You are not trying to write for the Pulitzer Prize. The letter is a gift of yourself, written for those you love
• Ask yourself: What do I want to make sure my loved ones know and have in writing
• Take it topic by topic: Don’t try to write it all at once
• Be yourself: You cannot bequeath what you never owned to begin with
• Be careful, be loving. The reach of this letter is unknowable.

Sharing your will. It?s a good idea to share your ethical will not only with family and friends, but also with your financial adviser and attorney. Knowing what you value and what?s important to you will help them to develop a personalized plan that can help you to leverage your values in the future.

An ethical will speaks to one?s posterity or descendants long after the legal will has been probated and forgotten. Of note, an ethical will is a dynamic document. Just as a will or living trust document needs to be revisited so does an ethical will, because events occur in ones’ life that have an impact on ones’ value systems.

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I had been checking on our economic stimulus check status regularly at the beginning of this month but hadn’t looked for an update in a few weeks.

I was happy to see that our rebate check actually came through via direct deposit about a week and a half ago.  We’re using the check to help fund our vacation this summer, which is getting closer, so I was pleased to finally see the balance in our bank account! Now I can afford that flight on our private jet, kidding of course : )

I know some of our neighbors and co-workers still haven’t received their rebate checks and are starting to get a little worried. It is a nice chunk of money, we received $1500, so I can understand why everyone is anxious to get it.

When they ask me for advice on their rebate I just point them to the details I found, how to track your economic stimulus payment. I remind them there are different qualifications for getting paid and refer them to the post frequently asked questions for economic stimulus rebate checks.

I’m just glad that ours has arrived. We’ve already charged our hotel stay for the trip to our AmEx Blue Cash card so the payment will come due here in the next few weeks.  We have the money to cover it even if the rebate check had never arrived but now it will be easier to pay the bill since I won’t have to move money out of our ING Direct account to cover it.  Now we just have to count down the days until vacation!

When selecting a credit card you need to do a little comparison shopping. Get some basic information on credit cards first before making your choice. You should be able to compare credit offers by different categories and get a clear idea of the best online offers available.

There are many types of credit cards to choose from. Some cards offer low interest rates, while others offer only a very low introductory rate, and some cards offer rewards directly back to the consumer. Always do comparison shopping and take careful notes on the offers that best suit your own situation. Easily compare the rates and fees at this site. Remember that those who know more about credit end up paying less.

Some are interested in balance transfer credit cards. These are the types of cards where you can transfer a balance from your existing card to this new card and get a really low interest rate for usually 12 months. This is advantageous because you save money, you buy more time to pay off your debt, and you can consolidate your debt into one new credit card this way.