5 Ways You're Probably Throwing Money Away

Did you know that Americans waste half a TRILLION dollars every year? And that's just what economists can measure! The true figure is probably much higher than that. These days, though, we don't have the luxury of flushing our money down the toilet. So, what are you wasting money on? And, more importantly, how can you stop?

1. Wasted food - $165 billion each year.

Before you order in a pizza or head to the drive-through window, take a look in your fridge. Odds are you've got food you've already paid for that'll make for a great meal!

Think everything in your fridge looks boring? Head to the world wide web and search for some ways to jazz up the ingredients you've got. A few creative new recipes could save you hundreds of dollars every month!

2. Wasted energy - $146 billion each year.

You thought your electric bill seemed high, but yikes! Luckily, cutting back on your energy costs doesn't require a complete life overhaul. Instead, simple things - like changing your air filter every three months, turning the thermostat in your water heater down slightly, and using cold water in the washing machine - can make a huge difference.

3. Credit card interest - $49 billion each year.

Did you know the average American cardholder has a balance of more than $2,000 every month and an APR of nearly 13%? You can avoid all of that debt in the first place by creating (and sticking to!) a reasonable budget. Use your credit cards sparingly - like for that unexpected trip to the emergency room, instead of a shopping spree at the mall. And, when you do pay with plastic, set firm goals for paying the balance off.

4. Traffic tickets - $12 billion each year.

This is a low estimate, because it's impossible to add up all of the extra insurance premiums that add up as a result!

So, slow down, stop texting, use your turn signal, and do all of those other great things you learned in Driver's Ed. Sure, you might get to your destination five minutes later or miss a phone call, but at least you won't see police lights in your rear-view mirror!

5. ATM fees - $7 billion each year.

Sounds kind of ridiculous, right? After all, you're paying money to get your own money! Unfortunately, banks keep charging more and more for the convenience of ATMs.

So, what's the solution?

Say "bon voyage" to that giant bank. Big banks are the worst when it comes to through-the-roof ATM fees. Smaller banks even tend to have arrangements with places (like grocery stores) where you can use the ATM for free. Some credit unions take it a step further by reimbursing you for ATM fees!

If all else fails, avoid the ATM altogether. Instead, wait until you have an errand to run and get cash back at the register. That's always free!

How to Compute Your ROI When Making an Investment

The most important thing an investor needs to understand is how to calculate their return on investment also known as their ROI. Even ROI can be computed differently and is sometimes broken down more specifically into the internal rate of return (IRR) or cash on cash return. I will briefly describe each and give very simple examples to help you grasp the concept. When calculating any of these, keep in mind every single expense you had while you were getting a return of your capital. This includes repairs, loan interest, insurance, commissions, fees, etc.

Your return on investment or ROI is the highest level calculation and is what I usually look at for a quick general view into what my investment returned. Keep in mind that ROI can also be negative. You can also compute your anticipated ROI when going into an investment based on your research and projections.

Example 1: Calculating ROI

Bought 100 shares of stock ABC at $10.00 per share. Sold 100 shares of ABC at $12.00 per share. The online broker's commission is $10 each time you buy or sell and you borrowed $1000 at 8% from another investor. This is known as a hard money loan. You held the investment for one year. Most people will simply see that they made $200 on $1000 and say they have a ROI of 20%. This is typically incorrect and too simplified. Here's the correct ROI calculation based on the example above:

Purchase $1000

Commision $20

Loan Interest $80

Total Investment $1100

Sale $1200

ROI $1200-$1100 / $1100

So what on the surface looks like a 20% return, is actually a 9.1% return after you include the fees, interest and rebase your investment from $1000 to $1100.

Your IRR is also 9.1% since you held the investment for only one year. If you had held this investment longer, the IRR would be less. The IRR would be 4.6% over two years (9.1% divided by 2 years) if we pretend that you didn't accumulate more interest on the hard money loan you took out. We of course know this isn't the case in the real world and would have to re-compute the entire ROI.

My favorite part of investing is calculating the cash on cash return. This is where it can get fun! In the example above, you borrowed almost all the money for the investment. Your total cash invested is $20 in the form of the online broker's commission. At the end of the investment you have to repay the lender $1080 (the initial $1000 loan plus the 8% interest). This leaves you with $120. This means your cash on cash return is 500%! You multiplied your actual money five times!

Here's the calculation written out $120-$20 / $20.

Now that you understand ROI, IRR and cash on cash return, your investing will take on a new exciting life.

How A Spouse Can Claim Spousal Benefits Now And More Benefits Later

Social Security pays benefits (i.e. income) based either on your own earnings or on your spouse's earnings. The latter is a spousal entitlement. Gimmicks abound by how you can increase your takings from the Social Security System. Here's another...

The Social Security System pays benefits based on you waiting to your full retirement age (FRA) to receive them. Your birthday determines your FRA as defined by Social Security. It used to be 65 for all, but the age is moving slowly higher.

Nevertheless, benefits paid out to you before your FRA - as early as 62 - are permanently reduced from your FRA benefits according to how much earlier you begin them. And, if you wait until after your FRA to begin receiving benefits, they increase by about 8% per year. There's no further increase for waiting beyond 70.

You always have the right to claim either your own earnings benefits or your spousal entitlement - whichever is greater.

The maximum spousal (let's assume wife's for clarity) benefit you can claim is 50% of your husband's earnings benefit. If the wife claims this before she turns her FRA, it's further reduced -as her earnings benefits would be too.

Working out the best way to get the most from Social Security over time really depends on your age, your spouse's age, your own earned benefits and those of your spouse.

Below is one option for a spouse (assume wife again) to claim now, and then to claim more later.

Claim Spousal Benefit at FRA, and then own benefit at 70

If a wife also has her own earnings benefits and has reached her FRA, she has a choice to make. She can choose to take her own benefits or her spousal entitlement benefits - whichever is larger. If she took her own benefits at her FRA, there could be no possibility for them to increase - outside of Social Security annual Cost of Living Adjustment (COLA).

But she could also choose to receive only her spousal entitlement benefit now. Because she is delaying receiving her own benefits until after her FRA - perhaps at age 70, those benefits will increase by about 8% per year. At, say, 70, she could then switch to her own benefits.

This would make sense only if her own benefits were equal or less than her spousal benefits, but would increase - because of her delay in taking them beyond her FRA - to a greater amount than her spousal entitlement. You can neglect the effect of COLAs since all benefits go up each year by that amount.

She can continue working too. Her work credits can serve to increase her final benefits just that much more. But check with current law just to be sure nothing has changed since this writing.

Financial Ratios And Their Meanings

Over the beginning of this summer, I have had the chance to work with a few startups. While working with them, I realized there is a missing piece of core understanding that is needed to grasp financial ratios. These ratios tell a company, whether new and unstable or old and stable, a lot of important information that a business needs to know in order to make informed decisions. It is not enough to merely glance over the balance sheet if an owner wants to succeed, they need to understand what the numbers mean and what they can do to change their outcome. I will explain three ratios, solvency, efficiency, and profitability.

Starting with the solvency ratio, what is this? This is one of many ratios that is used to measure a company's ability to meet long-term debt and obligations. In layman's terms, the solvency ratio measures the size of the company's after tax income, which excludes non-cash depreciation expenses, which is compared to a company's total debt obligations. Essentially, this ratio provides a measurement of how likely a company will be able to pay its future debts and obligations. The equation to find this ratio is (after tax net profit + depreciation)/(long term liabilities + short term liabilities).

After giving the definition, let's consider the importance of this ratio. Typically, a healthy solvency ratio is above 25%. The lower the solvency ratio, the more likely the company will default on its debts. When an owner is looking over their balance sheet, it does not take much effort to extract the required information to calculate this ratio, and it tells them so much. Yet, many owners miss these concepts, why is that? In many startups, the owner has thought of an idea, an idea they love. They are betting on their product doing well, which is perfectly fine. However, because they are so enthralled with their idea, they often believe they don't need to worry about the fine details such as ratios to make decisions. Therefore, they bypass these issues and look at the big picture only. Knowing if you are able to pay your debts is imperative not only to you, but to your investors. In addition, knowing you have been able to consistently pay them reflects stability, showing a worthy company.

Secondly, we have efficiency ratios. Efficiency ratios are used to explain how well a company is using its assets and liabilities within the company. For example, how much liabilities and assets did the company have to take before reaching said goal. Although the calculations vary, the most common one is expenses/revenue. (Expenses typically do not include interest expense)

When an owner knows this ratio, they can quickly measure their ability to turn resources into revenue. The lower the ratio, the better. For example, if Walmart's total costs, excluded interest expense, totaled $5,000,000,000 (B=billion), and their revenue totaled $8,000,000,000, (5B/8B=63%) they have a 63% ratio. This means that it took Walmart $.63 in expenses to generate $1 of revenue. That is not necessarily bad, nor is it outstanding. If a startup company owner can see this ratio on their normal expenses and revenues, they can understand how their company is doing and if they're absorbing too much cost. If a company consistently checks this ratio on a monthly basis, they can see how they are trending and what types of expenses and revenues are causing the most fluctuations.

Lastly, we have the profitability ratios. These ratios, as the title suggests, helps explain what type of profits the company is achieving. More precisely, it assesses the company's ability to generate earnings compared to its expenses. Some of the ratios include: profit margin, return on assets, and return on equity. We will specifically look at net profit margin (NPM). This ratio tells us how much profit a company sees for every dollar in revenue or sales. This ratio is the inverse of the efficiency ratio. The calculation is (net income/total income).

Looking at the calculation closer, let's take the Walmart numbers. Net income = 8B-5B=3B, now we take the 3B and divide that by the total income of 8B, which equals 37%. In a neater form, (3B/8B=37%). Remember, our efficiency ratio was 67%, 1-.67=.37. Again, the NPM in the inverse of the efficiency ratio. So, Walmart has a NPM of 37%, this tells us that for every dollar they earn, they profit $.37. As the inverse of the efficiency ratio, we want the ratio to be higher, not lower. As a startup, the owner needs to know what types of profits they are seeing after expenses are deducted. Like all other financial analysis, this ratio needs to be done on a monthly basis to examine any trends or to simply have a specific idea of how well the company's dollars are being used.

As I briefly mentioned in the intro, I spent some time with a few startups over the summer and noticed that very few startups understand the importance of these ratios. It is true that these numbers are not the answer to everything, but they provide excellent insight into how a company is functioning and whether or not adjustments need to be made. The issue I observed wasn't that the owners were not intelligent enough to know these calculations; it was arrogance. These owners and their startups have a sense of pride in their product, which is great. But, they are so confident in their product that they don't see the need to perform financial analysis over their incoming data to understand where they have been, where they are, and where they may go. There are many stories in the numbers that the owners need to know, and there is no need for them to miss it.

Post-Holiday Budget Crunch Fashion Thrift Tips

You might have realized by now that the winter holiday season is not for the faint of wallet. Between food, drinks and supplies for hosting holiday parties, gift-giving, and shopping for party outfits and cold weather gear, these holidays can outstretch the finances of even the wealthiest of merrymakers. That's why this New Year's season, we reached out to thin-pocketed fashion college students who are awfully good at making a little bit of cash really last. Luckily, we ended up with some great tips on how to hang on to your dollar bills in the early days of 2013 by hitting the thrift stores and being smart about what you buy.

1. Not all thrift shopping is created equally. If your post-holiday budget is stretched extremely tight, it's important to dismiss the common misconception that all secondhand clothes shopping is inexpensive. For those of you that live in bigger cities like San Francisco, Los Angeles or New York City, you will definitely have noticed by now that it majorly depends where you go looking if you are truly trying to find a bargain. In order to keep it extra thrifty this January, avoid smaller vintage boutiques where the staff hand-selects all of their merchandise. Instead, hit up bigger thrift warehouses like Goodwill or the Salvation Army. Sure, these places might require a little bit more time digging around to find your special treasures, but the prices are so cheap, it will be well worth the extra time.

2. Try everything but do NOT buy everything. Start your second semester of the school year at fashion colleges with a sleek and stylish late winter look. In order to accomplish this look, a great strategy is to combine any clothes (sweaters, boots, scarves, etc... ) you might have collected over Christmas and Hannukah from various gifts with some special, new thrift shop finds. Even at a super cheap second-hand clothing emporium, experienced shoppers often report that they still rack up quite a bill just off of the sheer temptation to buy too much stuff because of the reasonable prices. Avoid this temptation! Careful shoppers know that a few unique thrift accents can take your wardrobe a long way. No need to buy everything!

3. Look for unique, one-of-a-kind stuff. Most young fashion designers or designers in training at fashion schools recognize the importance of individual style. That being said, almost anybody (designer or not) would feel mortified if they walked into school, work or any other event and they were wearing the same outfit as somebody else!

Thrift shopping comes in handy in a major way when it comes to keeping one's wardrobe selections unique. Think about it this way: There is a much higher chance of dressing like somebody else if you stick to shopping only at major retail chains like H&M or The Gap. The trick is to hit up secondhand or vintage stores and hone in on whatever really unique clothing or accessories you find that speak to you. There is much less of a likelihood that the store you are at will even have more than one of whatever item you like in stock, so you can pretty much always go home knowing that nobody else around will be rocking that same look. This way you can be careful about money AND promote your individual style.

We hope you enjoyed your holiday season, but these thrift shopping tips are also supposed to remind you that no can last forever... Sigh, until next year!

President Obama: Emancipation 2013?

Time for hope and change. Why doesn't President Obama call an emergency closed door meeting with Congress? The purpose is, "Ric's Plan;" to put pressure, and convince Congress that they need to speak with their lobbyist, today. What is in everyone's best interest, is that their lobbyist persuade their corporation's to immediately put into work and start the best of what they have planned on their book's (new divisions, upgrades, etc.,) now, with jobs in the USA a primary consideration! If all corporations put the best of their plans into work, we would have an all at once, coordinated effort by our corporations, to jump start the American economy and create millions of jobs. Wouldn't this bring some certainty where there has only been uncertainty? Why not at the same time have a committee put together the plans for the "infrastructure bank," and have those plans finalized and started in a few days? This is just the beginning of the plan... What did happen with corporations and FDR during those 18 months prior to December 1941?

Don't we need urgent action, and not business as usual, with the state of our depression like economy, that is trending worse and facing... ?

Corporations are doing better than ever, looking at profits and productivity; don't corporations owe "We the People," just a little risk taking for 2013, and start creating jobs, today?

Is one of the reason's corporations have done so well in these last few recessions, due to loopholes, and at times blind-eye politicians (politicians not following up on regulators, and/or under funding or not funding oversight agencies, etc.?)

Does money really have a label of D or R; aren't Congressmen of both parties paid for by the exact same corporations?

Do we really have a two party system, or is it a one party system of corporate governance?

Don't all profitable corporations have plans on their books that they would like to execute, today, but with the uncertainty in our economy, the prudent move for these corporations has been to stay liquid?

If we jump start the American economy today, how will corporate earnings look in 2014, and 2015?

Why doesn't Congress start dialing for jobs, instead of dialing for dollars?

Could something as simple as, if the Rating Agencies, or if the Rating Agencies Regulators had done their jobs correctly, would 2008 have even happened?

What was the turn of events that allowed Rating Agencies to become alchemist, in the beginning of the 21st century? "Credit and Credibility" video http://www.pbs.org/now/shows/446/

Isn't a major problem today in going after questionable actions of corporations, the fact that in some cases our regulators were present when these questionable actions were occurring, so how do you prosecute, if government was present?

When is Congress going to reenact the Glass-Steagall Act?

Why are, three of the four too big fail Wall Street firms of 2008, larger institutions now in 2013?

What is happening to our national debt?

If Congress had not turned a blind-eye to businesses who hired illegal immigrants in the 90's and the first 5 years of the 21st century, would we have 12 million illegal immigrants in our country today in 2013?

Why in 2002, the World Economic Forum ranked U.S. infrastructure 5th in the world, and today in its latest report, we were 25th?

How do they keep us, "We the People," so distracted, while the country is crumbling down around us?

Something has gone painfully wrong in our USA in the last 30 years, doesn't it seem that way to you?

Is it time our politicians seriously work at getting Americans, back to work?

Don't we need a real sense of URGENCY, TODAY, JOBS?

Another Great Train Robbery in Cyprus - Hidden From the Public Eye

Do you realise that there was a press blackout about this in the US?

With Europe's May Day and a holiday in China, this was a perfect time to pull off a massive robbery in Cyprus. It was also a perfect time for a total news blackout in North America.

This shocking news on Cyprus' large depositor's confiscation of funds has not been reported for obvious reasons, but it does not make this historical event disappear.
What's more, the banks have announced "very temporary capital controls" which means that these depositors cannot take all their money out even if they want to! So not only have they banks stolen over a third of large depositors' funds, but they have also frozen another 30% of depositors' money. Keep in mind that so-called "temporary controls" have historically gone on for significant periods of time. i.e. months and even years in some cases.

These are very serious events and you should not take them lightly. If you do not get out of the banking system, you will probably not be able to get out of the system in the future. These actions have created a dangerous precedent and there are signs that other larger countries are considering stealing depositors funds in order to prop up failed banks. And future thefts may not be restricted to large depositors. People with small amounts could be robbed as well.

The plan is to wind down the Popular Bank of Cyprus known as Laiki, and to shift deposits of less than 100,000 Euros to the Bank of Cyprus to create a "good bank" and leave problems behind in a "bad bank." Deposits above €100,000 in both banks, which are not guaranteed by the state under EU law, will be frozen and used to resolve Laiki's debts and recapitalise the Bank of Cyprus, the island's biggest, through a deposit/equity conversion. So basically they are stealing depositors' money in order to prop up a bankrupt bank. Unbelievable.

The USA black out on the news in Cyprus does not mean this event didn't happen to large depositors. What it means is that those in control do not want you to know about it so that you won't be frightened into taking your savings out of the system. Please see the warning signs. We are under the same astrological aspects as we were during the Great Depression and the time when Hitler became Chancellor of Germany. There were warnings then too, but many did not heed them. We are fortunate that we have the internet today, so we can share information worldwide within seconds. Don't be taken by surprise and get yourself out of the system before the powers that be legalise stealing everything from under our feet.