The Debt Ceiling Deal

Image via WikipediaThe American political system was put to the test during the recent debt ceiling crisis. This crisis exposed to the entire world the willingness of some American Republicans (Tea Party) to bring the world to the brink of financial disaster by defaulting on government bonds and other government commitments in order to avoid eliminating the Bush tax cuts or any form of increased taxation for the rich which would have provided a balanced approach to deficit-reduction.

The Deal,in summary form , over the next decade increases the debt ceiling by $900 billion along with spending cuts of $917 billion for a net $17 million. $1.5 trillion in further deficit reductions must be approved by Congress before December 23rd. These reductions are to come from a 12-member congressional committee, equally composed of Republicans and Democrats. However, there will be a similar-sized increase in the debt ceiling. If the committee fails to reach agreement or its proposal is rejected, $1.2 trillion in spending cuts will be triggered.

Let’s look at the reality, the likelihood of the committee of 12 Republicans and Democrats coming up with a deal that will be supported by both parties is almost nonexistent. The Republicans will remain adamant against any tax increases and the Democrats will protect their social programs such as Medicare and Medicaid. All that has really happened is a possible two year delay before the debt ceiling war is renewed. The American political system remains as partisan and dysfunctional as before this crisis began
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Stay on Track,Money Magazine Hoss

Next Hoss Cents Free Financial Money Magazine Post:ul August 2011

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Money Saving Tips

From The Hoss's Mouth

The Hoss has compiled a number of money saving tips to assist you and your family in planning ways to cut your family expenses. Many of these tips are easy to implement and will result in considerable savings to your budget.

• Money saving Tip 1: The proper use of a programmable thermostat can result in a considerable savings in your home heating bill. Consult your local power company for recommended settings or look for information on the Internet.

• Tip 2: When going on vacation be sure to utilize the vacation setting on your hot water tank.

• Tip 3: Fix leaky faucets.

• Tip 4: Use weather-stripping and/or caulk to plug heat loss from drafty doors or windows.

• Money Saving Tip 5: Seal all energy leaks. Cracks and small holes around windows and exterior walls should be caulked.

• Tip 6: Purchase energy efficient compact fluorescent bulbs to replace standard candescent bulbs.

• Tip 7: Here's one you've never heard before: Turn out the lights.

• Tip 8: Turn of your computer and monitor when not in use.

• Tip 9: Basic cable only. Do you really need all those specialty and movie channels?

• Money Saving Tip 10: Do you really need call waiting, caller ID, voice-mail, call forwarding and three-way calling? Consider cancelling one or all of these services.

• Tip 11: Compare the various long distances providers. Choose a plan best-suited to your needs. Pay attention to their rounding policy. Do they charge by each minute or portion thereof or do they charge for actual time used? If you talk for a minute and a half and get charged for two, that is an unnecessary expense.

• Tip 12: If you are paying for multiple cell phones, this can be very expensive. Eliminate any that are supplemental to your basic needs. Sign up for family plans.

• Tip 13: Automatic teller machines (ATMs) are a great invention. However, you may be charged a transaction fee for using an ATM not associated with your financial institution. Identify which ATMs you can use without incurring a transaction fee.

• Tip 14: Closely monitor all your bank's service charges and identify areas where these charges can be eliminated or reduced, such as reducing the number of times you use ATMs if you are being charged per transaction.

• Money Saving Tip 15: Utilize the coupons in your local supermarkets' sales flyers. This could result in a huge savings in your budget for groceries.

• Tip 16: By store brand rather than name brand.

• Tip 17: Garage sales can also help reduce your expenses. You can pick up quality items for a greatly reduced price.

• Tip 18: End of season clearance sales can provide a huge savings on clothes.

• Tip 19: Where you have the expertise and knowledge, do it yourself. Paying service people can quickly add a great deal of unnecessary cost to your budget.

• Money Saving Tip 20: For special occasions such as birthdays, avoid gift-wrap that is expensive. Shop the dollar stores for good cheap wrapping. Mrs. Hoss does this all the time; she finds gift bags for a dollar, no more than two dollars, depending on the size.

• Tip 21: Learn to change the oil on your car. This can save you a few hundred dollars a year. Otherwise, utilize the many coupons that are available.

• Tip 22: Save on gas by keeping your tires fully inflated and your car tuned.

• Tip 23: Eat at home with meals prepared at home. Pack a lunch for work. Restaurant and take out foods are expensive and greatly increase budget expenditures.

• Tip 24:Eliminate those specialty coffees at the specialty rates.

• Money Saving Tip 25:Be self-motivated: Workout at home. Spa and health club memberships are costly.

• Tip 26: Pay cash. Many stores offer discounts for cash payment.

• Tip 27: Shop for an insurance company that will give you a preferred rate if you carry all your insurance with them. For example: car insurance, mortgage insurance and household insurance.

• Tip 28: Look for free activities: Take your kids to the park for a picnic and feed the ducks. Check your local newspaper for community events that are offered free of charge.
  

• Tip 29: If you go to a movie, make it a matinée or on a discount evening.

The Hoss realizes you may not be in a position to implement all of the above money saving tips, but make the most of as many as possible. This will help you and your family reach the financial goals you have established.

Stay on track,

The Hoss

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Previous Post: Creating a Budget

Financial Priorities

Establish Financial Priorities

From The Hoss's Mouth

The Hoss says; establish financial priorities for you and your family. This is an absolute must for financial success.

Any financial money magazine you read or any financial adviser you talk to will almost certainly relay the same information: The first step in any successful financial plan is to establish your financial priorities, or in other words, figure out what you are saving for. The Hoss says, be sure to include your spouse and other family members at this stage. It is much easier to obtain your goals when the whole family has input and is committed to achieving the agreed upon targets.

OK, don't worry. I know this is easier said than done, but The Hoss will provide you with suggestions to help you achieve this lofty goal.

First, make a list of everything you and your family members need or want to make them feel happy and secure. Let The Hoss help you get started with some goals common to all family members:

• get out of debt

• college education for the kids

• buy a house

• retirement fund

• planning a vacation

• save a little each month

• purchase household appliances

• buy a car

• start a business

• rainy day fund

Hoss Cents Free Financial Money Magazine Success Tip.

List your financial goals in order of priority

The Hoss says, now that you and your family have identified your financial goals list them in order of priority and break them down into three categories: Short-term, Intermediate-term and Long-term. Financial advisers differ on the recommend time frame for these goals. Look at all the circumstances and decide what makes the most sense for your family's situation. The Hoss provides examples below, but be flexible and adjust accordingly.

Short term goals - A year or less.

Intermediate-term goals - One to five years.

Long-term goals - Five years or more.

Hoss Cents Free Financial Money Magazine Success Tip.

Write your goals down.

The Hoss suggest using the KISS principle (Keep It Simple Silly). No, The Hoss is not calling you silly, but he is suggesting you keep your goals simple and realistic. If your goals are too complicated or unrealistic, you may be tempted to abandon them. Writing your goals down will help you and your family stay on course. Do not overlook this tip. It is extremely important for you to have a document to refer to in order to measure your success. Remember; do not be too rigid, as unforeseen circumstances may cause you to adjust your goals. This is a reality of life.

OK, that's enough for this post. What you have achieved here is in reality the first step in budget planning. Next edition of the Hoss Cents Free Money Magazine will deal with the remaining steps in building a budget to achieve your financial goals and priorities.

Stay on track,
The Hoss

Next Hoss Cents Free Financial Money Magazine Post: Creating a Budget
Previous Post: Good Debt Bad Debt

Good Debt Bad Debt

From The Hoss's Mouth

The last issue of Hoss Cents Free Financial Money Magazine made it clear that The Hoss does not recommend going into debt. However, The Hoss understands that unless you are a pro athlete, or you have inherited a fortune, or maybe won the lottery it will be almost impossible for you not to borrow money at various times throughout your life.

Hoss Cents Free Financial Money Magazine Success Tip

Before you incur any debt, you must fully understand the difference between good debt and bad debt. Not unlike knowing a good horse from a bad horse.

GOOD DEBT:

• Any debt that's used to buy an asset that will increase in value over the time of the loan.

• A mortgage used for the purchase of or remodeling of a home.

• Student loan for college (the value of an education is immeasurable)

• Provides a tax benefit

BAD DEBT:

• Any debt that's used to purchase an item that depreciates overtime.

• Car loan

• Credit card debt

• Vacation loan

• Let's make it easy to understand: ALL other loans are bad debt. Period.

The worst debt of all is credit card debt. Do not use your credit card to finance the purchase of personal or household items such as clothing, shoes, food, furniture and TV. These are all bad debt, just like placing a bet on a horse running on a dirt track when that horse specializes running on a grass track; you're going to lose.

If you currently have any credit card debt, you must take the necessary steps to eliminate this debt as soon as possible. If you have more than one credit card, get rid of all but one. That credit card must be the one with the lowest interest rate.

The Hoss wants you to understand that credit cards, when used properly, can be an excellent financial tool--they can be used to establish a credit rating. Proper use means paying the balance on or before the due date. ALWAYS.

The Hoss and Mrs. Hoss have only one credit card each. Why, you may ask, do we carry a credit card at all? We find them convenient to use when purchasing a high ticket item, because it reduces the need to carry a lot of cash. We ensure any charges on these cards is paid in full before any interest is generated. An added benefit of paying credit charges on time is that you will establish an excellent credit rating.

The Hoss has made this definition of good debt and bad debt very simple because it IS very simple and can be summarized as follows:

Good Debt = Appreciating Asset

Bad Dept = Depreciating Asset

Stay on track,
The Hoss

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Previous Post: Debt Control

Debt Control

From The Hoss's Mouth

Debt control is a winning ticket. This edition of Hoss Cents Free Financial Money Magazine provides the most important financial information you will ever learn.

A famous Canadian newspaper mogul who had accumulated a vast wealth was once asked the secret of his success. His reply was that he only bought items that he could pay for with the cash he had available at the time. In other words, he did not take out loans to purchase items.

Hoss Cents Free Financial Money Magazine Success Tip

The Hoss says get out of debt and stay out. The only debt you should acquire is for an asset that will appreciate in value over time. i.e. a home.

Okay, now I am going to bore you with numbers, but believe me when I say, at the end of this you will fully realize the importance of getting out of and staying out of debt.

Example One:

You have credit card debt of $6000.00 with an interest rate of 16 percent. Assuming you do not purchase anything else on this credit card, you could pay it off in two years paying $293.78 a month, for a total pay out of just over $7050. You see where I am going with this? You just paid over $1050 to the credit card company for the pleasure of doing business with them. Do you think you could have found a better use for that $1050?

Example Two:

There is this beautiful new car you absolutely fell in love with. It costs $30,000.00. The salesman likes you so much that he is willing to give you $5,000.00 for your old heap for a trade-in. Not only that, the kindly dealership will lend you the balance at a measly 4% over four years.

Okay, now what is this car going to really cost you?

To completely pay for this car in four years you will have to come up with $564.47 per month, for a total pay out of $27,094.86. That's $2,094.86 in interest you paid to the dealership. You probably noticed The Hoss did not calculate the administration fees charged by the dealer, or the taxes on such a purchase, nor did he tell you your old heap was sold by the dealer for a lot more than the $5000.00 he gave you. Oh well, The Hoss ain't perfect.

But do you get my point?

You could have kept your old heap another four years, put $564.47 per month in the bank, and even if you don't put the money in an interest bearing savings account, after four years you would be able to pay cash for a new car AND have over $2000 for that new HDTV you've been eying at your favorite tech shop. Now that's what I call a winning daily double. As Mom would say, ain't life grand.

By now you can see the wisdom of that Canadian newspaper man and why he was so financially successful.

Stay on track,
The Hoss

Next Post: Good Debt Bad Debt

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Hoss Cents Free Financial Money Magazine

The free financial money magazine by the Hoss leaves the starting gate today. It is designed for those of you who have difficulty in managing your financial affairs. The Hoss will guide you through the steps each of us should take to achieve our financial goals.

Why, you ask, should I read this financial money magazine and not others? The simple answer to that is you should not limit your reading to this magazine alone. The more information you obtain, the more likely you are to achieve the financial freedom you crave.

The Hoss will provide you with his Hoss Cents tips that contain valuable bits of information, which if followed, will assist you in reaching financial success.

Who is the Hoss? He is an ordinary Joe who retired at age 49.

He did so without the benefit of a college education. He did not inherit money. He was not a pro athlete. He did not partake in criminal activity. What he did do was work hard and make sound financial decisions.

Hoss cents financial money magazine will cover topics such as how to:

• eliminate debt
• invest wisely
• utilize credit cards
• establish and set priorities
• achieve your goals with budgets
• choose a financial institution
• select an insurance company
• purchase a home
• minimize taxes

Plus many more tips of a financial nature.

Each edition will concentrate on one topic. The first publication will explain the absolute necessity of controlling debt. Welcome to the Hoss Cents Free Financial Money Magazine.

Stay on track,
The Hoss

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