1.)  Save as much of your income as you UNCOMFORTABLY can!

• I can honestly say that my family and I actually DID save WAY more in 2010 than we ever have in the past.  We were able to bank over 50% of our take home pay, as well as pay down some debts.  This was accomplished through some very deliberate attempts to not blow money on all the little junk that can add up so quick.  I’m very proud of our saving habits this year!

2.)  Place a bet on US Stocks.

• Tip #2 also seemed to be right on the money for 2010.  US stocks performed WONDERFULLY in 2010, and early in the year I was able to allocate significant funds from my IRA into about 10 great, US based companies.  I had a couple of investments up almost 100% (CBI being one of them).  I’m hopeful that you took my advice on this one and consulted with a solid financial professional, regarding investment options, early in the year!

3.)  Study IRS tax laws!

• I’ve got to admit that I didn’t do a great job on this one in 2010.  I worked very hard to understand where I stood with my tax situation this year, but did not spend too much time researching new tax laws or seeking out new tax saving strategies.  I will need to do a better job in 2011 as it appears tax issues are getting more complicated every time Congress gets in a room together.

4.) Work Harder!

• I’m a big believer there NO-ONE works to their optimal potential…it is just human nature.  That being said, I truly had a great year at work!  I know I can work harder in 2011 though, as the house fire that I had to deal with for 6 months took a significant mental toll on the family.  I’m hopeful that now that we are back and life is getting back to normal, 2011 will be a year of hard work, lots of fun and great rewards!

5.)  Strive to become debt free!  6.)  Be Generous and Be Thankful!

7.)   “Have fun, love people, and drink great coffee!”

• I truly did work hard on 5,6 and 7 in 2010…especially on the coffee side…we seem to enjoy a lot of coffee here in Michigan!

Personally, I thought that was one of my finest posts (if I do say so myself).  But alas, I only received 18 comments…not nearly as many as the 65 comments that have been exchanged on the Quicken Loans post.

Anyways, here are my thoughts for 2010, in no particular order:

1.)  Save as much of your income as you UNCOMFORTABLY can!  I know this seem like an impossible and crazy goal, but I took some time last week to plug some family budget numbers for my team of 5, and surpisingly, it appears that if we made some marginal sacrifices, we could save ALOT more money every month than we currently do.  Now I haven’t discussed it with my wife yet, but I believe she will be on board, and that it makes sense to hunker down and become “uncomfortable savers”.  No doubt, we will thank our “younger” selves in the future!

2.)  Place a bet on US stocks.  I believe that over the next 20 years, investing in strong US based companies is going to provide significantly better financial returns than CD’s or Money Market accounts.  Make it a point this year to talk to your financial advisor or stock broker about some potential investment opportunities.

3.)  Study IRS tax laws!  I feel like a significant path to wealth is to be wise and strategic with your money.  One step in the right direction in 2010 will be to actually do TAX PLANNING.  Hire a good CPA and really invest your time into understanding your options within the US tax systems, then take the steps necessary to take advantage of every tax deduction or credit that you are legally entitled to…the IRS is not going to do it for you!  If you don’t educate yourself, and take advantage of good things like Electric Vehicle Tax Credits, or Energy Efficiency tax savings, no one is to blame but yourself!

4.) Work Harder!  This one is a carryover from 2009, but is still a timeless truth!  Times are STILL tough and many great people are losing their jobs.  My suggestion to you is to work that much harder at whatever it is you do to bring home the bacon.  Become the “we cannot lose, period” employee at your job.  This is often thankless extra effort, but it is worth it in the long run.  I believe great effort is always richly rewarded over the long haul!

5.)  Strive to become debt free!  Easy advice, enough said!  Too many people WAY smarter than me have preached on the debt topic!

6.)  Be Generous and Be Thankful!  Life is a gift, and is way too short to not take full advantage of it!

7.)   “Have fun, love people, and drink great coffee!”

HERE IS TO A HAPPY AND HEALTHY 2010! -TAM

A link in an email can be part of a phishing scam or linked to a virus. So even if it seems to link to a well known organisation, you should still double check. This is especially true when it comes to organisations that are expected to take your payment details, like eBay, Amazon, banks and even supermarkets.

To check if it’s the real McCoy, right click on the link and choose “properties” to reveal the link’s actual destination. Then see if the address makes sense. If it’s different to the organisation’s normal web address, then it’s almost certainly bogus – even if it’s just one character out. So get into the habit of looking at web addresses very carefully indeed. If you’re providing personal details of any kind you need to make sure the site is real and secure. Identity theft is common online, but is totally avoidable and all internet users should know certain facts to avoid their bank accounts being accessed.

How do you know if a site is secure? Well, if you’re a regular online shopper or use a range of personal finance tools, or if you receive your bank statements and access your bank account online, you should know to check for two key things:

1.      A padlock in the browser window to signify that the site has a security certificate

2.      An address that starts ‘https://’ – rather than the usual ‘http://’

If you’re asked to enter bank details or private information and these two key features are missing, you are doing so in a site that is not secure. And remember, if you’re ever asked for full details of personal information like your user name or password, when you are normally only asked for some of it, something isn’t right.

A further word of caution – just because these features appear in an email before you click on the link, don’t assume they are real. Furthermore, when you double click the padlock, the security certificate for the site should be displayed. So if you ever get a warning that the address of the site does not match the certificate, do not continue.

That’s why it’s good to get into the habit of entering the address of any banking, shopping, auction, money management or financial transaction website into your browser yourself – don’t just depend on the email links, no matter how convenient that might seem.

Finally, make sure you’ve installed the latest version of your web browser – Internet Explorer version 7 and Firefox version 2 have built in filters to detect fake sites – and check your credit card statements and online bank accounts regularly, to make sure nothing is amiss.

Many Thanks to Jennifer Lohan for the above guest post.

I purchased 15 companies over at Fristrade.  As of today, nine of them have lost money, five of them have made money…but my account is sitting at almost EXACTLY the $15,000 that I started with…so I’m flat overall.  That is ok, as I am generally investing for the next 4-6 years.  I did this in late 2002, andby 2007 my original $10,000 investment in stocks had quadrupled.  I liquidated around the time when the Dow Hit 13,000.  (I originally had thought I’d made a horrible decision as the Dow continued to climb past 14,000…but I stuck to my guns and did not get hammered in this market.)

So like I said, I tested the waters with $15,000 about 6 months ago.  My best RETURN was a 1 week trade on National City stock.  I bought in at $1.80 per share, and about a week later sold for over $3.00 a share. 

BUT MY BEST INVESTMENT HAS TO BE AMERICAN EAGLE OUTFITTERS INC. (AEO)

American Eagle is up 41.14% since I purchased it.  Same store sales are down at AEO, but not terrible.  I was a teenager once, I remember saving all my money to buy clothes.  (We really seem to care about clothing here in America, don’t we)  The company has next to zero debt, and almost $500 Million cash on its balance sheet.  It is also highly profitable.  I think as the economy softens, they do better than companies like Abercrombie & Finch…because the products is similar in style, very similar, but at a considerable value.  That has been a winning combination for my portfolio!

2nd best investment…APPLE COMPUTER STOCK…UP 17.54%

Again, I’m not offering specific investment advice, just letting you know what I’m up to.  Please seek professional advice when making any type of investment.  For informational purposes only!  Amen.

 Over the past 5 years I’ve had the opportunity to buy, operate, and sell five franchised restaurants.  The restaurant businesses, and specifically franchised restaurants, have provided significant additional cash flow for my family (on top of my earnings as a financial advisor 2002-2006, and VP @ Private Equity firm 2007-present).

I think the key is to realize that 9 out of 10 new business ventures fail in the first 12-18 months.  Conversely, a franchised business (franchised from an established, proven company) generally has a 90% chance of surviving that first year, and a 75% chance of surviving and/or thriving for up to 5 years.

The second key point is to understand the difference between franchises that require the owner to operate them day in and day out, and franchises that are designed to be operated by a manager and not requiring 8 hours of “on site” time from the owner.  I’ve confused these two in the past and it has cost me dearly. 

If you desire additional cash flow, you need to find a franchise concept that is designed to allow the owner to maintain their current career, but to “support and assist” a manager at their franchised business.  This is important, because if you purchase a franchise that is designed to have the owner live there, you have simply bought yourself an expensive job.  It will own you, you will not own it!

The key point of understanding a franchise as an investment is to employ the concept of return on equity.  Let’s say you purchase a hair care franchise for $100,000.  With good credit you generally will need to come up with $20,000 of your own cash (you, family, friends, etc.)…and a bank will usually give you the other $80,000 spread out over a 5 year repayment term.  If you hire a great manager your store may be profitable that first year.  To illustrate, let’s assume your store did $200,000 in haircut sales that first year.  You paid your manager, your employees, your rent, your supplies, utilities, franchise fees (royalties), taxes, interest on your loan, etc.  Then your accountant tells you that you have $20,000 left over at the end of the year…your profit!  You may look at this and say, “Wow, I made a 20% return, because this hair care place cost a total of $100,000…Great!”  But from the standpoint of Return on Equity, you have actually made a 100% return on your invested dollars!  The actual equity that you have into your business is only the $20,000 that you had to come up with to secure your $80,000 bank loan.  $20,000 invested, $20,000 profit, 100% annual return.  (If things go well…and there is a lot that can go wrong!  This is not for the faint of heart, no matter how much you like a franchise.)

This sale was GREAT in that it put a couple hundred thousand into the bank pretty fast.  What was NOT so great was that I was GIVING UP the approx. 50K in income that those restaurants provided each year. 

I learned a hard business lesson that many business owners simply don’t consider when they sell their businesses.  It is easy to think, “Great, I’ve got a large chunk of money!”  It is not as easy to think, “Wow, I need to change my lifestyle as I just gave up a recurring revenue stream!”

That being said, in 2008 my family needed to change our spending habits SIGNIFICANTLY or we risked blowing our entire nest egg.  Here is a snippet of what we did to cut 30K of fat from our budget without too much lifestyle change.  And I can tell you it felt AWESOME to get the spending under control!  As a family we didn’t feel like we were giving up much at all…2008 was probably our best year yet!

BIG CHANGES:

1.)  Gave up expensive travel and vacations for frequent camping trips to local state parks.  $6000 yearly savings!

2.  Gave up eating out all the time and trying to buy “Organic Everything!”  $3500 yearly savings!

3.  Stopped shopping when we were “bored” and realized our closets ALREADY were overflowing!  $4000 yearly savings!

4.  Got rid of our most expensive auto payment.  $5000 yearly savings!

5.  Gave up going to the movies and out with friends all the time and traded it for Blockbuster Online and popcorn with our girls.  We were spending almost $3000 per year on BABYSITTERS!  Crazy, I know!  $4000 yearly savings.

Smaller Changes:

1. Refinanced our mortgage to a 5.50% 30 year fixed rate.  $1800 saving per year.

2. Appealed our property tax assessment.  $500 savings per year.

3.  Learned how to set our programmable thermostat, and dropped the temperature about 3 degrees.  $800 savings per year!

4.  Dropped expanded cable and phone service $1200 savings per year.

5.  Stopped mindlessly driving everywhere and stuck to a fuel budget.  $2000 savings per year.

6.  Misc. small cuts not worth mentioning $1200 savings per year.

I hope this helps some of you and encourages you to “tighten up the belt!”  I know it is a lot more sexy to buy a new 60 inch plasma than to increase your permanent life insurance coverage…but what has the better long-term payoff for your family?  That’s what we all need to decide!

(I know the above graphic sucks, but I was too lazy and tired to mess with PhotoShop tonight)

JUST TWO DAYS AGO I was having lunch with a friend from work.  I was BRAGGING about how great my Capital One No Hassle Rewards Card was.  Great rewards, and an EXTREMELY LOW interest rate.  Look very closely at the Purchase Rate and you will see that it is 4.24% APY.  I told him about this and he simply didn’t believe me.  But you see it there, in living color.  I USED to tell everyone that Capital One was one of the best credit card programs available.

So what am I complaining about you may ask???

When I get home from work today, I’ve got a letter from Capital One, It reads as follows:

“Due to extraordinary changes in the economic environment, we’re reviewing our existing credit card accounts.  Having considered these economic conditions, your account’s current Purchase rate, and the length of time you’ve had this rate and account, we will be increasing your Purchase rate.  We’re also raising you Cash Advance rates.  The following changes will be effective for all billing periods that begin after April 17, 2009″

My new purchase rate went from 4.24% to a whopping 13.9% and my Cash Advance rate went to 24.9%

Isn’t this a great way to reward some of your best long term customers.  The letter does say that I have a right to decline these changes…but only by closing out my account.

I’ve got an amazing credit history and have had this card with a $20,000 credit line for a long time.  I don’t have any balance on it, and I believe that I will be closing it…who wants to do business with a company like this…ECONOMIC TIMES ARE TOUGH, SO OUR SOLUTION IS TO SCREW OVER OUR BEST CLIENTS.

Looks like I won’t be buying any Capital One Financial stock any time soon.  Who is running this company anyways?

I DON’T think that it is a foregone conclusion that our country is headed for a “depression.”  A depression in economic terms is loosely defined as a countries Gross Domestic Product (GDP) dropping by about 10% or more in a given year.  WHAT I MEAN by GDP is the total value of all goods, services, and investments spend by EVERYONE…individuals, businesses, and governments…in a given year.  The GDP of the Untied States of American as just under $14 Trillion last year. 

HERE IS WHY I’m Concerned…

Our country has survived economic downturns in the past, many times in fact.  This one is different though in my opinion.  The reason is this:  Individual Americans and our Federal Government has a CRUSHING AMOUNT OF DEBT that is growing bigger and bigger every day.  The interest alone that we must someday pay on our national debt is growing rapidly and is currently estimated at $45,000 PER SECOND!!!

I read recently that 80% of Americans would potentially be bankrupt and homeless if they simply missed 2 PAYCHECKS!

The reason for this is because of the huge mortgages, auto loans, failed business loans, student loans, credit card loans, etc. that we are all required to make huge payments on each month.  AND ALMOST NONE OF US HAS AN EMERGENCY FUND that would last more than two months. 

SO WHAT CAN YOU DO?

• Stop spending your money like the village idiot!  American currently save less than 2% of their yearly earnings! 
• Quit going to the mall every time you are bored!
• Build an emergency fund!  Do this with the dollars you are not blowing at the mall.
• Buy JUNK SILVER COINS.  Do this with about 25% of your emergency fund.  Silver has proved to be a good store of value for thousands of years.
• Get rid of unnecessary debt.  And do this as soon as possible.  If you just bought an ATV and took a 12% interest loan…sell that sucker, and get that debt off your back!
• But conserve cash too!  It can be unwise in uncertain times to spend every penny of cash you have to par down your debt.  This is where the concept of EMERGENCY FUND is important!
• Stock up on some food with very long shelf life!  I’m not trying to alarm you, but if you understand the gravity of the numbers I’m just shared with you, some extra food in the basement seems attractive.
• Keep having faith and working hard!  With all the doom and gloom out there, I still believe in power much bigger than ourselves and our economic worries.  Keep focused on ALL THE GOOD BLESSINGS in your life, because they are abundant, even through our struggles.  Just look at the birds outside, they don’t seem to worry where their next meal will come from…and aren’t us people more important than the birds?  I believe we are!

1. Go on a Diet! This is a great tip for your physical health and well being, but it is also a great tip for fattening up your pocketbook and not your gut.  The average American spends over $1500 per year eating out.  By cutting this in half and eating healthy stuff that is probably already in your pantry, you can save money and calories!
2. Go on a Budget!  This seems oversimplified and common sense BECAUSE IT IS!  Everyone knows they should track their spending, but few of us actually make a budget and stick to it.  Make 2009 your year to actually do it.  Sarah and I did it for all of 2008, and we cut our spending by almost $30,000 when compared with our 2007 spending.  We are looking to trim the fat even more in our 2009 budget!
3. Carpool or Ride Your Bike!  With gas prices at 4 year lows, it would be easy for me to take the H2 out of storage and drive it all over God’s green earth.  No Way.  I’m looking to keep the fuel costs down as much as possible in 2009, and lower my carbon footprint in the process!
4. Read More!  Knowledge in power, so if you don’t read, your knowledge base is growing at a slower pace than it should be.  There is tons of great information out there to help you spend and save wisely, but you must invest the time to get the knowledge!
5. Increase Your 401K Contributions!  If you have more than 10 years until retirement, this is a must.  I am bullish on the world economy over the long term.  We will have our ups and downs, but I believe we will continue to grow and innovate.  Don’t stop investing now because of fear, stay the course!  If your retiring soon, or are a nervous investor, talk to an expert.  Advice is always worth what you pay for it!
6. Start A Business!  Technology and the Internet has made it SO EASY to start your own Home Business, and be successful at it!  Turn your hobbies into cash flow.  If you like knitting, sell your stuff on ebay.  If you collect things, learn how to buy, sell, and trade them for a profit.  Use your imagination, it is easier than you think.  This will be extra work, for sure, but it beats wasting time in from of the TV every day!
7. Pinch Pennies!  I suggest that in January of each year you revisit every bill that you pay on a monthly basis.  I promise you can find savings very quickly and easily.  Maybe scale back your cable bill, renegotiate your auto and homeowners insurance, use Blockbuster Online instead of driving to the video store every weekend, make your home more energy efficient, find a better rate for any credit card balances you are carrying.  These actions and many more will pay off BIG in 2009
8. Unclutter You House! Get rid of everything that you don’t at least use once a month.  Sell it on Craigslist or E-bay.  Then make an inventory of all your important possessions and make sure you are properly insured via a homeowners or renters policy.  Make sure you are not overpaying for stuff you no longer own!
9. Start a Blog!  Blogging is a great way to get your thoughts organized and keep you motivated to make the changes that you need to make.  It is fun and easy to do! 
10. Work Harder!  Times are tough and many great people are losing their jobs.  My suggestion to you is to work that much harder at whatever it is you do to bring home the bacon.  Become the “we cannot lose, period” employee at your job.  This is often thankless extra effort, but it is worth it in the long run.  I believe great effort is always richly rewarded over the long haul!

Blessings on all your endeavors for 2009.  Let’s make this a year to be smart and move the ball down the field as far as we possibly can!