Fortune 500 Budgeting For Our Personal LivesWritten by Deborah Carraro
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2. Determine your ESSENTIAL expenses Steve has certain fixed monthly expenses. He lists them as: - Mortgage payment - Groceries - Automobile lease payment - Automobile Insurance - Utilities - Fuel 3. Calculate a monthly cost for ESSENTIAL expenses. The expenses that Steve has deemed essential are a mix of fixed and variable costs. He notes fixed payments first, assigning their values as: Mortgage payment$1,300 Automobile lease payment$ 385 Automobile insurance$ 130 To better gauge his variable expenses, Steve creates an expense log and records all his purchases for two-month priors to setting up his budget. He also examines his old utility statements to determine his average expenses and is able to assign following values: Groceries$ 200 Utilities$ 400 Telephone (incl. Long distance) $ 50 Fuel $ 250 Knowing that his variable expenses are based on an average of prior expenses, Steve sets aside $200 per month to cover periods when expenses may be higher than his estimate. Steve calculates his monthly ESSENTIALS cost as $2,915.00 4. Determine and calculate your non-essentials Steve examines spreadsheet he created for step 3 and identifies some other common expenses. Entertainment $ 50 Meals (incl. Daily coffee)$ 100 Gifts (weddings, birthdays, etc.)$ 100 Books and magazines $ 50 Miscellaneous $ 25 Steve’s monthly non-essential expenses total $325 Steve creates a new spreadsheet with information he has calculated thus far. He calculates his disposable income as: Monthly income: $4,166.67 Less: ESSENTIALS$2,915.00 Less: Non-essentials $ 325.00 Disposable income$ 926.67 5. Establish monthly contributions towards debt elimination and savings: Steve amassed some debt while in school and owes $5,000 on his credit line. He would also like to purchase a vehicle rather than lease and plans to take a trip to Europe in two years to visit family. He decides on following monthly contributions: Debt$ 450.00 Savings$ 300.00 Steve deducts his monthly contributions from his disposable income and is left with $176.67, which he decides to leave in his checking account to cover other incidentals and miscellaneous expenses he may have overlooked. He makes a plan, however, to transfer $500 to his savings account when balance in his checking account exceeds $1,000. It’s easy to see that you can write out a plan yourself or use a software package to set up a budget - no need to hire a professional accountant. It’s important to know where your money is coming from and where it is going so that you won’t have any unpleasant surprises – and maybe just enough money left over at end of day to buy that lottery ticket you’ve been hoping for! © 2005 Deborah Carraro
Deborah Carraro is a Virtual Assistant offering bookkeeping, web design, desktop publishing and business consulting services. She publishes a monthly newsletter Vascorp VA Advantage. To subscribe or find out more, please visit visit http://www.vascorp.com/va
| | Going Against the Conventional Investment WisdomWritten by Terry Mitchell
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However, I have been able to trade successfully with short-term momentum already established by market. Why no-load market index funds instead of individual stocks or Exchange Traded Funds (ETFs) that mirror various market indexes? Because no-load market index funds allow leveraging and short selling without need for a margin account. Also, some of these funds allow twice-daily trading (which is important for exiting early on bad days). In addition, fund company I use doesn’t charge redemption fees for actively trading its funds. Most fund companies, even those that specialize in no-load funds, charge these fees. Like I said at beginning, I’m not going into great detail, especially about my more aggressive strategy. However, I should define some terms so all of this will make more sense to those who are novices in world of investments. What is leveraging? Leveraging, in this context, is ability to buy shares of a stock or mutual fund and realize a multiple of its gain or loss during time you hold it. For example, if you buy a fund leveraged at 2 times a given stock index and that fund goes up 20%, you realize a 40% gain. However, if it goes down 20%, you incur a 40% loss. With individual stocks or ETFs, you need a margin account to do this. With a margin account, your broker is loaning you money on “margin” at a rather high rate of interest to cover leveraged (or extra) amount. Obviously, this could be very risky and costly. However, there are some funds that have this leveraging built in at no cost to you. These funds automatically give you one-and-a-half or two times gain or loss of a given stock index. What is short selling? Short selling is when you sell a stock (that you don’t already own) immediately at its current market price while agreeing to buy it at whatever market price will be at a fixed point in near future. In other words, you are betting that stock will be going down, so you can buy it for less than you sold it for. Have you ever heard anyone say “don’t sell me short”? Well, this is where that term came from. Selling someone short is tantamount to treating them like a bad stock that you believe is going down. Yes, it’s backwards of normal process of buying and selling stocks. As with leveraging, you need a margin account to do this for individual stocks or ETFs. Your broker loans you money on “margin” (actually buying stock temporarily), so you can sell a stock that you don’t own yet. Once again, however, funds I use have this short selling mechanism already built in to them at no cost to you. For example, you can buy a fund that gives you inverse performance of Nasdaq-100 Index. When that index goes up 10%, fund goes down 10%; conversely, when that index goes down 10%, fund goes up 10%. There are even funds with leveraging and short selling built in to them, at no cost to you! For example, there is an available fund that goes up 20% when Nasdaq-100 Index goes down 10%. Of course, that same fund goes down 20% when then Nasdaq-100 Index goes up 10%. As you can probably imagine, these funds can be powerful tools for profit-making for those who know how to use them, but can be highly dangerous for those who do not. For more information about any or all of these concepts and to find out what kind of investment is right for you, contact your financial advisor and/or do your own research. Hopefully, I have provided some food for thought as well as several resources that might be helpful to you when doing your own research.
Terry Mitchell is a software engineer, freelance writer, and trivia buff from Hopewell, VA. He also serves as a political columnist for American Daily and operates his own website - http://www.commenterry.com - on which he posts commentaries on various subjects such as politics, technology, religion, health and well-being, personal finance, and sports. His commentaries offer a unique point of view that is not often found in mainstream media.
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