Tonight I had the opportunity to watch the State of the Union; which outlines Bush’s final plans for America in the coming year. As the President’s final months come to pass, he is also trying to set some of his legislation chiseled in stone. Of course I am referring to his tax cuts that he introduced in 2001 and 2003. Here is just someone’s opinion on what the tax cuts could do if they are implemented in the tax code for good.

“If Congress makes the tax cuts permanent, the major economic benefits begin in 2011. For example,

Total employment will rise by 1,087,000 jobs per year, on average;
Annual GDP will be over $111 billion higher, after inflation;
Personal savings will grow by $163 billion per year, on average, after inflation; and
After-tax household income will grow by an annual average of $274 billion per year, after inflation.”

Am I true believer of the tax cuts that the Bush administration has put into place over the past eight years? Take a wild guess? No, of course I don’t. Do I believe in lowering taxes? Hell yes I do, but the administration is still going about it the wrong way. I’ve said this over and over now, but the mainstream media still won’t cover the real long-term damages that these tax cuts will have on America without cutting spending. How does the government really expect to purchase all this fancy military equipment without increasing taxes? I am not in favor in cutting military budgets, by any means. I would love to see an increase in domestic military spending and a large decrease in international spending though. It’s like the game of ‘Risk.” It’s much easier defending your boarders than to have your armies spread out all over the map. The Bush administration needs to cut their credit card in half and burn it.

People need to understand that I am not in favor of increasing taxes. I truly believe that raising them will inevitably throw us into a depression, but we must lower our spending habits to save our nation’s future. My first idea that the government could implement that could save them a lot of money, while also cutting taxes for all Americans, is lowering government spending in the private sector.

There are many government programs that tax every single business, but only benefit a few. Here is just an example that helps one industry, but damages another. If the government gives a 10 billion dollar grant to an oil company for global expansion, this will inevitably hurt the alternative oil industry. What happened to the invincible hand of economics that we’ve preached about in econ classes for so many years? Here’s a quick definition - “Smith claims that, in a free market, an individual pursuing his own self-interest tends to also promote the good of his community as a whole through a principle that he called “the invisible hand”. He argued that each individual maximizing revenue for himself maximizes the total revenue of society as a whole, as this is identical with the sum total of individual revenues.”

The other factor here is that every single business will have to pay for some of this “free” grant money. A small business owner in Georgia that makes doo-dads will not see a return in this situation. All they will see is a tax hike in their quarterly payment. Imagine this scenario but a 100 times larger. Government spending has corrupted our nation and truly damaged our economic future. We need to let business fuel themselves and add the real sense of an American meritocracy. In a perfect environment a large business would loan a company the 10 billion dollars and expect some kind of return. That is the true sense of American investing. Business investing in business for the betterment of both parties.

Can we really get out of this hole we’ve dug by implementing tax cuts and still allow rampid spending? Something needs to change… What do you think? What do other people think?

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With recent months as economically challenging as they have been for the mortgage and lending industries and the housing market, it should come as no surprise that expert economists and financial thinkers are keeping a close watch on the credit card debt situation. Many are concerned that credit card debt could experience a similar bubble burst type of disaster, meaning even more losses for financially struggling lending institutions.

According to a widely published January 23, 2007, Associated Press report, Capital One experienced significant fourth quarter profit loss. One of the nation’s leading credit card companies, Capital One saw a 42 percent reduction in profit as compared to the previous year’s fourth quarter earnings. American Express also, according to recent reports, experienced fourth quarter losses of just under 10 percent. Some fear that this could be a part of a trend, as financially strapped consumers struggle to make ends meet.

The New York Times recently reported that “credit card debt is growing at the fastest rate in years,” pointing out that the rate of growth “may signal coming trouble for the banks that issue them.” According to MarketWatch.com, this increase in debt seems to be because “consumers loaded up on credit-card debt to make up for a loss in the purchasing power they once wielded by refinancing mortgages during the real-estate boom.” Delinquencies in credit card debt payments are starting to edge up, and not only among those with bad credit.

Lenders and investors throughout the word are still staggering from the blows they took during the bursting of the housing bubble and the mortgage and lending meltdown, and most economists agree that neither of those situations have reached bottom yet. With the potential financial danger involved with a similar crisis happening in the credit card market, there will be many eyes – those in America and beyond – watching those numbers during the next few months.

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Should you really shy away from a big night or take financial hit for a good time? Most savvy spenders will say “you can have a great time and still be on a budget.” While this is true, I still think that splurging once in a while for a good night is definitely worth it. For New Years, I attended an all-inclusive party which had a pretty nice price tag before you were allowed in the hotel. The tickets were on pre-sale for $170.00 before December 15^th and $205 after the 16^th. Fortunately, I searched on Craigslist and found a ticket for $140. It never hurts to make sure you are getting the best price possible. But this was just one of many purchases I would make that day.

Because I traveled back up to Atlanta for the holidays, I didn’t have access to nice clothing. I had to purchase some black shoes, and pants for the party so I didn’t look like a scrub. I was also in a time crunch so I had to purchase the “nice” clothing at Wal-Mart. Yes, Wal-Mart. I was pleasantly surprised that they had some nice clothing for under fifty bucks. Now my price tag is almost two hundred dollars for one night of fun and I haven’t even showered yet. Was it worth all the hassle and money? Of course it was. I realize that I won’t be doing this every night, so I decided that it was a great opportunity and I shouldn’t be worried about the price tag.

A lot of people get so consumed with money that they forget that having fun sometimes comes at a price. Money doesn’t always buy happiness, but it sure does help. I could’ve found a house party which doesn’t really cost much at all, but I’ve done that so much in the past. This year I am trying out new things that I’ve never experienced before and I have to say that it’s going really well. This lifestyle is a little more lavish than my life in 2007, but it is fun and interesting. I am not going to jump in a mound of debt because of the new lifestyle, but I realize that I won’t be saving as much as I used to. Sometimes you got to take one for the team though. I have all my life to save and make money, but I am only young once.

My New Years resolution isn’t saving money, increasing my income, or trying to pay down some of my debts. It is on the other hand, trying to have as much fun and excitement within my means. I know my views on life and finances are changing a lot right now, but my life changed a lot in the last quarter of 2007. Maybe later on this year I will be able to have as much fun as possible and save money (which would be totally awesome). Remember that life comes at you fast and if you don’t try to make the best out of every moment, you might miss out on something huge. Have a great New Year and let’s make 2008 even better than last year.

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Are you in debt or have some other type of financial burden you just want to hide in the closet? Trust me on this. You are not alone. When you finally accept that you are in a financial bind, the faster you can work at removing it from your life. Before I moved to Orlando, I had to pump in $8,000 into fixing up my rental property after my previous tenants did some pretty big damages to the house. This situation evaporated all my savings and I started to live on credit. To make things even worse, a business I was partnering with ended up terminating our agreement and totally removed any type of monthly cash flow. I can honestly admit that this was one of the hardest times of my life. I didn’t know what to do, which led me to a small type of depression.

I took even more struggle for me to actually realize what I had to do to get the ball rolling in the right direction. Being in debt, spending over 40 hours a week repairing my rental house, and having no income really threw a wrench in my plan on being financially independent. My sister-in-law said to me that “There’s a big difference between successful and unsuccessful entrepreneurs. Successful entrepreneurs find any way possible [legal of course] to get out of a situation on top. Unsuccessful entrepreneurs give up and cry about their situations.” I was acting like an unsuccessful entrepreneur. Having a negative outlook on the scenario will always bring a negative outcome. Think positive and ask for guidance from people that have gone through a similar situation. Remember the first step to any problem is admitting it’s a problem.

I needed to think of ways to get out of my mess and come out on top. Originally, I tried to handle everything at the same time. I needed to get new tenants, create a case on my previous tenants, find a job, get money, repair my house, and at the time, keep my girlfriend happy. As all of you know, I didn’t resolve this situation without lots of bangs and bruises. I am still in debt from all the house repairs, I didn’t end up getting any money from the old tenants, and I lost my girl. Was I successful in the overall situation? I think so. I currently have incredible tenants, I have a new job in Orlando, and I am paying off my debt slowly but surely. I learned that you need to handle everything like an individual project. Complete one thing at a time and then move on. In my situation, I needed to get new tenants, but first I needed to repair my house so I could get people in there. So repairing my house was the number one priority. After that, things started to fall in place.

Now that that part of my life is complete, I can reflect on the decisions I’ve made and understand my mistakes. After analyzing the past year, I realized that this was all spun from a poor decision I made last year. Renting out my house without doing proper due diligence really smacked me in the face. If I tried to find better tenants, I wouldn’t have had to throw in all the money and go through all the stress that came from it. With every huge financial decision you need to take your time and reflect. It would have been better for me to pay one more month of the mortgage and try to find better tenants; instead of renting it to bad tenants.

Just remember to face your fears before 2008 and handle them accordingly. Don’t be afraid to ask questions to people that know and always learn from your mistakes.

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We all know of many people that are forever dumping money into high risk investments trying to beat the market. Unfortunately, most people don’t even come close, due mainly because of the investors egos. Many people feel that they can time the markets (meaning get in and out at the right time).

The problem with this strategy is that people are emotional and have a hard time selling when a stock is up. Look at Nortel for example, near $800 in stock value fell and fell as low as $1. I’ll let you guess when the most people entered this stock and when most bailed.

There must be an easier way to get a high return without playing all the stock market games. Many people in the US have credit card debt. On the average most people carry a balance of $8000. With an average rate of 14.56%! Assuming no compounding, that’s $1165 per year that you’re losing. I challenge you to find another investment with that security and return! Think about it. Pay off the debt before you start throwing money in the stock market. When you have credit card debt with a high interest rate, your personal return is still 0 if you’re investing in stock (Your stock market return 11% your credit card interest rate 11%). Pay it off then invest.

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Are cash advance loans really that scary? Do they end up helping some people that are in need of financial assistance? Probably… I mean there are exceptions to every rule. I’ve only read and heard horror stories about payday loans and how they are out to get you. I will never apply for a payday loan (at least I hope so), but for some people it could possibly get them out of a rut if they end up paying the loan back in full on the day it is due. People need to always read the fine print and always plan ahead. If you ever end up applying for a payday loan, paying it back immediately needs to be your top priority. This should be a last resort and make sure you have exhausted all other types of financing (i.e friends, family, neighbors, and trying to be beggar on the streets).

I just received a new advertiser on eFIPO and decided to write a quick blurb about payday loans. They have allowed me to write my personal feelings on payday loans without any type of censoring.

The following statements are not mine and they belong solely to National Payday.

Cash advance loans, also known as payday loans, can be a necessity in a financial crisis. You may be forced to give up your paycheck to take care of emergency bills or the stress of living paycheck to paycheck is just too stressful at certain times of the month. There are several excellent finds on online for cash advance loans. You will be able to find many options from the comfort of your own home.

A cash advance is so simple to do over the Internet and many online lenders offer free cash advance loans to people who are using the service for the first time. This can save you a lot and make the process of getting a cash advance cheaper and easier. The process is a breeze and it only takes a few minutes to fill out your online application. All you have to do is show that you are 18, have a job and a checking account and you can be approved within minutes. The money can be in your checking account within 24 hours and your stress will be relieved. If you find that you have extra cash come in, you can pay your loan early on online or allow the lender to withdraw the amount on the loan’s due date.

Borrowing money has never been easier and thanks to the Internet it is as simple as ordering something off of eBay. You don’t even have to leave your house or be seen walking into a payday loan lending office, which is often a concern for some people.

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Now that I can finally see the light, some hidden, yet necessary costs are revealing themselves. The past month, I’ve been receiving tons of mail concerning graduation announcements. They are a great way to tell people that you are graduating and they can also provide some pretty nice financial benefits. When I graduated from high school, I didn’t really know anything about graduation announcements because they aren’t really popular in Canada. But now that I know about them, I’m going to milk the cow. Just kidding! Before I send the announcements out, I need to purchase them (this can cost a pretty penny). Some packages range from $100- $250 just for the announcements. If you expect to get money or presents in return, don’t cut costs with your announcements. You got to get poor to get rich (meaning spend more money on announcements to get nicer rewards).

I am also interested in purchasing a frame for my diploma. This can set you back another $150-$250 dollars depending on the quality of the frame. I highly recommend purchasing everything from one company to get some discounts on the whole package. After totaling up all the costs, I’m looking at throwing about $300-$400 on graduation (excluding graduation festivities).

• Announcements with all the bells and whistles- $110 to $140
• Cap and gown - $50
• Frame-$150
• Mailing Fees- $25

I’m hoping this stuff will end up paying off! Feel free to send me gifts or money if you would like at JRBeaudry at eFIPO.com. Just kidding, but really feel free. A congrats will be fine too!

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Check out Aridni. They are currently having a financial/entrepreneurship/business poetry contest. Aridni’s Poetry Contest: Mixing Business with poetry. Here’s my poem that I submitted for the contest. I hope you like it!

I’ve seen many men throw away their money.
I would even point and laugh and think it was funny.
People will buy gold and expensive liquor.
Little do they know, their debt is getting thicker.
I try to explain and tell them you’re way out of sight.
But all they do is shout and want to pitch a fight.
“Stop judging me! I can spend all my cash.”
Little do they know, it’s gone in a flash.

After mounds of debt, they come knocking for advice.
Know they realize debt is like a bad case of lice.
Stop buying crap and pay down your debt.
Did you really need to buy a diamond necklace for your pet?
You’ll find your retirement money in your shoes to be sold.
Now sell all your stuff like your baseball hat and your mouth full of gold.
Your life is not over. You didn’t soil it.
But stop throwing money down the toilet.

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I’ve read a lot of bloggers views on why 0% offers are such an attractive deal. Some make a pretty good argument on how to make “decent” money by following a pretty easy plan to receive interest on the borrowed money. This seems attractive at first, but the negatives really do outweigh the positives.

Here’s a quick list of the positive reasons.

Extra money- You will receive an extra $10 to $40 per month after all is said and done.

Making money off someone else’s money -Leverage is usually always good.

No money down option -You don’t have to put up any financial backing/money or collateral/tangible asset to earn interest.

Here are the negatives I can think of on the top of my head.

Huge financial responsibility -Can you discipline yourself to stay on top of the minimum payments and not rack up any other kind of debt? This is very hard to do for 99% of the American population. Just because it’s free money doesn’t mean you don’t have to make large monthly payments to amortize the debt.

Having the extra cash flow - Can you make the large monthly payments on top of your regular bills? This can pose a big problem for most people. Your minimum payment can reach up to $300 bucks a month! Here’s a simple solution for this problem. Just payback the loan with the money you borrowed, but you will be cutting into your gain (which that would totally suck).

Is it really worth it? - What happens if you couldn’t afford one of the monthly payments because your car broke down and you need the extra money to pay for the repair costs? What if you become incapacitated or lose your job? Your interest jacks up and you no longer qualify for the 0% offer. Your minimum payment could easily triple in one month and for the life of the card. These issues can easily spring up on the drop of a dime.

If you really want an extra $400 dollars per year, consider investing a little more and spending a little less. Learn the rules about retirement accounts to save money on taxes. You can certainly be $400 dollars richer by cutting out random purchases for six months. Shop online for things you buy at a store and learn how to bargain on pricing! The gain is not substantial enough for me to throw on a couple hundred pounds of stress on my back. If you really want to be cheap, learn how to conserve on things you’ve never even thought of.

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First Quadrant- Debtor

Whether you’re in college borrowing student loans, or you’re in the workforce with a ton of credit cards, you will be regarded as a debtor to all bankers. Why do some people fall in a hole of debt, while others manage to rise above it all? Sometimes you can’t really stop it. You were born into a lower income family and you’ve had to pay your way through life. I call these debtors the diamonds in the rough. These types of people have the ability to transform their debt to knowledge later on in their lives. They know the true value of a dollar and they usually try their best not to blow their money on random things.

On the other hand, you have this type of debtor that ends up blowing even more money on stupid things because they don’t know any different. They will spend all their money on a depreciating asset¹ and then use their credit cards and loans to make it “pimped out”. “Pimped out”is just another word for stupid spending. Usually, these types of people are very generous to their friends at a young age. They usually pay for drinks at the bar, fast-food for friends after the bar, and have massive parties at their place when the bar is closed. I call these types of people the live-in-the-now debtors. They don’t think of the long term liability they are getting themselves into. I worry a lot about the live-in-the-now debtors. Unfortunately, they are usually the ones that file for bankruptcy before their 26^th birthday.

Similarities between most debtors

• Look at their minimum payment as their actual payment.
• Spend 15-20% more than what they make.
• Eat out more than they eat in.
• Present thinkers instead of long term thinkers
• Postpone paying off their credit cards and keep more cash on hand.
• Have trouble sleeping at night because they worry about paying credit card bills
• They have addictive personalities i.e. drinking, gambling, and so on

Solution

The first step to reach the Check Casher quadrant is regulating your spending habits. Stop using credit cards to pay for things. Go on a cash only budget. If you need help if your budget, please take a look at this post. When you’re on a cash only budget, once you run out of money, you run out of money! You can’t rely on credit cards to bail you out this time. A cash only budget teaches self-discipline and can cure your debtor type of personality. Your big bills need to be paid before you start paying for the small stuff. Your rent or mortgage, food and necessary bills come first! Here’s a rough budget for reference purposes.

Slowly pay for your credit cards till they reach $0 balance. This might take three months or even three years depending on your debt level. After you reach the $0 balance, you can jump to the Super-Savers quadrant. Give yourself a high five! Now you have to learn how to become an Intelligent Investor.

*eFIPO’s Rule* When you’re a debtor, do not buy any thing you don’t absolutely need!

¹ Cars, TV’s, stereo systems

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