Getting the Recognition you Deserve at Work

Don't worry when you are not recognized, but strive to be worthy of recognition. ~Abraham Lincoln

The onset of a recession has caused many people to have to worry about their job security. Keeping your job is enough to worry about in itself, but at the end of the year is the time that you most are evaluated based on the work that they completed for the year. Now, many employees do not want to seem to burden their employers by asking for an increase in pay during times where jobs are scarce and money for companies is hard to come by. However, companies want to retain their good talent, especially those who produce results and will usually try to work with employees to increase their compensation.

Employers can easily be compared to the average consumer. Most consumers typically like to get the best bang for the buck, and if they are going to pay premium price for a product, they want to make sure that it will last and continue to be worth the price.

Below are some of the principles I follow to try to get recognition at work:

1. Think outside the box to fix a problem.
• Always try to come up with three solutions to a problem.
  
• After determining a solution for a problem presented to you, think about whether or not it is the most efficient way to solve the problem.
2. Do the work no one else wants to do.
• Oftentimes, my management likes to request a volunteer to do an extra project before assigning it out to an employee. I volunteer for those requests frequently.
• Shows initiative and willingness to work.
• Increases your net value to the company.
  
3. Document the value of your accomplishments (as they happen).
• Many times people document what they do instead of how what they did positively impacted the company.
• Document the results of what you did and have it improved a process to the company.
• Use a format that is similar to listing your accomplishments on a resume
• Example: Provided great customer service to walk customer through initial setup of product resulting in less call volume for initial setup of product.
• Each time you complete a project or receive a kudos for a job that you had involvement in, archive the email under an "Accomplishments 2009" folder and write it down in a notebook. I use "Google Notebooks" for this.
  
4. Expand your network at work.
• Companies want employees that help create a comfortable work environment.
• Always try to be nice to your colleagues as well as help out those who are struggling.
• It may even be worth it to hang out with colleagues outside of your job to create trust as well as receive help from your colleagues when you are in a bind.
  
5. Increase your net worth
   
• In terms of accounting, you are either going to be a net asset or a net liability to your company.
• The company can make this judgement by determining the amount of assets you bring to the table versus the amount of liabilities caused by the company.
• Examples of Assets of an Employee:
• Employee Productivity
• Employee customer relations
• Employee skills
• Examples of Liabilities of an Employee:
• Paycheck paid to the employee
• Benefits provided to the employee
• It is always a good recommendation to make sure that your employer sees good value from your performance at work by your contribution to the company being worth more than what they pay you for it.
6. Less complaining/More resolutions
   
• Unfortunately, most work environments are not perfect. There will always be something to complain about. Rather than complaining to your boss over things that cannot change, try to deal with them.
• If there is something that needs to be changed, instead of just complaining alone, present a solution to resolve the problem.
  

By following these principles, you can increase your overall value (net worth) at work and give your employer more reason to provide you a pay increase after your evaluation at the end of the year. Even if you get turned down for a pay increase this year, you can start following these principles in the new year to request an increase at the end of 2009.

What are some of the other recommendations you have to get the recognition you deserve at work? Leave them in the comments below.

Stay Disciplined!

Cash Rebates for Shopping...Microsoft Live Search Cashback

Special thanks to Nate Lee who inspired this article. Thanks for the heads up for the readers to get a quick money rebate during the holiday season!

I am deciding to break away from my normal blogging schedule and share with you a quick and awesome program going on with Microsoft right now. Currently, Microsoft has created live search for products that you can purchase online. Now, while many search engines currently have this capability, the kicker with Microsoft is that they pay you instant cash back for certain qualifying items.

For instance, I just searched on the Microsoft Live Search site for "Dell 6000 AC" and purchased a Dell AC adapter for my brother on Ebay. I clicked on the link that had the little Microsoft Cashback symbol and received 8% cash back on my purchase. Not only did I pay less than retail for the adapter but I received a rebate also that will be deposited into my paypal account, that's too sweet of a deal to that I felt compelled to share. I have spoken with my friend who gave me the heads up about this program and he stated that his friends confirmed that it is legit as Microsoft has cut checks to people who have purchased through this program.

Ok, I'm convinced, sign me up!

To enroll in the program, you have to meet the following requirements (taken directly from their FAQ Page):

Who is eligible for Live Search cashback?

You are, as long as you:

• Provide us with a valid email address and password for account access.
• Are at least 18 years of age and reside in the U.S.
• Have a valid U.S. mailing address (a P.O. Box won't work).
• Create or have an active Windows Live ID and cashback account.
• Adhere to the Microsoft Service Agreement.

To use the program with Ebay, you will need a paypal account and ebay account that are both in "good" standing. Other points to mention is that it is required that you have at least $5.00 in your cashback account before the send you a check and there's a waiting period of at least 60 days in most cases before you can receive your rebate.

For more information about this program, refer to the Microsoft Cashback FAQ page.

Do you have any tips or secret gems you know about for getting the best deal online? Please share them in the comments below!

Stay Disciplined!

Accounting 102...Using the Double Entry System

To every action there is an equal and opposite reaction. - Newton

*To better prepare for the concepts explained in this article, please read the previous article "Personal Accounting 101...Understanding the Basics to Accounting"*

As mentioned in the previous article, I am planning on taking on my personal finances from a different perspective in 2009. I want to become my own personal accountant and understand my finances at a higher level to track each and every dollar that I spend. In order to do this, there are some accounting principles that must be understood to ensure proper accounting of my money.

The latest principle that I have learned about is the "Principle of Balance" in accounting. This principle seems necessary to me because I want to know where each dollar comes from and goes to in my personal finances. Knowing this information will help with identifying any kind of holes that my money seems to disappear into. In addition to that, it will help identify my spending trends and adjust finances according to the previous trend so that I can better eliminate unexpected expenditures.

The "Principle of Balance" is implemented in a accounting method called Double Entry Accounting. Below is a definition of what exactly this is:

Double Entry Accounting: A standard accounting method that involves each transaction being recorded in at least two accounts, resulting in a debit to one or more accounts and a credit to one or more accounts.

Although this seems like a lot of overhead for tracking your personal finances, it offers several benefits:

1. Accounting Trail
• Using Double Entry accounting allows you to track where the money originates from as well as where it ends up at. This way each dollar can be tracked and it is easier to identify when money is being wasted.
  
2. Automatic System of Checks
• Since every transaction is being recorded twice, it provides an automatic system of mathematical checks to make sure that all money is being accounted for. With this method, all credits have to match all debits in a transaction.
  

For further clarification, let's take real world example of this scenario. For instance, if an employee has their paycheck deposited directly into their checking account from an employer, then the money has been withdrew from the employer's account in the form of a paycheck and deposited in the employee's checking account in the form of increased funds. Using the double entry method of accounting, the journals that record this entry would look to be the following:

Income: Paycheck (-$500) -> Asset: Employee's Checking (+$500)

To make this a little more complicated, let's look at the terms debit and credit to understand this in more formal accounting terminology.

A quick explanation of how debit and credit works is listed below:

Debit
Money is recorded in the debit column, which is always the left column, when it is being transferred to an account. Also referred to as depositing into an account. (Citation)

Credit
Money is recorded in the credit column, which is always the right column, when it is being transferred from an account. Also referred to as withdrawing from an account. (Citation)

Applying this new terminology to our current real world example, you get the following:

Debit:Employee's Checking - 500
Credit: Income Paycheck - 500

*I know this seems a little backwards and is a bit to wrap your head around due to the nature of Credit and Debit cards, and how they work, but once you start thinking in terms of deposits and withdrawals, it will be easier to understand*

Now the previously referred to benefits of this method are obvious because all debits (deposits) have to equal all credits (withdrawals). However, recording each transaction and then performing calculations seems to be a complicated and tedious task. This would be true if we did not have computers, however there is free software that handles most of this for us. All that is required from the user is to save receipts and enter them into the software.

Doing a quick Google search for "Accounting Software" can turn up many choices, however I plan on using GNUCash. Not only is it free, but it is very feature rich allowing the user to create charts, graphs and reports.

What are some of the financial resolutions you are going to make for 2009? Do you have better ways for money management? Let us know!

Stay Disciplined!

Personal Accounting 101...Understanding the Basics to Accounting

I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs. -Thomas Jefferson (1743 - 1826), Letter to the Secretary of the Treasury Albert Gallatin (1802)

With the new year right around the corner, I have decided that one of my resolutions this year will be to track every dollar earned as well as every dollar spent in my personal finances. I am going to start up a new pseudo-company called "Jonathan Torian Inc." and become my own personal accountant. In order prevent failure and ensure a promising financial future, I am going to begin learning the basics in accounting and apply it to my every day life.

Two Types of Accounting

Cash Basis of Accounting

An accounting method wherein revenues are recognized when cash is received and expenses are recognized when paid. This method is inferior to the accrual basis of accounting where revenues are recognized when they are earned and expenses are matched to revenues or the accounting period when they are incurred (rather than paid). The cash basis of accounting is usually followed by individuals and small companies, but is not in compliance with accounting's matching principle. (Citation)

Accrual basis of accounting

The accounting method under which revenues are recognized on the income statement when they are earned (rather than when the cash is received). The balance sheet is also affected at the time of the revenues by either an increase in Cash (if the service or sale was for cash), an increase in Accounts Receivable (if the service was performed on credit), or a decrease in Unearned Revenues (if the service was performed after the customer had paid in advance for the service). (Citation)

Cash Basis Accounting is the most applicable to the individual consumer.

Main Financial Statements

1. Income Statement
2. Balance Sheet
3. Statement of Cash Flows

Income statements

Show how profitable you are during the time interval. Profits will be measured in the amount able to be saved after a given time period. This can be used to show what time of the year money is more likely to come in or go out. Profitability involves two things, amount of money earned (revenue) and expenses.

Revenues

The amount of money that a company actually receives during a specific period, including discounts and deductions for returned merchandise. It is the "top line" or "gross income" figure from which costs are subtracted to determine net income. (Citation)

Expenses

The economic costs that a business incurs through its operations to earn revenue. (Citation)

Matching Principle

The principle that requires a company to match expenses with related revenues in order to report a company's profitability during a specified time interval. Ideally, the matching is based on a cause and effect relationship: sales causes the cost of goods sold expense and the sales commissions expense. If no cause and effect relationship exists, accountants will show an expense in the accounting period when a cost is used up or has expired. Lastly, if a cost cannot be linked to revenues or to an accounting period, the expense will be recorded immediately. An example of this is Advertising Expense and Research and Development Expense. (Citation)

Balance Sheet

A financial statement that reports the amount of a company's assets, liabilities. (Citation)

A "snapshot" of a individual's financial position at a given moment in time.

Previous Article about using Financial Snapshots

Assets

Assets are things that an individual owns and are sometimes referred to as the resources of the individual. (i.e. Personal vehicle(s), its cash in the bank, home, etc.)

cost principle

The accounting guideline requiring amounts in the accounts and on the financial statements to be the actual cost rather than the current value. (Citation)

Depreciation

Depreciation is required by the basic accounting principle known as the matching principle. Depreciation is used for assets whose life is not indefinite—equipment wears out, vehicles become too old and costly to maintain, buildings age, and some assets (like computers) become obsolete.

In accounting, an expense recorded to allocate a tangible asset's cost over its useful life. (Citation)

Liabilities

Obligations of the company; they are amounts owed to others as of the balance sheet date. (i.e. Loans, credit cards, etc.) (Citation)

Statement of Cash Flows

Shows how Direct Delivery's cash amount has changed during the time interval shown in the heading of the statement. Good for helping to determine your financial circumstance and whether or not things need to be adjusted.

The goal of these articles will be to get a basic understanding of accounting principles then determine ways to integrate them into my personal finance. I am hopeful in being able to become the Chief Financial Officer of my finances for 2009.

Too often we rely on others' book keeping to determine if our finances are balanced. How many times do you check your bank account after you receive a bill to make sure that the power company debited the correct amount? How many times have you been overcharged by a department store or did not receive a store credit for returning an item. Unfortunately, I believe we can attribute much of the economic woes today due to not tracking expenses correctly and understanding the underlying debt trap that many Americans laid out.

By tracking my expenses, I hope to avoid this trap and being in less debt than what I owe today.

What are some of the financial resolutions you plan on doing for 2009?

Stay Disciplined!

Reading the Prospectus...A tutorial about knowing what you are invested in.

You can know the name of a bird in all the languages of the world, but when you're finished, you'll know absolutely nothing whatever about the bird... So let's look at the bird and see what it's doing -- that's what counts. I learned very early the difference between knowing the name of something and knowing something. -Richard Feynman

With the current downturn of the economy, many people are uncertain about their future with the current financial situation that the country is facing. If you were fully invested in stocks since October 2007, your portfolio is probably down somewhere in the neighborhood of 30% - 40% of its value on that date. It is amazing the difference a year can make.

I must admit, I have fell victim to the downturn of the stock market just as many of my colleagues have. As of today, I am currently down 38.8% in my 401(k) alone not to mention the many other investments that I currently own. While I am in no position to make a recommendation on what to invest in next, what I can do explain the tools provided for the investor that can help you make an informed decision about where to place your hard earned money.

Some of the fundamental steps that is incorporated in "It's Easy as P.I.E" is the planning and evaluation phases. Both of these require that you do the necessary research to make sure that your current allocation is the best applicable to your current financial situation. It also requires that you periodically review your current allocation to make sure that your portfolio is best suited for the amount of risk you are willing to take on. One of the most important tools for doing this research for a stock or mutual fund investment is given in the form of a prospectus.

Prospectus: A formal legal document, which is required by and filed with the Securities and Exchange Commission, that provides details about an investment offering for sale to the public. (Link to Investopedia)

Prospectuses are usually broken down in the following structure:

1. Overview
• Typically provides a high level overview of what the stock or fund is comprised of.
• May provide a small summary of the objectives of the company and how they plan to make their revenue.
  
• Provides some general information about the investment and provides in general a snapshot of the investment Year to Date (YTD) performance and price.
  
2. Expense and Fees
• In the case of mutual funds, there is usually a management fee that the mutual fund charges you in order to maintain the fund purchased. This fee is usually referred to as the Expense Ratio.
• Expense Ratio: A measure of what it costs an investment company to operate a mutual fund. An expense ratio is determined through an annual calculation, where a fund's operating expenses are divided by the average dollar value of its assets under management. Operating expenses are taken out of a fund's assets and lower the return to a fund's investors. (Link to Investopedia)
• Some funds also contains a load fee that is charged for maintaining the fund.
• Load: A sales charge or commission charged to an investor when buying or redeeming shares in a mutual fund. (Link to Investopedia )
  
• May also contain a minimum amount required to purchase the fund initially. From my own experience, it does not look like this minimum price needs to be maintained, but just done on the date of the initial purchase of the fund.
  
3. Performance
• This section may be the most important part of the prospectus as it will generally give you an idea of what kind of return you will be able to get on your investment.
• Contains average annual returns for 1, 3, 5 and 10 years. May contain the funds performance since the fund's inception.
• Return: The gain or loss of a security in a particular period. The return consists of the income and the capital gains relative on an investment. It is usually quoted as a percentage.(Link to Investopedia)
  
• The use of the return helps gauge future performance of the fund or stock. Depending on the market conditions, it can allude to whether or not the investment is going to continue to provide a good return on your investment or whether you should look elsewhere as it might have hit its peak.
• Usually represented in a percentage form that displays your overall return in the case that the investment was made at whatever previous time period without further contributions.
  
• This section may also contain a graph of the prices of this investment over time for a predetermined time period allowing for an example of what a certain amount of money would have returned over the past.
  
4. Portfolio Composition
• Another very important section to the prospectus is the portfolio composition.
• Contains information about the specific stocks or other mutual funds and the amount of them that the investment is comprised of.
• In a mutual fund, usually contains a list of the Stock Style
• Stock Style: The investment approach or objective that a fund manager uses to make choices in the selection of securities for the fund's portfolio. (Link to Investopedia)
• Flash Movie of Stock Styles
• Displays the sectors of the market that the fund is exposed to.
5. Prices and Distributions
• This section contains a historical reference of the prices that the stock or mutual fund closes at on a daily basis.
• Can be useful for determining whether a stock is over-valued based on the price over a given period of time.
  
• Can also help to identify the best time to purchase the stock during the month.
• Contains the rolling 52 week high and low which allows you to gauge the high price and low price for the year of the investment.
  

Although I am unsure about how much lower the Dow Jones will go, I am still hopeful that the stock market will rebound and pull itself out of this funk. In my opinion, I think that there will be a lot of bad days down the road, however, if I am able to make an informed decision by investing in the sectors that I believe will bring America back to the forefront of the global economy, I may be able to reap some great rewards.

Feel like I missed something in this article about prospectus? Please share your knowledge about this topic in the comments below.

Stay Disciplined!

P.S. - For some real world examples of prospectuses, look at the links below:

Fund listing for Vanguard
Fund listing for TRowePrice

The Privilege of Giving

Title: The Privilege of Giving

Body:

“It is more blessed to give than to receive.” — Jesus, Acts 20:35

While watching CNN tonight, I saw a compelling story about a family in Phoenix, Arizona that was begging on the side of the street for money. The father had recently lost his truck driving job and has currently had to resort to panhandling in order to feed his family. Now although I strongly believe that people are in charge of their own fate to a certain degree, I cannot help but to have a few heartstrings pulled when I see a grown man cry due to being unable to feed his family by his own devices. With as much emphasis put on a man as being a "provider" in our society, I cannot help but guess that this man has to be feeling that he is failing in his responsibility.

One sad realization about this is that this and many other stories will continue to happen due to the current economic situations. A co-worker once told me that layoffs always seem to occur when money is needed the most and with it being the holiday season, it would seem like the absolute worst time to lose your job. Many Americans unfortunately face this uncertainty as they are working in industries that are cutting back majorly due to the slowdown of the economy. Although it is hard to provide a solution that will encompass the multiple problems individuals face, there still are some things we can do to help.

One of the main principles I abide by in my personal finances is giving back. Whether through money, volunteering time, or donating my unused goods, I feel that one important aspect to help remain humble in personal finances is through giving. Below are some of the guidelines I follow when giving:

1. Take care of home first then branch out.
• Always make sure that you take care of yourself and immediate family before reaching out to others. It is hard to build someone else a house while your house is currently falling itself.
  
• Sometimes people decide against giving if they feel that there is no one they know who is in need, but you may be surprised to find out that people close to you may be in need but too proud to ask for assistance.
2. Have the right motive for giving.
• Giving is a privilege, not an obligation.
• The attitude you take towards giving will definitely reflect and affect those around you. If you give with good intentions, you may inspire someone close to you to do the same.
  
3. Give what you can afford.
• Giving must be done in moderation. There is no reason you should go into poverty or slacking on your responsibilities due to your giving.

I sat down and spoke with my great aunt today and she explained to me that during her younger years, she would go to school during the day time and work in the cotton fields immediately after she got home. She told me that all the food that they had was grown in a garden and many of the luxuries that we value today were not in existence or were too expensive to afford. She explained to me how she lived through the Great Depression and World War 2 and how they were able to get by with what they had. Unfortunately, we do not realize today how much of an abundance we have.

As mentioned by the quote at the beginning of this article, if you have the privilege to give, you are blessed. Often times we analyze our situation as being poor due to not having all the material things that we want. However, after talking to my great aunt, I find that we are much better off than our ancestors were. Some of the ways you can choose to give are listen below:

Feeding America
http://feedingamerica.org/take-action.aspx

Big Brothers Big Sisters
http://www.bbbs.org/site/c.diJKKYPLJvH/b.1539751/k.BDB6/Home.htm

VolunteerMatch
http://www.volunteermatch.org/

What other ways do you feel are positive ways to give back to society? Are you planning on giving back during the holiday season?

Stay Disciplined!

The Economy is in a complete recession...What do I do with my 401k?

Don't waste life in doubts and fears; spend yourself on the work before you, well assured that the right performance of this hour's duties will be the best preparation for the hours and ages that will follow it. - Ralph Waldo Emerson

At the time of this writing, the stock market has closed approximately 400 points down today. This is very disheartening information for many Americans today who are constantly saving money for retirement in the stock market. Although many of the analysts and financial gurus are saying that "this is the time to invest", it is hard to contribute 6% of my bi-monthly income to a retirement account only to see it decline 4-5 percent immediately thereafter. Even I find myself becoming a bit more doubtful in the future of our stock market because it just seems like every day we take one step forward, the next day we take two steps back.

This time period has given me the opportunity to begin researching other investment options outside of the stock market to learn the all important rule in smart investing...diversification.

Diversification: A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique contends that a portfolio of different kinds of investments will, on average, yield higher returns and pose a lower risk than any individual investment found within the portfolio. (Cited from Investopedia)

A silver lining in a gray cloud

Some of the online analysts and experts recommend to have a 100% diversified stock allocation if you are saving 20+ years for retirement. I agreed with this particular recommendation until I came across this latest financial crisis. Now I believe that true diversification is having a mix of bond and stock securities at all times no matter the length of years to wait before retirement.

Back in July, during the time the Dow Jones index was around 11,000, I shifted about 30% of my total allocation from stocks to two specific bond securities. Although most of the positions in my 401k portfolio are down at the current moment, however the investments in the bond markets have provided a positive return.

Although a lot of focus is not placed on bonds, I wanted to highlight the two that I am currently invested in. I believe these bonds have the potential to give a decent return in the current market conditions:

1. Inflation Protected Bond Fund (TIPS)
   
• What it invests in
  The return earned on an inflation-protected bond comes from two components that respond to movements in inflation and real interest rates. The first component of return adjusts the yield by the change in consumer prices. In contrast, the second component of return operates inversely with the movement of real rates; if real rates rise, the price of the fund will fall, and vice versa. (Taken from the Prospectus on Fidelity's 401K Site)
  
2. Stable Value Fund
• What it invests in
  The fund invests in fixed-income securities and book value wrap contracts issued by banks and insurance companies, which provide for the payment of a specified rate of interest and for participant withdrawals at book value (i.e. principal plus interest). (Taken from the Prospectus on Fidelity's 401K Site)

Although they do not have great returns, something positive is better than something negative.

Timing is Everything

Although I am looking at approximately 35 - 40 years before I am able to touch the savings in my 401k and Roth IRA, I have already planned how I hope to allocate my funds as it gets closer to retirement. The strategy I plan on following is to place most of my allocated money in an aggressive (higher risk/higher return) allocations and continue to have some money allocated in more conservative (less risk/less return) investments while I have more than 10 years to touch my money.

The thought behind this is that although the stock market may continue to be volatile, I will end up positive in the long run. The goal of this type of allocation is to gain a higher interest rate than that of investing in a high yield savings accounts or in bonds.

As I approach closer to the time where I am able to access that money without penalty (within approximately five years), I will make the shift to a more conservative portfolio that will allow me to reduce my risk in the stock market and continue to keep the majority of my money on fixed rates. Although I will not potentially make as much in interest on my money, I can rest assured that I will not lose the majority of my money in volatile stocks. An example of a conservative portfolio is 75% bonds and 25% stocks.

Eyes on the Prize

The key to succeeding in long term investing is to develop a plan and stick to it. Although I have seen the value of my funds decrease over the past few months, I have seen the overall number of the amount of shares that I own increase. I have continued to contribute to my stocks to continue increasing the shares that I own. It is my hope that the economy will rebound soon to help continue to increase the overall value of my retirement plan.

How are you holding out with your 401K plan? Do you still contribute? Share your thoughts below.

Secure Computer Practices to Protect Your Personal Finances from Identity Thieves

The onset of a recession is causing some people to try to get more income by any means possible. Although this is a great motivational tool for people when this is done ethically and legally, it can also be very negative when illegal means are used to increase one's income. Due to the dire situations (banks failing, credit crunch, etc) of our economy, there are many opportunities forscammers and thieves to try to take advantage of the average consumer.

To the average computer user, security is not a top priority. It is simple for most users, turn the computer on, read a few emails, pay a couple of bills, browse a few websites, turn the computer off. Although this seems like a relatively simple and safe thing to do with every day computing, statistics show that over 15 million Americans are victim of identify theft every year. (Citation)
With these circumstances, it is extra important for people to become vigilant to protect their assets as well as identity.

Things to Protect Yourself From While Online

1. Spamming: the abuse of electronic messaging systems to indiscriminately send unsolicited bulk messages. (Cited From Wikipedia)
2. Phishing: The criminally fraudulent process of attempting to acquire sensitive information such as usernames, passwords and credit card details, by masquerading as a trustworthy entity in an electronic communication. (Cited From Wikipedia)
• Ways to Spot a Phishing Attempt
  
3. Malware: a portmanteau word from the words malicious and software, is software designed to infiltrate or damage a computer system without the owner's informed consent. (Cited From Wikipedia)

Types of Malware

1. Virus: a [malicious] computer program that can copy itself and infect a computer without permission or knowledge of the user. (Cited From Wikipedia)
2. Trojan Horse: Malware that appears to perform a desirable function but in fact performs undisclosed malicious functions. (Cited From Wikipedia)
3. Spyware: Computer software that is installed surreptitiously on a personal computer to intercept or take partial control over the user's interaction with the computer, without the user's informed consent. (Cited From Wikipedia)
   

Although there are a lot of malicious things out there to try to compromise your security, securing your computing is not an impossible. Below are some easy ways to prevent your identity from being compromised online:

Ways to Prevent Your Identity from being Compromised

1. Passwords
• Choose a password that is at least 8 characters in length. If allowed, a combination of upper and lower case letters, numbers and symbols.
• Never store your passwords in a public place accessible by many. (Good idea to keep it in a wallet or purse, bad idea to keep it on a sticky note on your work monitor)
  
2. Delete Spam
• Use the built-in spam filters of your email provider.
  
• Be sure to report obvious spam to increase the accuracy of the spam filter being used.
  
3. Use Encryption (https) when possible.
• Most reputable companies that require you to do any kind of online transaction usually support encryption.
4. Use caution when on public wireless access points.
• Wireless access points transmits unencrypted network traffic in plain text. That means Instant Messaging, email, web traffic and any other transmitted information can read by someone using a network sniffer.
• If at all possible, always try to encrypt your network traffic (using https) or use caution and refrain from transmitting sensitive information while connected to a wireless access point.
  
5. Security Software
1. Anti-Virus software will help protect the integrity of your computer and check the files located on them for any malicious programs. Below are recommended free anti-virus software.
   
• Avast
• AVG
  
2. Firewall software will allow for you to make sure no unsolicited connections will be allowed on your computer preventing unauthorized access to your files and personal information. Below are some recommended firewalls:
• Built-In Windows Firewall (Windows XP and Vista)
  
• Comodo Firewall
  
3. Spyware Removal
• Adaware
• Spybot
  
4. Browser Protection consists of programs used to identify false websites that may try to portray a legitimate site
   
• No Script
• Automatic phishing detection (Internet Explorer 7 and Mozilla Firefox )
  
6. Monitor Credit Reports
• The government has mandated that all consumers be allowed to receive at least one credit report for free from all the credit reporting bureaus (Equifax, TransUnion and Experian)
  
• The only free (without any strings attached) credit report can be acquired from Annual Credit Report.
  
7. Keep your Operating System up to date
• Microsoft constantly finds new vulnerabilities in their software that can allow a malicious user to access your computer without any authorization. They release security software updates at least once a month to fix these vulnerabilities and close these holes.
  

It is impossible to eliminate your risk of identity theft when using the your computer on the Internet however, using the recommendations above, you can reduce the likelihood of your identity being stolen. What are some of the ways you protect you identity when using your computer?

Stay Disciplined!

More Information for Foreclosure Investments

I realize that the previous post about the foreclosures was a bit incomplete because I did not really leave you with too many links that you can use to actively research the foreclosure market. Having these tools listed in this article can help you decide whether an investment in the foreclosure market is a sound decision.

Finding Foreclosures

As mentioned in the previous articles, foreclosure listings can be bought in three different phases. Those three phases are:

1. Pre-Foreclosure (Short Sale)
   
2. Foreclosure by the Bank (Courthouse Steps)
3. Sold/Auctioned as a Foreclosure

Below are some of the links that you can use for researching these properties. Please hover over the links for a description of each link.

Atlanta Journal Constitution Foreclosure Listing

US Home Auctions

Hudson and Marshall Auctions

Georgia MLS

Trulia

Due Diligence

Part of the due diligence for determining whether or not any property is a good investment is find out key pieces of information. Some of the things to research are:

1. Crime in the Area
2. Schools in the Area
3. Property Taxes to pay
4. Previous value of the home
   

Below are some of the links that you can use for researching this information. Please hover over the links for a description of each link.

Atlanta Police Google Map Showing Crimes in the City of Atlanta

Listing of the current and previous value of a home

Georgia MLS

County Tax Records for Homes in Georgia

Getting the Finances in Order

The last and in my opinion, the most important step is getting your finances in order to purchase any kind of investment. In addition to the information listed in my previous post below is a website that contains great information to help calculate whether or not you are in a good position to finance an investment.

Great Place to learn about Financing an Investment

I hope that these links assist in your decision of whether or not to pursue an investment in real estate. Please share with us any other links that you find useful to assist you in your decision of whether or not to invest.

Stay Disciplined!

Index Funds...The Investor's Training Wheels

The average man doesn’t wish to be told that it is a bull or a bear market. What he desires is to be told specifically which particular stock to buy or sell. He wants to get something for nothing. He does not wish to work. He doesn’t even wish to have to think. -Jesse Livermore

On my birthday during one my wonder years (where I did not have to worry about things like bills, stocks, recession, etc), my father bought me a bike. After the initial excitement of realizing that I got a bike had passed, I realized that I was going to have to learn how to ride the thing. I was a bit timid of the thought of having to get on the bike, maintain balance and pedal all at the same time. After all, I could fall off the bike, get hit by a car in the street or many other bad things.

However, my friend Zack would come by my house on his bike. His house was a mile away from mine and while it took me about 15 minutes to walk to his house, he could get to my house in 5 minutes. Well, now it was my turn, now that I have my bike, I was capable of getting to his house within 5 minutes or less, I just had to learn how to ride it.

So when I tried to ride my new bike for the first time, I hopped on and tried to pedal. Unfortunately I did not understand the concept of balancing on the bike and got approximately 1 foot forward before having to put my feet down to prevent me from falling. After a week after these failed attempts, my father came out and showed me a couple of tricks. He taught me how to coast down a heel to learn how to maintain my balance. Once I learned how to maintain my balance, I learned how to pedal and eventually was able to put the two together and ride my bike.

At the end of the whole learning process my dad told me, "Man, maybe I should have gotten you some training wheels, that would have made this a lot easier and you would have been riding in no time." What, training wheels? Are you serious!? Are you telling me that I could have gotten back at least a few days of failures if I just had training wheels!?

Well, it seems like history repeats itself, because I made the same mistake on my initial entry into the stock market. The simple rule to succeeding in the stock market is to "Buy low, Sell High". Sounded simple enough to do so back in October 2007, Washington Mutual was on its way down and I thought that they looked like a good buy. They were down to $20 from their high of $47 and I just knew when they rebounded, I was going to be able to recover all of my money as well as make a hefty profit.

Well, if you have not followed Washington Mutual's fate, currently they are bankrupt meaning that their stock is worth $0 and no longer exists. Fortunately, I was able to recover some of my money before losing it all, however, the fact of the matter is whether I lost $1000 or $10, I still lost which is the exact opposite of my motivation for investing in the stock market.

Once I realized that my individual stock picking skills were not up to par, I realized that I need to get some "training wheels" so that I do not let history repeat itself. While researching one day, I came across Index Funds.

Index Fund: A type of mutual fund with a portfolio constructed to match or track the components of a market index, such as the Standard & Poor's 500 Index (S&P 500). An index mutual fund is said to provide broad market exposure, low operating expenses and low portfolio turnover.

(Index Fund Definition taken from Investopedia)

*For a list of other common stock indexes, view the Wikipedia page*

An Index Fund is the novice's best investment tool as it offers the following benefits:

1. Allows you to easily diversify your portfolio without having to choose individual funds
   
• Diversification: A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique contends that a portfolio of different kinds of investments will, on average, yield higher returns and pose a lower risk than any individual investment found within the portfolio. (Cited from Investopedia)
  
2. Low Management Costs
• Since Index funds are managed by computer models that try to purchase the exact funds listed by an index rather than relying on stock analysts, the fee to manage index funds are typically lower than those of other mutual funds.
  
3. Low Turnover
   
• Turnover: The number of shares traded for a period as a percentage of the total shares in a portfolio or of an exchange. (Cited from Investopedia)
• Lower turnover allows you to pay less transactional costs as well as reduce the capital gains tax that you will incur for trading funds held less than a year.
4. No commissions to pay when bought directly from some mutual fund companies.
• Unlike many online stock brokers, when you buy more shares of an index fund directly from the mutual fund company, you do not have a to pay a commission for each purchase. In addition to that, you typically do not have to pay a commission to redeem the fund at a later date.
5. Easier to do Automatic Investing for dollar cost averaging
   
• Dollar Cost Averaging: The technique of buying a fixed dollar amount of a particular investment on a regular schedule, regardless of the share price. (Cited from Investopeida)
  

Although there are many advantages to investing in Index Funds, there are some disadvantages as well.

1. Index funds are designed to perform at the index rate of return
• If you are trying to get a higher return than the rate that is given by the market, you will typically not achieve it by having an index fund.
  
2. As with all investments, there is a risk that the overall index can go down meaning you would get a negative rate of return. (i.e. our current market situation)
3. Investing through a brokerage typically requires a hefty minimum if you are investing in a general account.(i.e. Vanguard requires $3000 for a minimum investment into their funds for a general investment account)
   

Index funds give you the chance to invest in the stock market without a lot of experience or knowledge. I highly recommend that you if you wish to start investing in the market, that you do so using an index fund especially with the market at historic lows. For those who are interested in getting their feet wet with index funds, you can do some research at Vanguard for the different funds they offer.

Do you have any recommendations for Index Funds or any other beginner investments, please share them in the comments below.

Stay Disciplined!

Are foreclosures a good investment?

Every Cloud Has A Silver Lining ( be hopeful because difficult times always lead to better days ... ) - Unknown (quoted from GoEnglish)

Everyone knows about the huge sub-prime mortgage debacle that is unfolding in our country right now. According to the New York Times, (link to article), six million people are expected to default on their mortgages this year. In addition to that, houses are rapidly decreasing in value all over the United States due to lack of demand. Although this is really bad news, for some, it presents a huge opportunity.

This opportunity is to diversify your current investment portfolio. I have been looking into expanding my investment portfolio into the real estate arena because stocks are still highly volatile and the prices in the real estate market have fallen drastically. Plus, having a guaranteed way to make passive residual income is very appealing. However, before diving in head first, I wanted to take the steps to educate myself on the topic to see if it is a viable way to invest.

Earlier this week, I attended a Foreclosure Investment Property Seminar at the Georgia Tech Alumni Association given by Mary Beth Lake who is a Realtor with the Harry Norman Realtors company. She provided us a very informative and interesting presentation that covered the pros and the cons of investing in Foreclosure properties. I felt that this presentation is great information to share with anyone who was thinking about investing in Foreclosures or Real Estate in general. Below is a summary of the presentation she provided as well as some of my added notes:

Investment Real Estate (Foreclosures)

Investment Real Estate: Real estate that generates income or is otherwise intended for investment purposes rather than as a primary residence. (Citation)

Foreclosures

Foreclosures are typically "distressed" properties that a bank repossesses in means to recover the cost of the loan that a homeowner has defaulted on. Foreclosure usually progresses in the following stages:

1. Pre-Foreclosure
• If the homeowner misses one mortgage payment, the foreclosure process can begin.
  
• Sometimes during the pre-foreclosure stage, the bank will work with the homeowner and agree on a "Short Sale" in which the bank agrees to take a lower price on the home than what is actually owed.
2. Foreclosure by the Bank
• The bank goes through the process of evicting the tenant out of the home and repossessing the home to put it up for sale.
• The bank can advertise the home on the courthouse steps to have the property bidded on.
  
• Some states are non-judicial meaning that the bank does not have to take the home owner to court to evict them.
  
3. Sold/Auctioned as a Foreclosure
• The bank can sell the home on the courthouse steps.
• If the home does not sell, the bank can choose to list the who with an Real Estate Owned (REO) Agent who can either choose to sell the property through a public auction or by using the traditional means such as the Multiple Listing Service (MLS).
  

Caution: Pre-foreclosures and Short Sales can take a lot of time and require a lot of patience. Short sales are very risky and foreclosure homes are usually sold without any disclosures. This is important to know because states like Georgia are "Buyer Beware" which means the buyer would not be able to hand back the property if they decide they do not want it anymore after signing the contract.

Due Diligence

Prior to investing in the foreclosure market, much due diligence needs to be done to determine whether or not the home is a good investment. To assist in the planning of this one must realize the four financial benefits of owning investment real estate and how to calculate them. The four benefits are the following:

1. Income
2. Principal Reduction
3. Income Tax Savings
4. Appreciation

Income: Revenue generated by the Real Estate property (rent).

Principal Reduction: Reducing the amount borrowed or the amount still owed on a loan.

Income Tax Savings: Deductions that you can claim on your income from owning Investment Real Estate. For more details, click the "Financial World" link. (Financial World )

Appreciation: An increase in the value of an asset over time. (Investopedia)

To assist with the analysis of the investment property, the presenter (Mary Beth) provided us with an excel spreadsheet she acquired from Tom Lundstedt who gives seminars about investing in Real Estate. (Thanks Mary Beth and Tom!) This file is accessible to our members through the "files section" on the Pamplona Finance Google Groups Page.

For those who review the pre-filled excel spreadsheet, the scenario to accompany that file is listed below:

Scenario:

• You are investigating a property in east Point that is listed for $139,000. You think that you can negotiate the seller down to at least $130,000.
• You plan to put 20% down and pay all the closing costs.
• You would like to close in early December 2008 so that you can make any necessary repairs over your holiday break and hopefully have it leased by January 1st 2009. You plan to lease it for a year.

Some other useful tips during due diligence is to do the following:

• Use the tool to analyze multiple homes in the area.
• Fill out a Schedule E for Real Estate Investments to claim on your taxes.
• Can request a Schedule E if purchasing this home from a Real Estate Investor.

For more information about the Schedule E, consult about.com article here.

Gathering the Money to Invest

With the economy being in the state that it is, many investors are not able to reach deep into their bank accounts to put the money up to obtain an investment property. Most first time investors will have to take some type of loan from a bank and pay the money back over an extended amount of time. This part of the presentation was given by George Connolly who is a mortgage broker with SunTrust Mortgage. Below are the initial requirements needed to finance a Real Estate Investment if borrowing the money from a bank:

1. 20% of the sale price down payment.
2. 3% closing cost of the loan.
3. Six month property emergency fund to cover mortgage and monthly expenses when the house is not generating income.
4. $5,000 - $10,000 in liquid reserve for repairs, emergencies.
5. Monthly expenses
• Accounting Fees
• Attorney Fees
• Landscape Maintenance
• Utilities
• Taxes
• Insurance
  

The Exit Strategy

With all businesses, it is important to know what you are going to do once you figure that the property is no longer a good investment or you are ready to cash in. In the optimum situation, the house will appreciate over time and you will build equity in the home. Equity is the difference between the current market value of the property and the amount the owner still owes on the mortgage. (Investopedia) There are three ways to move the equity:

1. Sell the current property and buy another.
• Will have to pay Capital Gains Taxes. (Captial Gains Tax Calculator)
  
2. Refinance the current property and use the money to buy another property.
3. 1031 Exchange.
• 1031 Exchange - A tax deferred exchange that is for like-kind investement with property with a specified strict time period. (IRS)

More Useful Information

• Always purchase Owner's Title Insurance.
• Financiing can make the difference between a property performing well or going down the drain.
• Don't confuse Inflation with Appreciation.
• Places to purchase a great deal
• Excellent School Districts
• Developed/Developing areas
• Places you would not mind living yourself
• Get a team of proven professionals to assist you with investment decisions. Team should include the following:
• Accountant
• Attorney
• Loan Officer
• Property Management Company
• Realtor
• 1031 Exchange Qualified Intermediary

One thing that the presenter shared with us is that Foreclosed homes are a lot of work and may not be as lucrative of an investment as many people think it is. To help with your decision, I have included a video that I took while surveying a home that I found on www.ushomeauction.com.

In summary, if you are willing to put in the effort, time and money needed, a foreclosure can be a good investment. However, I think that it may be worth the time and effort to spend a little extra money on a non-foreclosed home as it may require less work to make it habitable for re-sell or a tenant. From my research, I have learned that it if you want to invest in Real Estate, do not just limit yourself to searching for foreclosed homes.

Do you think that Foreclosures are still a good investment? Please leave your comments below.

Stay Disciplined!

By the way...we do workshops too!

So to step away from one of my regular posts, I just wanted to bring to your attention another great resource that you can use on your journey to personal finance freedom. We, in the Pamplona Finance Group, typically hold a monthly - quarterly workshop about a personal finance topic that we receive input on from our members. The workshops are free of charge (for now) and all we ask is that you come out ready to participate and learn.

The video above is a trailer from the latest workshop done in September. (Please forgive my video editing skills) The workshop was very interesting and informative. The presentation was delivered by our very own Marc Wilson who is passionate about taking the proper steps to secure his financial future.

If you would like more information about our workshops, please join our subscription list by adding your email to the section labeled "Google Groups" on the right side of the page. We send out the information about our workshops to members who are subscribed to our list.

We really encourage you to come out to learn as well as share any information that you want. In addition to that, this is a good way to network as well as meet some potential accountability partners who can help you achieve your financial goals.

Stay Disciplined!

Surviving the Recession...Getting Back to the Basics

To use fear as the friend it is, we must retrain and reprogram ourselves...We must persistently and convincingly tell ourselves that the fear is here--with its gift of energy and heightened awareness--so we can do our best and learn the most in the new situation. -Peter McWilliams, Life 101

Earlier this week I took a trip to New York for my job. Now, I am by no means a fan of airplanes, but I understand that they are relatively safe and each time I have flown, I made it safely to my destination. So in my mind, it was going to be business as usual as I settled comfortably in my coach seat, although there was a slight drizzle coming down and the sky was painted gray with clouds at Hartsfield Airport.

The most fearful part of flying for me is taking off as I have heard that many say that the highest risk of something going wrong is during that part and landing. As we aligned ourselves straight on the take off runway, I hear the engines roar and we are off. As I feel the plane separate from the ground, I notice that everything seems to be going normal. Just as I get ready to breathe a sigh of relief, the plane takes a sudden drop. My stomach goes to my chest and we hear the captain of the plane say "Please remain in your seats with your seatbelts fastened as we are going to be in rough air".

Shortly after the intercom turns off, the plane takes another dip and I look around to see other people with fear obviously on their faces. I begin to think to myself that this is the end and say a short prayer as I may be getting ready to meet my Maker. However, the captain continues to push the engines full throttle and after we experience a few more dips, we finally level off at 41,000 feet where the air is a little smoother. Needless to say, although we experienced a few more bumps in the air, we arrived to our final destination safely and in one piece.

Later that day, I realized that the airplane ride was a strong analogy to what our economy is going through right now. We are currently at the point where most Americans are looking at each other with fear on our faces thinking some variation of "this is the end". However, just as the captain did what it took to navigate through the turbulence in the air, our government will do the same. Although we may go through a few more bumps while trying to get to our final destination, ultimately we will arrive safely.

If you do not know that a recession is going on right now, then this is your wake up call. All the times of spending more than we make, eating out, burning gas, etc are coming to an end. Below are some of the basic principles that I am using to survive this recession.

1. Budget.
• One of my friends always budgets and sets aside a specific amount of cash that he can spend at his discretion (eating out, partying, etc). He does this because it really resonates with him as he sees cash leave his fund as well as allows him to think twice before spending the money. Once that money is gone, he knows that he has to wait until his next paycheck before he can do any further discretionary spending.
  
2. Save at least 10% per paycheck.
• One of the most important assets to have during tough times is a fund that is highly liquid (Emergency Fund). This comes in handy to carry you in between pay periods as well as cover any unexpected expenses that can occur while money is tight.
• Devoting 10% of each paycheck to a high-yield savings fund will add up quickly. Recommended bank where I keep my Emergency Fund: HSBC
  
3. Plan out trips.
• Having a car is quickly becoming a larger and larger expense because of the cost of gas. Planning out the trip and knowing exactly where you are going prior will allow you to consolidate trips and conserve gas rather than having to make multiple trips in one day.
4. Cook.
• On average, I spend about $7/meal when I eat out at a (decent) fast food restaurant. When I eat at a sit-down establishment, that goes upward to $13 - $15 (tip included).
• My average meal at my house costs about $15 to make, however, it typically lasts for 3 days. I typically eat leftovers twice a day for those three days which roughly equals 6 meals total. Doing the math, you see that my average cooked meal costs $2.50. Big big savings!
  
• Below are some useful websites with quick and easy recipies.
  
• Kraft
  
• All Recipies
  
5. Work Overtime (if your job allows it).
• Overtime is great because it typically pays 1.5 times your hourly rate as well as it typically does not require any extra work outside of your regular job.
• Overtime gives extra unbudgeted income that can be used to weather the recession period.
6. Turn a hobby into Entreprenuership.
• One of my biggest hobbies is computers. I have turned my hobby into a small entreprenuership where I help out people with any computer problems they may have. This is a double win because I get money for doing something I would do for free as well as people save money by using my services rather than some big company that charges an arm and a leg for the same service.
  
• Some other entreprenuer ideas...fashion consultant, tutor, dance instructor, bartender, party planner...get CREATIVE.
  
7. Find creative (cheap) sources of entertainment.
• Game nights have become a regular routine amongst my friends. Rather than going out to spend money, we typically organize a game night or crank up some Rock Band and have a blast..
  
• Another interesting idea to do is have a potluck dinner where each of your friends cook an item and create a buffet of food. Just make sure your friends can cook.
  

No one said this was going to be easy, however, it is very doable. The key is to not give up and become very resourceful to make it through these turbulent times. So fasten your seatbelts and hold on because the ride is going to be bumpy, but if we stay the course, we will make it through it. What are some of your tips to make it through this recession period? Please share them in the comments below.

The Credit Default Swap...A Contributing Factor to Today's Economy

There is not really one clear reason as to why the economy is in the situation that it is in today. There are many contributing factors that have been at the center of the government's investigation consisting of subprime mortgages, high consumer default rates as well as unemployment. However, one of the known, but not talked about, contributors to the current state of our economy is an investment product called a Credit Default Swap.

Below is a short explanation of the credit default swap as shown from wikipedia:

A credit default swap (CDS) is a credit derivative contract between two counterparties, whereby the "buyer" or "fixed rate payer" pays periodic payments to the "seller" or "floating rate payer" in exchange for the right to a payoff if there is a default^[1] or "credit event" in respect of a third party or "reference entity". (Source)

To put this in more plain terms, take the following example:

Most of us (the buyer) who have cars have car insurance in the case that something happens to our car and we need to have our car replaced. We pay a periodic "premium" to an insurance company (the seller) in return to have the insurance company to provide the replacement cost of our car in the event that something happens to it. In most cases, if something happens to our car, we have to provide evidence to the insurance company by showing them the car. After the insurance company sees the car, they will more than likely provide you the money according to the previous agreement. Sounds reasonable right...

Well, let's take a look at Credit Default Swaps. The way it was designed to work is to allow investors to buy insurance on fixed income that they bought from a company (such as a company bond) so in the case that the company went bankrupt, they could recover some of the cost they invested in the bonds. Well, due to many factors, this started to be abused by investors and instead of actually buying the insurance to protect against losses for bonds possessed by the investor, they began buying the insurance with intent of receiving a big payout if the company went bankrupt.

Since there is technically no regulation in this market, investors did not need to show proof that they owned $10 million dollars worth of bonds to take out $10 million dollars of protection against this bond. In addition to that, the companies providing the protection (insurance companies and others) would gladly accept the insurance premium paid by the investor to insure companies (such as Lehman Brothers and Washington Mutual) that seemed financially sound and did not look to have a big risk of defaulting over the past years.

In most cases, those same insurance companies did not set aside the needed capital to cover the coverage promised in the case of a default by those companies (although they signed contracts legally obligating them to pay the specified coverage). So in turn, when major corporations, who have been opened for multiple decades (such as Lehman Brothers and Bear Stearns), began to fail, those insurance companies were unable to pay contributing to the bankruptcy problem being experienced by our financial institutes.

The insurance companies never should have accepted premiums from investors that could not prove if they owned the fixed income securities. In addition to that, they should have operated as their purpose and set aside the money necessary to cover the insurance claims in case of a default.

The financial lesson learned is that unethical business practices (AKA greed) never pays off and is eventually destined to fail. A lesson that we all can learn from this is that there are not too many highly-probable ways to get rich quickly. It all comes down to how much risk you are willing to take as well as the level of loss that you are able to deal with. Below are some of the lessons that I have learned recently about greed and personal finance in regards to my situation:

1. Day-Trading in the Stock Market
2. Investing in Penny Stocks
3. Investing without doing Due Diligence on companies

By no means am I trying to discount these methods of investing as many will argue that these exact methods have worked for them. I am purely providing my experience with these methods in hope to save someone the financial grief that I have experienced before. By all means, if you have the magic formula that works for you 99.99% of the time, please feel free to share it with us.

P.S. - I learned about the Credit Default Swap product from attending a highly informative ToigoTalk about the subject. Click on the link to learn more about this and other financial topics.

For another interesting article about Credit Default Swaps, check out the following link:

http://www.dailywealth.com/archive/2008/oct/2008_oct_04.asp

More Information about Recessions

Well, I think that the country is in a bit of a recession now. No worries though, during my usual exploring on the Internet, I found an interesting chart that contains information about past recessions the country has experienced. The link below provides a bit of an explanation as to why the recession may have occurred as well as give the duration of it.

This may help to calm all of your fears about our current economy. Check it out!

Brief History of Recessions [Harvard Business School via Consumerist]

The Best Return...Investing in your Future

“When it comes to the future, there are three kinds of people: those who let it happen, those who make it happen, and those who wonder what happened.” -John M. Richardson, Jr.

We are definitely in some times of great uncertainty right now. The housing market is in shambles, the stock market is not much better and more than ever people are questioning the government's ability to bring us out of this situation. Well to be quite honest, no matter who gets elected this coming November, no matter how much change each respective candidate promises us, the real change is not going to happen until we decide it to happen.

So how are we supposed to accomplish this change?

A change can start right now when you commit to investing in yourself. As I have tried to explain in the previous articles, we are our most important asset because we each hold unlimited potential to what we can accomplish. Due to this, we should use our potential to accomplish our goals by investing in our future.

1. Take calculated risks
• There is a difference between an investment and gambling. Note the differences in the definitions below:
• Investment: the investing of money or capital in order to gain profitable returns, as interest, income, or appreciation in value. (Source from Dictionary.com)
• Gamble: to stake or risk money, or anything of value, on the outcome of something involving chance (Source from Dictionary.com)
• There is no mention of "chance" involved in investing which means that with a sound investment strategy, you are almost guaranteed a reasonable return on your money. Understand that one must invest in knowledge on your different options for investing and the risks associated with each option.
  
2. Give 110% in everything you do
   
• I always like to think of the saying "Go hard, or Go home!" when I am not feeling as motivated about doing work. It is a classic statement because it is so true. Unfortunately, we all get tired and lose motivation every once in a while, however, we do not get a second chance at life. If we do not push forward and do the best we can everyday we have the chance to, there is no telling of what opportunities we may miss. We should never be mad at ourselves if we have done the best we could and gave it all that we got!
  
3. Help Others
• Paying it forward may one day pay you back.
• If you ever receive the opportunity to help someone out, take advantage of it and do it. We never know how some day that person (or someone else) will return the favor. Also, must realize that we are very fortunate to offer assistance to someone else because with the state of this economy, we never know when the shoe will be on the other foot.

This concludes my series on "Investing in Yourself". I hope that we begin to realize that we are our best asset and by increasing our stock price, we will be able to increase our overall situations as well as our economy. I will resume talking about personal finances and continue to share my experience as it happens but I really hope that we become more aware of the true power of change each of us possess.

As the quote says at the beginning of this article, there are three types of people...which one are you?

The Best Return...Investing in Experience

"You gain strength, courage and confidence by every experience in which you really stop to look fear in the face. You are able to say to yourself, 'I have lived through this horror. I can take the next thing that comes along.' You must do the thing you think you cannot do." -Eleanor Roosevelt (1884 - 1962)

Have you ever got in front of a large group of people to give a speech only to experience that sudden tingle of nervousness and fear before opening your mouth? At this point, you have two options, either remove yourself from the spotlight, or continue with your planned speech. You decide to go with the latter, take a deep breath and give your speech. Usually upon completion of the speech, you will say to yourself, "That was not that bad after all" and feel like public speaking is your new niche.

Although this is a trivial example, we find the more we experience, the less fear that we have. This is especially evident in today's market due to the fact that those of us who are new to investing look at the market today and see that it seems like the "Great Depression" is coming for a second time around. However, for those who are more seasoned, they know this current economic condition to be part of a financial cycle that is completely normal to the economy. They have lived through and experienced the economy during the early 1980s (which was dubbed a "recession") as well as when the technology bubble burst in the early 2000s.

They know that historically, the market recovers and surpasses the point at which the economy slowed. So while many of us are afraid to dive in, pull out our money and use techniques such as Dollar Cost Averaging to make more money, they patiently continue to follow their investment plan and continue to increase their shares in the market. As illustrated by the initial example, a lack of experience can cause imminent fear and hold us back from reaching our goal.

Experience as defined by Wikipedia:

Experience as a general concept comprises knowledge of or skill in or observation of some thing or some event gained through involvement in or exposure to that thing or event. The history of the word experience aligns it closely with the concept of experiment.
(Link to Definition of Experience)

Below are some of the ways that experience can be used to increase your overall stock price:

1. Experience is the best teacher.
• A mistake is not a mistake when a lesson is learned.
• During my initial entry into the stock market, I went against the recommendations of my colleague and invested heavily into the financial market during November 2007. As most know, this was the beginning of the mortgage meltdown and I lost about 50% of my initial investment during this time. I learned a lesson to perform more due diligence and to develop a sound financial strategy rather than betting blindly.
• Never be afraid to try something new in fear that you will not get it right.
• "Anyone who hasn't made a mistake, hasn't learned anything"
  
2. Experience is fulfilling.
• I went White Water rafting for the first time a few months ago and it was a BLAST. During the trip up to the site, I was nervous due to my fear of the river. However, by having an experienced guide, my fears were calmed and I had the adventure of a lifetime!
• So much focus is placed on "learning from mistakes" through experience, however there are times when you get it right! Do not forget that there is a 50/50 chance to succeed during your experience.
  
3. Experience makes you stronger/provides hope.
• Once you have gone through something, you know what to expect and do not have the same fear to go through it again.
• Knowing that you have accomplished something builds onto your confidence and helps you know that you can accomplish more.
  

We must learn that no one is perfect and that it is impossible to get everything right as we go through life. One of the biggest failures that we can have is to not experience new things at all. We must embrace new experiences and take positive risks to improve ourselves.

What is holding you back from experiencing new things and taking control of your financial future? What are some of the experiences that you have had (good/bad)? Feel free to share with us your thoughts on whether you would do it again.

Stay Disciplined!