Monthly Archives: October 2011

Starting a Business is Scary!

Written by in Business
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I’ve recently decided to invest in a new online venture with a friend. We’re building a site with a new service that isn’t out there yet and we think the business model is sustainable. It’s going to be a lot of fun once it’s built and there’s a very high ceiling, who knows where this will take us. We’re not ready to release our idea yet, but stay tuned because it’s a good one!

That being said, there are a LOT of scary things when starting a business, no matter how great of an idea it is. Whenever you are putting money in without knowing the outcome, it makes me nervous! It’s not gambling because I have control over it and it’s not an all-or-nothing type of deal, but I still risk losing everything I put in!

Building a website is the least of our worries. In all, we are spending $640 just to have the site built. This isn’t a blog and since there are features that I haven’t seen elsewhere on the Internet, we are having a site built specifically for us and our new service.

Once the site is built, we will have to drive traffic to the site. While there’s a slight chance this turns into a viral campaign, but since 99.9% of sites aren’t like that, we will have to build from the ground up. We’ll start with friends and family, Facebook, Twitter, etc. But there are only so many free options out there, so we will likely have to pay for traffic at the beginning until word spreads or someone notices us.

Next we have expenses for running our service, which likely have to be paid before we see even a penny. These costs aren’t small and will be coming out of our pockets.

Finally, we will be looking for sponsors for our hip new company. We don’t anticipate it being easy to get people to sign up for an unknown service, we are counting on win-win situations for everyone and possibly to get some of our costs covered at the beginning until we are fully up and running.

In all, we are probably looking at $4,000 – $6,000 in an initial investment. That’s not something I’m entirely comfortable with, and with most of my investments, they are either very small or have little risk of losing it all.

When starting a new business, you’re putting everything on the line. There are no hedging your bets, you either succeed and make your money back, or you fail and go into bankruptcy (not personal, but if we lose all of our money we invested, we’re unlikely to pump more cash in).

I’m scared as heck to do this, but the pull of starting something original and having a working business is too good of an opportunity to pass up. The upside is high, so while there are some major risks we are taking.

I can’t wait to share the new service with you guys, I think you’ll love it when it comes out!

Readers, do starting businesses scare you? Are the risks too high to justify the investment of time and money?

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Best of The Rest: Site Problems Edition

Written by in Best of the Rest
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You may have noticed that I’ve been MIA recently. Well, maybe you didn’t notice. But either way, I’ve been here, typing out articles even if you guys haven’t been paying attention. But maybe you haven’t seen me in your feed or in your inbox as usual. That’s because there was an error with my feed and it wouldn’t update. So maybe you got a barrage yesterday.

Either way, it looks like everything is fixed and should up as normal. I’ve been saving a few posts until it got fixed, so you should see some fun content coming up.

I paid someone $10 to fix the problem, which was fine because I didn’t know how to and my basic Google searches didn’t bring me any new information.

Then, it broke again. And my guy didn’t email me back for a few days. So I had to investigate myself. It turns out there was a simply fix that I could do all by myself. So $10 wasted, but now I have the knowledge not to waste the money in the future.

While I’ve been in my cave writing, I had time to check out these articles:

How a 12% P2P Investment Can Become a 6.5% Return (via Social Lending)

5 Easy Ways to Freeze (via Money Mum)

Flaky Accountability Partners (via Prairie Eco Thrifter)

Pay Cash or Finance a Car? That Is the Question (via Free Money Wisdom)

Who Are the Most Frugal Celebrities (via Financial Success for Young Adults)

What are the Best and Worst Jobs in the World? (via My Personal Finance Journey)

9 Impulse Buys that Turned Out Better than Expected (via Money Cone)

10 Ways to Stay Poor… Forever (via Money Talks)

I was also included in the following carnivals:

Totally Money Carnival (Editor’s pick!)

Festival of Frugality hosted by Minting Nickels

Festival of Frugality hosted by NerdWallet

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Social Security Taxes May Increase in 2012

Written by in Taxes
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We’ll all be paying more social security taxes next year!

No new legislation has been passed, and President Obama is actually trying to reduce the payroll tax to 3.1%. But there are other forces at play here that may result in about 10 million Americans paying more in social security tax.

The news is mixed: Those who receive Social Security benefits will receive 3.6% more next year due to a cost-of-living increase that will go into effect. Inflation has been rising, but the same inflation that affects the amount of social security checks also raises the amount of income that is subject to the Social Security tax, also known as the payroll tax.

Currently, workers pay tax on the first $106,800 of income. But starting in 2012, workers will have to pay the tax on the first $110,100, an increase of $3,300 that will be subject to the tax.

In the past, the 12.4% payroll tax was split between workers and employers, each of which paid 6.2%. For 2011 however, Congress passed a temporary payroll tax holiday which lowered the work portion down 2 percentage points to just 4.2%

There are a few scenarios for how much people could pay, all depending on what happens in the next 2 months.

Currently, people making $110,100 or more pay $4,486 to Social Security taxes.

If the Social Security tax reverts back to 6.2% in 2012, people making $110,100 or more would pay $6,826, a whopping $2,340 more than the previous year.

If the Social Security tax remains at 4.2% in 2012, they would pay $4,642 in Social Security tax, an increase of $139 in 2011.

If Obama has his way and the Social Security tax is lowered to 3.1%, they would pay $3,413 in Social Security tax, a decrease of $1,073.

Of course, this only affects people who make over $106,800. For those that make less than that, all of their wages are subject to the tax, so a decrease down to 3.1% would help everyone while reverting back to 6.2% would hurt everyone.

UPDATE: The 2012 social security tax rate is set, and remains at it’s 2011 level of 4.2%. Yay for more money!

Readers, are you rooting for the payroll tax to be lowered, raised, or stay the same? This is one of the most noticeable taxes we see and our tax bills are directly affected by inflation.

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Who Needs Life Insurance?

Written by in Insurance
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Anyone who has children should also have life insurance. Life insurance is one way to guarantee your family’s financial security, provide for your children’s education, help them continue to build your business or even help them pay for things like cars and mortgages. Think of life insurance as another way to invest in your family’s future.

There are generally three types of policies to look for and different considerations with each one.

  • Universal Life Insurance: A flexible policy that you can structure around your needs and your monthly income. You can adjust the premiums paid per month if your income varies over time. You just have to ensure that you pay enough to keep the policy valid and in effect. There may be a death benefit option that can either increase or reduce the death benefit as needed. This is especially useful if you have young children and want certain levels for lengthy periods of time, but then want to be able to reduce the benefit when your children are grown.
  • Term Life Insurance: This kind of policy will maintain a certain premium for a distinct time period, after which you can opt to continue coverage with a premium that increases annually. You might decide that you want life insurance for 15 years with guarantees that your premiums will remain fixed. If you have a fixed budget, this might be especially useful.
  • Whole Life Insurance: This offers a guarantee on the death benefit and guaranteed cash value for a guaranteed premium. This is often most expensive kind of life insurance, but may pay dividends (refunds of unneeded premium) that can be used in a variety of ways: to increase the death benefit, to borrow against for any use or to keep the policy in effect so that you can stop paying monthly premiums. Cash values can function as additional investments or assets.

Paying for Life Insurance

Knowing how much you can afford to pay on a monthly basis means having a solid understanding of both your expenses (monthly bills, child care, mortgage, other insurance, food, healthcare, travel, entertainment) and available assets (investments, savings, additional income that can be counted on). It’s useful to look at all your expenses and determine where you could save a few dollars each month. Just cutting down on a latte here or a dinner out there can add up to significant savings. Genworth Financial offers a free budget calculator to help you limit expenses to cover the costs of life insurance.

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