Planning For Wealth

A couple of weeks ago I posted that I had created an Amazon aStore (Planning for Wealth Book Store).  Now I’d like to tell you about Amazon aStores.

What is aStore

aStore is a Amazon Associates product that allows associates to create professional online stores.  An aStore can be created in just a few minutes and requires no programming skill. 

Features

You can create up to 100 aStores per associate account.  Create as many pages are you want in each store with unlimited category and subcategory nesting.  aStores can be embedded into or linked from your existing website.  You have access to all Amazon products including product descriptions, reviews, and recommendations. Listmania and themed product lists are also availble from Amazon customers.  Amazon shopping card is already built into the store.

Advanced users can customize store nazigation directly on their own website and create customer systle sheets to enhance the look and feel of their aStore.

How does it work

Amazon Associates has a simple online interface you use to create your store.  Sign up as an associate if you are not already an Amazon Associate.  Amazon’s online interface will guide you through the process of creating and customizing you store categories, setup the look and feel of the store, and provides you with the info you need to link to your new store or embed it into an existing website.  No programming skill is necessary.  A new store can be created in just a few minutes.

Associates are paid a referral fee for all products purchased through their aStore.  See the Amazon Associates program for exact information on Amazon referrals.

How much does it cost

aStores are available to all Amazon Associates and are free.

How to get started

Sign up as an associate if you are not already an Amazon Associate.  Then visit the aStore section of Associates Centrel.

Last week my youngest daughter’s 1st grade teacher handed every student in her class a sheet of paper with a picture of a treasure chest.  Everyone was to draw a picture inside the treasure chest of something that they treasured or was very special to them.  My daughter drew a picture of her Beary Bear.  Beary Bear is a stuffed bear that she picked out at Build-A-Bear Workshop on her 1st birthday.  Beary Bear goes every where and does everything with her.  Beary Bear is ratty and worn, has missing patches of fur, and has been lost several times but has always found her way back to us.  Beary Bear is her most prized possession.  During recess after the kids all shared what they drew some of her classmates confronted her on the playground laughing and making fun of her because she did not draw money or gems or other items that belong in a treasure chest. 

The other kids reaction saddens me.  In first grade these kids should be valuing their family and friends, their toy truck or marbles or doll.  Instead kids this young are being taught that money is to be valued most.  From the reaction of these other kids I would say some are being taught that money is the only thing that matters.

When you’re done reading this ask yourself “what would I draw in that treasure chest?”  And if you have kids how are you influencing what they draw in their’s.  Our kids watch and learn from us every day.  They will tend to value the same (or similar) things their parents do.  If we behave like money is the only thing that matter then they will learn that same behavior from us.  If we spend our income as soon as we get it our kids learn that from us.  If we tithe, are willing to help other, and are careful with our spending and finances our kids will learn that from us.

What would I draw in my treasure chest?  I would draw my family and friends, my church,  responsibility, integrity, honesty, and love.  I would not draw money or wealth.  Money and wealth are great things to possess but they do not make me who I am.  Whether I’m rich or poor monetarily I will still have all of those thing I drew in my treasure chest.

 What would your draw in your treasure chest?

Here’s a family a could all learn a few things from. They pay for a nice house, 2 cars, furniture, clothes, food, and anything else they need for a family of 7. with a average family income of less than $35,000.

This Friday’s California Mega Millions jackpot will be one of the largest jackpots in history — $325 Million.  We all dream of winning a prize of like this but are we prepared if we do.  Most lottery winners are not prepared and many have ended up worse off after winning than they were before.  Here is a list of several things you should do before claiming your prize.

Don’t tell any one.  You’ll be amazed at how many “friends” you have once words gets around.  A lot of reporters could be asking to interview you.  And just about every unscrupulous charity will be knocking on your door or calling to get a piece of you winnings.

Keep the ticket safe.  Put the ticket in a safety deposit box.  Put it in a plastic bag in the back of the freezer.  Do whatever you can to keep the ticket safe.  If you loose the ticket or it gets damaged you could be out millions of dollars.

Double and triple check you winning numbers and the drawing date for the ticket.  You want to make sure to truly did win.  It’d be very disappointing to think you’ve won $300 million and then find out you were looking at the wrong ticket.
Don’t collect right away.  Take your time.  Complete all the steps here before you collect your prize.  Rushing to collect you prize could put you and your prize at risk.
Get an unlisted phone number.  As soon as people find out you’ve won you old phone will be ringing non-stop.  Change you phone number and get rid of this headache before it starts. 

Arrange for a special bank account.  You can’t just deposit millions of dollar into a normal chekcing or savings account.  Go to your bank of choice and make arrangements with them to open a new account.  The winnings will be transferred electronically to your account.  So the account needs to be set up ahead of time.

Build a team of advisors.  Get professional advisor to help you manage you winnings.  At a minimum you will want a tax attorney, estate planner, and a financial planner.  You will be in a whole new tax world whenyou receive your winnings.  A tax attorney is a must to navigate these new treacherous waters you are in.  A financial planner is necessary to help you plan how to make the most of your winnings.  A good financial planner will help you map out short term and long term plans for managing and inveting your winnings.  Some people would say you don’t need an estate planner but I think they’d be wrong.  An estate planner will help you plan out what happens to you fortune when you die.  Inheritance tax can take 50% or more of the money in your estate before anyone even sees a dime of that money.  A good estate planner will help you organize you estate so you loose little to no money to inheritance taxes.

Lump sum or payments.  In general, you are better off taking a lump sum payment.  A lump sum is subject to current tax rates.  Tax rates may change over time so payments would be subject to the tax rate at the time each payment is made.  You will also have a large amount to invest now giving you greater earnings in the short term.
Think about your job.  Take some time off work.  You will be very busy getting everything organized to collect your winnings.  During this time decide if you want to keep your job or not.  Many winners go ahead and quite.  But if you enjoy your work you may want to stick around.  Don’t decide right away.  Take the time to be certain of you decision.  If you are going to quit wait until you receive your money.  You don’t want to quit your job then find out the next day that did you not win the lottery.

Have a plan.  This point cannot be emphasized enough.  If you want to be successful with your fortune you need a solid plan for what you’re going to do.  The professional advisors you gathered around you will help you develop concrete goals and plans for how to manage you fortune.  Without a plan you could end up line the many winners would wond up owing more than they won after only a year or two.

Once you have everything in place go claim your prize and enjoy.  And make sure you set aside a some fun money.  If I’d won I would take everyone in my group at work out to a nice lunch, take family and friends to our favorite restaurant in Pebble Beach, and take the kids to Disney World for a week or two.

Sit back, relax, and take a deep breath.  Don’t forget to exhale.  Being debt free is the first step towards building wealth.  For many of us getting out of debt seems an insurmountable task.  But it doesn’t have to be.  I’ve had several family members end up with $15,000 to $20,000 in credit card debt.  Each of them were still young and had low incomes but with careful planning, controlling their spending, and patience they managed to pay off their debt.

Below is a list of several key concepts we all need to understand to be debt free.

Good Debt vs Bad Debt:  There’s two basic types of debt - good debt and bad debt.  Debt from home mortgages and school loans is considered good debt.  I also include investment debt in good debt.  Good debt is debt that provides a necessity for life, increases you current and future income, or provides investment asset growth.  Credit card, revolving lines of credit, and other consumer debt is bad debt.  Bad debt takes money out of your pocket without putting any back.  See my post Good Debt, Bad Debt for more info on debt.

Track Spending:  To reduce debt you need to know where your money is going.  We know this by tracking our spending.  It doesn’t matter whether you use an electronic or manual method.  Keep all receipts and organize them into various categories like gasoline, groceries, utilities, housing, etc…  Then keep a record of each month’s category total.  This will help you know where your money is going each month.  Start right now.  The earlier you start tracking your spending the better equipped you will be when you start setting your goals and developing a spending plan.  See my post Get out of Debt: Track Spending for more info on tracking you expenditures.

Know Where you Stand:  You need to know where your money is going each month and how much you are in debt.  Gather all your pay stubs, bank statements, credit card bills, and recipts you’ve saved from tracking your expenses.  Add up all your income and subtract all of your expenditure to know where your money goes.  Then add up the minimum payments due and the total remaining balance for your credit cards, store credits, and loans.  These will give you your minimum monthly payments to stay current on you debt and your total remain debt.  See my post Get Out of Debt: Know Where You Stand for more info on determining where you money goes each month and your total debt. 

Set Goals:  The final goal is to be free of debt.  But this one goal is not enough to get you through the process of reducing debt.  There are two basic types of goals needed to help us through this process: milestones and action goals.  Milestones are targets you want to achieve during the debt reduction process.  A milestone would be a goal like payoff the Visa card by January 1.  Each milestone usually occurs only once during the entire process.  Action goals are goals to take a specific, often re-occurring, action.  Pay an extra $100 a month to MasterCard until the card is paid off is an example of an action goal.  Start with small goals and work towards larger ones.  Whatever goals you decide on they need to be obtainable.  These goals should also challenge you.

Make a Plan:  Now that you have a set of goals you need to make a plan on how to accomplish those goals.  It helps to write down your plan along with your goals.  This keeps them together and acts as a reminder of how they work together.  The plan should state where that extra $100 is coming from for you action goal and how you’re going to reach each milestone.  Break larger goals down into several small steps you can take and include these in your plan.  Your plan can be pretty simple as long as it provides all the necessary information to guide you to meeting your goals.

Create a Spending Plan:  Many people call this a budget.  I prefer spending plan.  Budget implies a limitation on what you can spend.  If you are like me you hate the idea of someone saying you can’t do this or can’t do that.  Spending plan implies the ability to spend which helps us feel better about the plan.  A spending plan is part of your overall plan and includes a month by month break down of what you expect to spend in various categories.  The categories should closely match those used when you started tracking your spending (gasoline, groceries, utilities, housing, etc…)  I also like to include a cash flow report as part of the spending plan.  A cash flow report shows the source and total of all income and expenses for a month and the difference between the two.

Pay Yourself First:  This means the first thing you should do every month is put a portion of your income into savings.  Do not touch this money unless you absolutely have to.  In the short term this money will most likely act as you emergency fund.  In the long-term this money will build your retirement fund.  Also, the longer money earns interest the faster it will grow because of compounding.  $50 set aside every month for 360 months will grow to about $41,600 at 5.00% interest.  The total interest earned is about $23,600. At 8% interest the final total is about $74, 500 with about $56,500 in earned interest.

Create An Emergency Fund:  Everyone should have an emergency fund that covers 3 to 6 months of living expenses.  This fund helps you cover expenses should an emergency occur.  Your plan should include funding an emergency fund but only after you are all the way or mostly out of debt.  After you are out of debt it’s up to you how quickly you fund your emergency fund.  But remember the sooner the better.  Usually we get little to no forewarning when an emergency will occur.

Live Within Your Means:  This is the most important step in getting out of debt.  Never spend more than what you make.  If you spend more than you make then you’re only making your debt worse.  Living within you means also include controlling you spending.  Do you really need those designer pants or shoes?  Do you really need a second skidoo or that gas guzzling SUV?  Buy a used card instead of a new one.  If you need a good commute car get a Mazda or Nissan or Saturn instead of a BMW.

Review Progress:  Review your progress regularly.  This will let you now if you are on track or need to make adjustments to your spending plan or work on cutting spending more.  Some months will be worse than the others.  Doing regular reviews will help you stay in control of your finances and your plan.

Be Patient:  Getting out of debt will takes time.  You will need to be patient and stay focused on your goals if you want to get there.

I’ve added a simple book store using Amazon’s aStore.  You can connect to it here — Planning for Wealth Book Store.  There is also a link to the store under Links to the right.  This is my first attempt at anything like this store.  The store doesn’t look too bad for only about 20 minutes of work.  I’ll probably be tweaking it off and on for a while so see if I can’t improve on it.  Be sure to let me know what you think of it.  As I have time I’m also going to look into how the Amazon eCommerce functionality works and figure out how to make an eBay niche store.  There are programs available that will auto generate scripts for Amazon aStores and eBay niche stores.  But for now I’m only looking for methods that are free.   So far I’ve only played around with HTML and PHP a little.  Guess I need to buckle down and get to work. 

Several months ago my wife and I decided it was time to defrost the freezer in our garage.  So we moved its contents to our smaller kitchen freezer.  We had been slowly using up the contents of the freezer to do just this.  We unplugged the freezer, opened the door, then promptly forgot about it.  About 2 weeks later I decided to buy a small coffee maker for heating water for my tea.  I drink several cups a day and was heating the water, one cup at a time, in our microwave.  About a week later we got our PG&E bill.  We noticed that the bill was little lower than normal but didn’t think anything of it.  Around that time we remember our freezer but decided to leave it alone; we were doing fine with our packed smaller freezer.  Another month went by and we got the next PG&E bill.  We were in shock.  The bill was about $80.00 less than normal.  We let another month go by and again our utility bill was $80.00 less than normal.  We knew then that the cost savings was from turning off the freezer and using the coffee maker to heat my water.  We eventually determined that the freezer was costing us $60-$70 per month to operate. We wanted our freezer room back and we hated the refrigerator in our kitchen — it came with the house when we bought it and the door shelves kept falling off — so we decided to use the old refrigerator for extra cold storage in the garage and get a new refrigerator for our kitchen.  In the end we bought a new refrigerator that only cost us about $4.00 a month  run.  Just by replacing the old freezer we saved $66.00 a month in electricity.  Switching to the coffee maker saved us an addition $10.00 a month.

Several years ago we also found out that the newer front load washers and dryers can cut your water and electricity bills by a larger amount over older model washers and dryers.  Our 13 year old washing machine decided to die one day.  The gears on it were worn out.  So we went looking for a new washing machine.  After trying several different stores and looking at many different models and comparing energy ratings we settled on a Neptune front load washing machine from Maytag.  After some debate we decided to go ahead and get the matching dryer with it.  Our dryer still worked but it was near the end of its life.  Together they cost use about $1700.00.  That was a lot but we figured we’d recoup the cost difference in a year or so with the reduced utility bill.  We’ve had this washer and dryer now for about 5 years.  Our water bill dropped about 40% and our PG&E dropped about 50%.  All together, switching to the new front load washer and dryer saved us about $100.00 per month in water and electricity.  We not only recouped the extra cost but they paid for themselves in just 17 months. 

What Is CashCrate

CashCrate is one of many “Get Paid To” web sites found on the internet.  CashCrate pays you to complete online surveys or try new products or services.   There are hundreds of surveys available with new ones arriving everyday.  You can earn money through completing surveys or their their referral program.

How Does CashCrate Work

Companies need people to try their products or review their websites or services.  CashCrate gets paid by these companies for our participation; passing 75% of their money back to us.  Many different types of surveys are available.  You choose the surveys you want to complete.  Next to each survey is the compltion criteria and how much you are paid for dong the survey.  After selecting a survey a new browser window is opened sending you to the surveys website.  After completing the survey you go back to the CashCrate website and submit the survey as completed.  The amount paid by for the survay is credited to your pending earnings until CashCrate can verify with the company that the survey was actually completed.  Some surveys will also earn you points which can be redeemed for gift cards from the CashCrate Prize Shop.

Getting Paid

You will get paid for any month in which you have verified earnings of at least $10.00.  Payments are processed on the 20th of te following month.  So your $20.00 earnings from July will be mailed to you on August 20.  CashCrate does not currently support ACH or other forms of electronic deposit.

Referral Program

CashCrate uses a two level referral system.  The first level is people you directly referred who create a new account.  The second level is people you direct referrals refer.  You receive a portion of the income earned by your direct and indirect referrals.  Also, the amount paid comes out of CashCrates pockets, not the pockets of you referrals.  The table below shows what you make per level.  Also, noticed that the amount earned goes up with the more referrals you have.

You’ll also receive a $3.00 bonus for each referral who meets the $10 minimum payout.

Who Can Join

Anyone can join CashCrate as long as they are at lest 13 years old.  People of countries outside the United States are welcome to join.  However, most surveys are in English so language may be an issue for some.

Tips For Using CashCrate

• Use two different email addresses.  Use you main email address when you sign up for CashCrate.  You a different email when doing surveys.  Be aware that the survey providers have started rejecting email address from 2prong, private phone and other disposable email addresses.
• Don’t use the old gmail dot trick.  Some providers assume the email is fake if they see a dot in the email address and are rejecting these surveys.
• Don’t do the same survey from multiple sites.  Keep track of what surveys you complete, especially if you are doing them from multiple Get Paid To site.  Providers get upset when they get the same info more than once and may reject all surveys with duplicate info.
• Read the forums.  There is a lot of good info on the CashCrate forums.

I picked up a copy of “The Total Money Makeover: A Proven Plan for Financial Fitness” by Dave Ramsey at the library a couple days ago.  I have hardly put it down since.  Dave Ramsey does an excellent job presenting his methods for a Total Money Makeover.  He provides many real life testimonials from every day people like you and me that he has helped since he did his own makeover.  He provides several worksheets at are easy to use and comprehend. 

In the “The Total Money Makeover” Dave also does a good job breaking down many myths about money and debt.  His discussion on “Keeping Up with the Joneses” will be an eye opener for many who read his book.  Daves presents seven simple baby step to follow and his reasoning for each one.  While the seven steps (listed below) are simple to understanding they will be hard for many of us to implement.  He wants us to change our behavior and attitudes towards money and debt so we don’t fall back into the same traps that got use into financial trouble in the first place.  As Dave puts it we need to focus on the plan with “Gazelle Intensity”.

Dave baby steps for a Total Money Makeover are:

• Baby Step 1: Save $1,000 cash as a starter emergency fund
• Baby Step 2: Start the Debt Snowball
• Baby Step 3: Finish the Emergency Fund
• Baby Step 4: Invest 15 Percent of Your Income in Retirement
• Baby Step 5: Save for College
• Baby Step 6: Pay Off Your Home Mortgage
• Baby Step 7: Build Wealth

If you are serious about getting out of debt or just want a boost in staying focused on your financial goals then pick up a copy of “The Total Money Makeover: A Proven Plan for Financial Fitness“.  You will find reading this book for the first time or reading again time well spent.

With personal and household debt growing at ever increasing rates it is important that we take time to understand debt.  Many think all debt is bad and should be avoided or paid off as soon as possible.  But debt can be good or bad depending upon how it is used and its affect on your finances.  There are several key differences between good and bad debt.

Good Debt - debt from home mortgages, student loans, and business loans is generally considered good debt.  Some investment debt may also be considered good.  Good debt builds value over time.  Good debt also tends to offer some tax advantage and have a low interest rate.

Student loans typically have low interest rates and the interest is tax deductible.  Also, your salary or hourly wage is typically higher when you have a college degree.  Interest on home mortgages and real-estate investment loans is usually tax deductible and the property appreciates in value over time.  Business loans help purchase equipment and inventory necessary for a business to operate.  The interest on these loans can be written off as an expense.  A loan at a low interest rate to purchase an investment that returns a higher rate of return is also good.

Bad Debt - debt from purchasing items on credit that are consumed or depreciate over time is bad debt if the credit or loan is not paid in full when due.  Credit card debt, car loans, boat loans, personal loans, and department store lines of credit are all examples of bad debt. Bad debt typcially comes with high interest rates and offers no tax advantages.  The items purchased with bad debt has decreasing or no value over time.  Clothing can loose as much as 50% of its value as soon as you walk out of the store where you bought it.  Most cars loose 20-25% of their resale value when you drive off the car lot where it was bought.  Paying credit card debt or personal loans off over time can cost you 2-3 times or more what your original purchase cost. 

Be careful!  Borrowing more than you can afford is bad no matter what type of debt you acquire.  Good debt is bad if you cannot live within your means.  Bad debt is always bad and should be avoided or paid off as soon as possible.