Monthly Archives: January 2008

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Okay, so January isn’t quite over yet, but you get the idea.

I didn’t really have any New Year’s resolutions, but I did lay down a few goals for 2008 and I guess now is as good a time as any to see if things are still on track…

Eliminate all credit card debt by the end of June 2008. Current credit card debt is $10318. I’m aiming to achieve this goal slightly ahead of schedule, by about a month, according to the snowball plan I started in November.

Progress is far ahead of schedule on this goal. This morning, my total credit card debt is under $5000 and with Thursday being another pay day, it’s likely to fall even more by the end of the month. I’m hoping to have all of this wrapped up by the end of March now.

Eliminate PMI from the Mortgage by the end of December 2008. Right now, it’s costing me over $1000 per year. For what? Nothing. To meet this goal, I’ll have to contribute an additional $160 per month towards my mortgage.

I’m on pace for this, though it doesn’t really feel like it. At the start of the year, I began throwing $125 towards the principle each Monday. So, with the extra payments this month, I’ve climbed $500 closer to my target of $6100. In total, I have $5124 left to go.

Pay off my auto loan by the end of December 2008. Current balance is $7418. This is also included in my snowball plan and it’s scheduled to be paid off in October if all goes as planned. I’m not looking to speed this up; just finish it off.

Nothing worth mentioning on this one. I’m just making the payments…nothing extra. This goal comes in a distant second to the credit card goal. Current balance is $7177.

Increase my 401k contributions to 15%. This way I’ll receive the maximum match allowed from my employer. Right now, I’m contributing just under 10%. I’ll plan to make this move once the credit card debt is eliminated. Achieved 12-27-2007

I achieved this goal before the year even started, but with the way the markets have been going, my increased contributions habe only resulted in larger losses. That’s okay though — in the long run, it will be a very good thing that I got this back up to the full match percentage when I did.

Increase my passive income. Now that I’ve dumped my largest client, the hockey team, I’ll soon find myself bringing in a lot less income. But, I also find myself with a lot more free time. Free time that I should use to optimize my other ventures to make up the difference; except now I’ll focus on more passive income streams because, in all honesty, I’m tired of working so much. Right now my 100% passive income hovers around $50/month. With the least effort possible, I’m looking to triple that in 2008 and pick-up a few low maintenance clients as well.

I’ve made a few moves in the past couple of weeks to get this goal on track, but nothing really impressive. I missed out on a generous advertising opportunity last week because I took too long to respond to the email offer — but that won’t happen again. I’ve got everything forwarding to one address now so nothing sits and waits for a week. Eitherway, things are headed in the positive direction. Passive income for January is looking to top out around $80.

$10k in savings. This is my lofty goal. I’m not sure it’s even possible. Right now my ING account is holding a mere $1k. No matter how far rates fall, with a 5-figure balance working in my favor I’ll have to be making atleast $1/day in interest and for whatever reason, I like that. I’d also like to pay for some still needed interior renovations in 2008 with cash and this is where I’ll draw from.

I’m tanking on this goal. On January 1st, I had around $1000 in savings. Today, I’m well below that, and the interest rate is falling so I’m not real *excited* about trying to right the ship on this one. I haven’t thrown in the towel just yet, there are 337 days remaining in the year, but I’d be shocked if I come close to realizing this goal.

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Oh, the humanity!This morning at work I walked into a heated conversation between two co-workers about how “things” are going up, but no one is getting paid more.

I kept quiet, wisely, as I passed through, but the gears in my head were turning.

True, no one at my place of employment is getting paid more. Okay, maybe a few are, I’m not exactly privy to that type of info, but by and large, most of us are making the same amount we made last year, and probably the year before that too.

They were comparing their electric bills, insurance bills, oil bills… that sort of thing. At first, I almost jumped into the fray — it’s exciting to hear people discussing the taboo subject of their finances out in the open.

But then it became apparent that they were just buying into the media’s hype of the economic downturn. Complaining about this. Complaining about that.

I got back to my desk and started to brainstorm this entry.

Now I know everyone’s situation is different, but that fact is, things really haven’t gone up?!

Last year, my total electric bill was lower than it was the year before. My natural gas bill was lower. My insurance premiums were lower (even with an accident). My phone bill was lower. My cable bill, well, that one went up. But you know what? It only went up $48. That’s $4 a month. Hardly a sum to cause hardship.

Gasoline, okay, last year it was costing me around $21 to $23 dollars to fill my tank. This year, it’s been around $33 for each full tank. People can complain all they like about gas prices, but really, is $10 more a few times a month really enough to break the bank?

The funny thing to me is that most of these folks wouldn’t even consider dropping the “unlimited text messaging” option on their cell phones or not spending $5 at Dunkin Donuts on the way to work each morning…

I guess my viewpoint is that things really aren’t as bad as the lead story on every newscast makes it out to be. For the average Joe, a 600-point swing in the markets or a 75 point rate cut is totally meaningless.

And really, in the grand scheme of things, most of us are just that — average Joes.

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Hold Your Breath!

With a big day ahead of us, Brainy Smurf is predicting the DJIA to drop 515 points today.

I’ll even go out on a limb and say that the intra-day low will be down 700 points — shortly after the market opens only to recover later in the day.

I don’t like it. I don’t even really understand it, but I’m really glad that everything I have invested in the markets is for the long term. Today’s gonna hurt, but just for a little while.

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Wham-O FrisbeeI was never really terribly impressed by the hula-hoop.

Magic Sand held my interest for about 15 minutes.

Slip ‘N Slide was painful.

And though I spent countless hours playing ultimate frisbee in university, I never could throw a frisbee very accurately.

I guess I was just more of a yo-yo fan — and those were manufactured by a completely different company.

Last week, Richard Knerr passed away. He didn’t invent the Frisbee, or even the Hula Hoop, but he did make a successful business around them.

Wham-O co-founder dead at 82

Richard Knerr, co-founder of the toy company that popularized the Hula Hoop, Frisbee and other fads that became classics, has died. He was 82.

Knerr, who started Wham-O in 1948 with his childhood friend Arthur “Spud” Melin, died Monday at Methodist Hospital after suffering a stroke earlier in the day at his Arcadia home, his wife Dorothy told the Los Angeles Times.

Knerr and Melin, who died in 2002, got their start in business peddling slingshots. They named their enterprise Wham-O after the sound a slingshot made when it hit its target.

They branched into other sporting goods, including boomerangs and crossbows, then added toys such as the Superball, Slip ‘N Slide and Silly String.

When a friend told them in 1958 about a large ring used for exercise in Australia, they devised their own version and called it the Hula Hoop.

Around the same time, they bought the rights to a plastic flying disc invented by Walter “Fred” Morrison, and renamed it the Frisbee.

Anyway, as I’m slowly but surely dissolving my own company, I’ve come to realize that I made a critical mistake when I started. Originally I’d planned to start my own ISP — and I even had the backing to do it. At the time, AOL was the market standard and they had a lot of critics — basically they were easy prey on a small scale. I think I easily could have started a small and local dial-up service out of my parents home.

That never materialized because I didn’t really pursue it aggressively. What I did pursue was web design. That lead to generic graphic design for logos and things, and eventually I even took up photography too. I think I did alright. I’d consider myself a pro across all three lines of work.

The photography was easily the most profitable, but it also had the highest start-up costs and without a contracted job, it would have been an impossible climb to profitability. Freelance photography just isn’t profitable these days and that’s where I find myself these days.

The problem was that all three required, well, me. And that’s where I screwed up. I went into a business that would essentially *always* require me on the frontlines.

Knerr and Melin did it the right way with Wham-O. They came up with an idea, financed the initial start-up costs to manufacture and market the product and then sat back and managed while low wage employees did all of the actual work. They were able to step back and just reap the benefits.

The fields I chose weren’t something that I could ever pass off to a low wage employee. And that was my big mistake.

Some call it “passive income”. I’m not sure that’s what I had in mind. Sure I’d like to open a coin-op laundromat or car wash that requires very little maintenance, but I don’t know that 1, those are very profitable or 2, that they’d hold my interest.

If I could do it all over again, one thing that has always come to mind is an ice rink facility. The upfront costs would be huge, and I’d imagine the utility bill would be sizeable too, but once it’s up and running, all you’d need is a couple of part-time Zamboni drivers, a manager of some sort, and local kids earning minimum wage to serve as skating guards and referees — then when profits allow, expand into offering skating lessons with paid instructors.

I’d enjoy it just as much, and now, after 11 years, I’d probably be making more, and working less, than I am now.

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NHL Credit CardThe last time I did this was back in June of 2007 and I thought that with just having eliminated two credit card balances recently, it might be a good time to go back and see how the landscape has changed.

This is a list of my open credit card accounts as of January 2008:

Bank of America Business MasterCard
Originally an MBNA account before they were bought out by Bank of America, I opened this account in March of 2005 when I started to divide my personal and business expenses and keep track of them separately. Turned out to be a great move as it was shortly there after I realized how much money I was bleeding on business expenses. This is currently the only card I carry, but I rarely pull it out.
Balance: $0
Credit Limit: $24200 (up $2000 since last update)
Rate: 9.9%

CitiBank AT&T Universal MasterCard
I opened this account in April of 2007 utilizing a 0% for 12 months offer. I wrote a $6000 check to myself, which I originally dropped into my ING Direct savings account to jump on the “arbitrage” bandwagon. Shortly afterwards, I pulled the money out to finance the siding project. As the original plan was to make money on this card, I do not carry it in my wallet — though in the near future I plan to use this card for personal expenses as it’s the only card I have with a “rewards” program.
Balance: $0
Credit Limit: $8500 (up $1700 since last update)
Rate: 0% until April 2008, then 13.81% 13.48%

Chase Bank Visa Card
This was one of my first credit cards. I opened the account in 1998 and it was one of the cards that I ran up a considerable balance on before I got my act together. The highest it ever went was $12905 and that was in October of 2005. By August of 2006, I’d eliminated the balance, but continued to use the card for gas and the occasional purchase. Balance was always paid in full each month. In June of 2007, I took advantage of a 4.9% for the life of the balance offer to fund the siding project. As a result, I no longer carry the card for expenses.
Balance: $5227
Credit Limit: $19200
Rate: 4.9% 17.27%

Bank of America NHL MasterCard
Another of my original credit cards originally opened through MBNA in 1997 for a free t-shirt. This is also another card that I ran up a 5-figure balance on. In May of 2004, it topped out at $10915. By November of 2005, I had wiped the balance out. Now I have my internet service provider automatically bill to this card each month, and like clockwork, I pay back the $42.95 automatically on the same day using an autopay set up from the MBNA days. I do not carry this card and have not carried a balance since November of 2005.
Balance: $0
Credit Limit: $27400 (up $4600 since last update)
Rate: 20.99%

Bank of America Platinum Plus Visa Card
Originally opened in March of 2005 as a failed plan to use balance transfers to consolidate balances at a lower rate. At first I transferred $5000 to this card. Evidently, not having learned my lesson the first time, I transferred another $5000 to this card in March of 2006. Luckily the rate was only 6.25% for both transfers. I wiped out the balance, which topped out at $6925 in March of 2006, in January of 2007. I do not carry this card and don’t ever plan to use it again.
Balance: $0
Credit Limit: $15400 (up $1400 since last update)
Rate: 18.24%

Bank of America GoldOption Loan
This was a loan for $10000 I took out in December of 2002 to, again, consolidate a few balances and put some much needed cash in my hands. At the time, it was that found me the loan at 9.9%, and when the big check made out to me came in the mail, it was from MBNA. After a couple years of paying it down in regular $226 intervals, MBNA sent me a credit card attached to the account and started treating it like a credit card. With each month, the rate would rise another half percent or so. Not cool. I made my final payment in March of 2005 when the rate had climbed to 13.24%. I do not carry this card and don’t plan to ever use this line of credit.
Balance: $0
Credit Limit: $13700
Rate: 24.99%

I think it’s funny how each month I get correspondence from the banks notifying me of credit limit increases as an attempt to lure me back into using their card. Hasn’t worked yet — though some of the included promotional teaser rates are attractive enough to get me to read the fine print.

My total credit limit has increased $6000 to a total of $108400 over the last 6 months. In theory, it’s comforting to know that if push came to shove, I could charge 6 figures. That’d be crazy though.

At some point, I’d like to sit down and figure out how much it actually cost us to finance the siding project using credit cards though. At the time, it wasn’t exactly what I had in mind, but now that it’s nearly paid for, it may have actually worked out to be a pretty good move for us (compared to alternatives like a home equity loan) in the long run.

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taxes.jpgGood news on the horizon for business owners in Connecticut it seems!

I’ve read numerous places that the best way to become wealthy is to own your own business.

Well, I’ve done that, and while I have earned a lot of additional income over the years, there have always been drawbacks. In Connecticut, the biggest drawback has been the “Business Entity Tax”.

Back in March of 2003, out of the blue, right in the midst of tax season, I received a bill from the Secretary of State for $250 for a Business Entity Tax.

At first I had no idea what this was all about. I’d been in business for six years at that point and had never had to pay the state a dime since incorporating.

I sucked it up and paid it thinking it’d be a one-shot deal and chalked it up as one of those losses you have to classify as a “cost of doing business”.

In 2004, I got the bill again. That’s when I did some research and learned that it was a tax for the sake of a tax. Huge companies in the state like Aetna, Northeast Utilities, ESPN, and even the WWE have to pay the state $250 just for, well, existing.

But so do little guys like me – where, on occasion, $250 is more than we bring in any given month. Chump change for the big guys, but a huge expense for super small business.

One of those great examples where the little guy gets screwed by a flat tax.

With March fast approaching, I’ve budgeted out the expense for 2008, but the news today indicates that I may just be able to hold on to that income this year.

Lawmakers Seek To End Business Entity Tax
By JANICE PODSADA | The Hartford Courant
3:49 PM EST, January 17, 2008

The secretary of the state and a bipartisan group of state legislators said Thursday they will seek to abolish Connecticut’s annual $250 business entity tax during this year’s legislative session, which begins Feb. 6.

“This is an onerous tax. It’s really just a tax for existing,” Secretary of the State Susan Bysiewicz said. The tax was created six years ago as a stopgap measure to balance the state budget, she said.

“In 2002, we had a $96 million deficit. For the past four years we’ve had surpluses,” she said. “Before we get too used to this tax, let’s get rid of it.”

More than 118,000 businesses pay the annual business entity tax, which brings the state about $30 million a year. The amount represents about one-sixth of 1 percent of the state’s annual $18 billion budget. Bysiewicz said making up the $30 million difference should be relatively easy.

Republican policy makers attempted to abolish the tax last year, including the proposal as part of a budget amendment package. But it was defeated.

This year, abolishing the tax will be in a separate bill, which should increase the odds of its passage, both Democratic and Republican legislators said.

Small businesses, which create many new jobs, are unfairly burdened by the tax, said Bonnie Stewart, vice president of government affairs with the Connecticut Business & Industry Association.

Business registration fees are relatively low in Connecticut. For example, it costs $60 to register a limited liability company or limited liability partnership in the state. Corporations pay more. But at the end of the year businesses, regardless of size, must pay the $250 tax whether or not they made money or even launched their enterprise.

“I hear from many people who say they formed a company, but didn’t pursue it. And then they get this bill in the mail,” Bysiewicz said.

“While $250 may not seem like a lot, for our members, all of whom are small businesses, it can mean a month’s electricity bill or a month’s insurance,” Frank Alvarado, director of the New Haven and Willimantic offices of the Spanish American Merchants Association said.

“When we get that bill, it’s the one time we think about doing business in another state,” Theodore C. Hsu, owner of Horizon Services Co., a cleaning and supply business in East Hartford, told participants. “I talk to many other business owners, and they see this as being gouged. It stops their spirit.”

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CitiBank LogoI’m pretty proud of myself.

On December 17th, the balance on my CitiBank AT&T Universal MasterCard was $5000. This morning, this being a pay day, it’s at $0.

Even better, it was less than a month ago that I eliminated my balance on my Bank of America Business Card.

Two credit cards gone in the span of a month!

Two down, one to go — and the remaining card’s balance is just over $5000. Can I keep pace and wipe that one out by February 17?

Probably not.

But still, this puts me a good five months ahead of schedule on my snowball plan.

Sure, that may indicate I should have set out with a more aggressive strategy from the get-go, but I’m still perfectly happy with how things are coming together.

Well, except my checking account balance. Have I mentioned that I’m broke yet?

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When I first saw the headline, I thought to myself, “Can this be true? Could one of my childhood heroes be guilty of such a thing?”

But then I clicked the link and saw that it was just some thug football player in a strip club. Phew…

And I wonder how he got the nickname “Pacman”. He looks *nothing* like the real thing…

Can You Dig It?