I am currently working on the Cheaters Guide to all things IRA. I know you could probably google most of the information contained in the guide but my goal is to put it all in one place written clearly and concisely. This Cheaters Guide to IRAs will hopefully help you better understand what your employer may be offering you and for planning purposes how to best allocate your money now and down the road.

  In the Cheaters Guide to IRAs I will be covering the Roth IRA, Traditional IRA, 401(k), Roth  401(k) , and Non-Deductible IRAs. In a separate addition for the self-employed I will cover SEP IRAs and SEP 401(k)s . Even if you already have a good understanding, this reference should come in handy when you have a question and are not sure of the answer off the top of your head. I hope you will find it useful and will be able to download it shortly. Please leave any suggestions on this or anything else you see on the site that could be improved under the suggestions category. As always please be constructive and always do your own necessary due diligence before making any investments.

Thank you,
Matt

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     Businessweek.com wrote a great article on 20 business ideas that someone can start on the side for extra income. It actually came out earlier this week I believe but I was reminded of it when I saw a similar story on my local TV news. The story on my local news actually spoke of stay at home moms and woman laid off from work starting businesses. These are people who took what could have been a desperate situation and turned it into a positive success. In fact one woman started her own baking company and sold 500,000 cookies in a short period of time since starting the business. This fits right into the business week article as it mentions being a baker as a part time business idea.

   You will see that I am a big fan of starting a business. One because it is a goal of mine to eventually own and run several successful companies. But also because I have seen how powerful owning your own business can be. I believe most of us have a talent or idea that we can transform into success. Click the following link to see the complete list of 20 part time business ideas.

20 Part Time Business Ideas

   On May 31, 2009 there was a special on CNBC called the “The Oprah Effect”. It was a very interesting special that highlighted several companies and the effect of having one of their products endorsed on Oprah’s Favorite Things Show. During the special they briefly stepped you through their story of getting the call from Harpo Productions ( Oprah’s media company, and yes it is Oprah spelled backwards ) and how it impacted their business.

    This was interesting for several reasons. One it talked about the vast reach of the Oprah show and the staggering size of her audience. Oprah has been in the talk show business for over 20 years. Oprah’s net worth is estimated to be over 2.7 billion dollars. The Oprah Show has over 44 billion viewers per week. With statistics like these it is no wonder that she has the ability to completely change your life or your business. Now obviously it takes a great amount of work to get an endorsement by Oprah but as you will see in the stories to follow it is possible.

    The first example of the power of Oprah is when in October of 2008 she said that “she loves” the Kindle. Amazon sold out before Christmas. Another example is a business called “We take the Cake”. The current owner baught this business because it was going bankrupt for the sum of $72,000 . Using her marketing background she was able to update the image of the business but it was not enough. Then one of Harpo’s producers received a keylime bunt cake from the “We Take the Cake” bakery and got one for Oprah because she thought it was so good. Oprah decided to select it for her Favorite Things in 2004.  The impact following that episode caused “We Take the Cake” to get so many phone orders that their voicemail would fill up every 45 seconds. It crashed their web server and helped to double their sales. But the true benefit was the residual partnerships. The bakery was soon selling their cakes through the Neiman Marcus catelog, their batter to Whole Foods and the biggest benefit which is they are now baking wedding cakes for high-end resorts for the tune of $5,000 to $20,000. We Take the Cake is now estimated to gross over one million dollars a year.

   Several other business were highlighted through the special with similiar results. There were also examples of people who have benefited from Oprah by associating themselves with her instead of by having a tangible product to be endorsed. Robyn owner of the blog livingoprah.com now gets an estimated 10,000 readers per week and has a book deal under development because she blogs about doing everything Oprah. Basically anything Oprah recommends on her show she does. Whether it is buying her favorite things or doing a certain amount of meditation, she does it. Then she blogs about the experience. There is also a woman who has a very successful coaching business structured around preparing people to be on the Oprah Winfrey show and how to handle being interviewed. Let us just say her rates are not cheap.

   You are probably wondering how this relates to the theme of my blog or why you just spent five or ten minutes reading this article. I feel that there were several important things to be learned. This special was relevant because if you read my blog you know how important I think it is to have your own hustle. I feel that this show highlighted some created people and their process.

    Things that I learned are you can have a great product, if nobody knows about it then you will find yourself slowly going bankrupt. Getting your business in front a massive audience of the wrong people is much less effective than getting it in from of one right person. If you do have a product that seems to align itself with products usually chosen by Oprah’s favorite things, having her endorse your product is guranteed to change your life. As an entrepenuer it is important to keep an open mind, develop a good quality product or service and provide excellent customer service. So even if you do not get in front of Oprah you can still suceed.

Thank you,

Matt

*For a full listing of the products highlighted please click the following link – The Oprah Effect

   In my quest to continue to help myself and others save money to build wealth I came across an interesting factoid. Aparently I have been living in a bubble and you may already know what I am about to write about but Target has both coupons and grocery sales listed online. Of course this only applies to Super Target stores but offers another alternative to big chain grocers who continue to raise prices more often and offer sales and coupons less.

    Food is usually a large part of most households budgets especially those with several kids. According to the USDA the average spend per household was 9.8 % in 2007, the last year data is available.  That is a decent bite, not to mention that food prices have continued to increase since so it would probably be fair to say this number is higher now. Now I am not going to recommend going to 10 different stores all over your state but if you happen to have a Super Target close by you could save some money. I purchase certain goods there because they are cheaper than most places and now that I know about their circular and these coupons, I am going to see if I can expand my shopping list.

   So the two links you need to follow are the weekly ad . Above the image of the circular you will see a field for your zipcode. Enter this first so you can get the sales targeted for your region. Second is the link for the coupons you can use at the Super Target. The total savings for the current offering of coupons is slightly over $12 but this can add up to substantial savings over time. Also, unlike many money saving tips there is no sacrifice or cutting out, however there is some printing out involved. I watch a show on CNN called Squawk Box and they have had one of Targets larger investors William Ackman on several times and each time he mentions them expanding their retail food business. So good luck and happy savings.

Thank you, Matt

    I recently happened upon a site called iwillteachyoutoberich.com. This obviously caught my attention as I am always looking for people who have new perspectives on personal finance. This gentlemen seems to be a bit ahead of the game as he has already developed a web site and recently released a book.

    I continued to look at the web site for two reasons. One i want to be rich, or more specifically, wealthy and I am always looking for tips or information that can inspire posts on my own site. Interestingly enough Ramit Sethi refers in one post to The 4-Hour Work Week by Tim Ferris. This is interesting because I recently read that book and posted my thoughts and opinion on the ideas discussed inside. Ramit shares some themes such as automation. Now Tim and Ramit are not the only ones to take this view of automation. You may have heard of a book titled , “The Automatic Millionaire” by David Bach. His book was published before both of the above mentioned so maybe he inspired them.

   I like the layout of the site, it is clear and easy to read. He talks about using ING Direct Savings because it has a feature called “sub-accounts”. These allow you to create pseudo accounts within your main account as a way of organizing your money. For those of us who are visual or compartmental, this is a real plus. The downside is ING is offering less than 1% on savings. Granted rates are not high now but there are several banks offering in the 2.25% range.

   I will probably get the book. It is inexpensive and if I come away with something that saves me $10 just one time it would have paid for itself. I do find that my brain is becoming full. I think I may be at my limits in terms of what I can research and read. Ramit talks about action and that is exactly where I find myself. He took action by co-founding a web company and writing a book. I can relate as those are two things I am striving to do as well. Where are you now? Are you ready to take action? If so what will that action be?

   I was driving in my car and heard a radio ad for Credit Answers on the radio. They are a debt settlement company. What made me listen was that they said now is the time to settle debt because of the economic stimulus and due to money banks received from the government. This is obviously very untrue. Creditors my be more willing to settle now because they know people are being crushed by the economy and would rather get some money than none, but at the same time they are raising interest rates and fees.

   There are a couple other things they said in the ad that bothered me but I cannot remember the specifics. However, I figured I would follow up and check the web site.  First of all there is no mention of their fees.  Wikipedia states some charge a montly fee while others charge a percentage of the money saved through settlement with the creditor. Second, they make a weak attempt at addressing the fact that this will affect your credit for seven years;   as quoted from their FAQ, “That depends on what your credit looks like when you enrolled in our debt settlement program. But in general if you do not make payments and pay your creditors according to the terms of your agreement your credit will suffer. That is one of the trade-offs you will have to make if you are serious about reducing your debt. “  Third, When asked if they can protect you from legal action, they say, “No, but we do have strategies on helping you manage the collection efforts and can direct you to an attorney to answer any suits that may be filed.” However, on a seperate page they state, “If you attempt to work a credit card debt settlement with a creditor on your own, you will lose the protection that comes from the involvement of a professional third-party credit card debt negotiation.” Which is it?

   Now I am not saying all these companies my be using predator tactics. There are firms that probably legitamately have relationships with creditors to expidite and maxamize savings in settling debt. Do not use this as a method of consumption, meaning settling your debt and continue to create new debt.  Hopefully, their fees and having to save the full payment for settlement would discourage such behaviour.

    Things to remember, Credit Answers does not disclose their fees because they want you to call but I think any good business should be up front about their costs. Debt settlement , charge-offs, and the like will remain on your credit report for seven years. Creditors may be more will to negotiate now because of economic conditions and the uncertainty of employeement but there are not any special programs or incentives in the stimulus for helping consumers with excessive unsecured debt.

   As always, be responsible, make a budget, pay off your debt, and good luck !

Matt

An important part of building wealth is obviously saving and investing. We are one of the worst nations in the world when it comes to saving. Please remember that the following is only my opinion and for reference only, not advisory purposes.

    The federal lending rate is zero , thirty year mortgage rates are back down to five and a quarter percent but what can you get for saving your hard earned cash? I am going to go from the perspective that our initial principal we have to save is a small amount , one thousand dollars . You may have much more and that is excellent.

    Let me just preface the following information is for those who do not want to put any principal at risk. The following accounts are FDIC insured up to the current $250,000 and then the $100,000 limit once the former sunsets. It is also important to note that they do not have any sneaky account fees and the minimum to open and maintain the account for each is a dollar.

FlagStar Bank – 3.00 % / $1.00 min ( as of 1 - 09 )
 Troy, MI
 Learn More

GMAC Bank – 3.00 % / $1.00 min ( as of 1 – 09 )
Midvale, UT
Learn More

iGObanking.com – 3.08 % / $1.00 min ( as of 1 – 09 )
Lake Success, NY * Division of Flushing Savings Bank
Learn More

FNBO Direct – 2.80 % / $ 1.00 min ( as of 1 – 09 )
Omaha, NE
Learn More

Amboy Direct – 2.79 % / $ 1.00 min ( as of 1 – 09 )
Oldbridge, NJ
Learn More

    Yes , I am aware that there are other accounts and investment vehicles with higher yields , but none that are insured by the FDIC and none that only require a minimum investment and balance of a dollar. It is important to note for this post that inflation was reported in November 2008 at 1.1 % and historically averages about 3.45 %  ( Average from 1913 - 2007 using data from Bureau of Labor Statistics ) . You want your money to, at the minimum match inflation and obviously beat it if you hope to build wealth successfully.

   So, I am reading an article by the AP on finance.yahoo.com about the auto bailout passing the house but looking at heavy opposition from republicans in the senate. Now at this point the government has doled out so much money, what is another $ 14 Billion ? The government whats someone to oversee General Motors and Chrysler when they take the federal financing, and Ford Motor Corporation should they participate , although they still are stating they have enough cash to stay liquid at this point.

   Now up to this point I am following and it is more or less what we have come to expect. Business is run poorly, bad decisions made, business going under, fed bails business out, tax payer left holding proverbial bag. They would leave us to believe that if we allow these companies to take the natural course of other mismanaged companies ( bankruptcy ) that we would be left it some sort of apocalyptic ruin. I could be wrong as I am not a studied expert of economics and the auto industry but really ?! There are businesses making money , buying , merging and hiring. Why ? Because they are well run with healthy cash flows and strong balance sheets. Is the consumer going to benefit from the Big 3 being bailed out. I doubt this because, whatever stipulations the government tries to impose will still be mediocre when compared to the technology we possess. People are getting 40 year old pickup trucks to run off of firewood, how is it that my car a 2002, gets 17 mpg city ( and its japanese ) . Or Ford makes the the 24 mpg fuel economy on their new Ford Flex seem like a real gas sipper. It goes without saying you are not going to get 24 mpg as no one lives in a perfect lab test enviroment. Yet, intel can put 291 million transistors on its core 2 duo chip die that measures in at a minature 88 mm x 88 mm .

    The clintcher for me though was at the very end of this article it says there is a provision for a pay raise for federal judges. Not only is that obviously not related in any way to the auto bailout but does the government not thing it is in poor taste to give these guys a pay raise in a bill that is going to add an additional tax burden to the American people. I can tell you the cause of our economic woes, greed. Greed is the reason that we did not have the oversight and measures in place to prevent the financial meltdown. Greed is the reason gas mileage sucks. Greed is the reason the government continues to pass bills with large sums of wasted tax dollars. Hey, at least the stock market went up some.

~ Matt