Budget Your Way To A Better Lifestyle

IntroductionThe average per household debt in the U.S., not counting mortgage debt, is about $14,500. A typical credit card purchase ends up costing 112 percent more than if cash were used. A $1,000 charge on an average credit card will take almost 22 years to pay, and will cost more than $2,300 in interest ($3,300 total) — if only 2 percent minimum payments are made. There are many families that, if faced with a sudden $1000 bill, would find it difficult to come up with the cash to pay for it.This report will explain the hows and whys of setting up a budget that you can live with, putting together a structured savings plan and reducing your debt. I call my household budget “The Marriage Saver” because I honestly believe that it went a long way towards saving my marriage. Before budgeting our money, we would deposit our paychecks into our checking or savings account and buy what we needed or wanted. We knew that at the end of every month, we would have to pay the rent, so we kept enough in the account to take care of that. But when (notice I said when and not if) an unexpected car repair or appliance breakdown came up, we always ended up fighting about where the money would come from. After setting up the budget (and this is without any increase in our family income) the emergency money was always there. By now, some readers are going to be thinking that they can’t afford to set up and maintain a budget. The fact is that you can’t afford NOT to. The principles that will be explained here apply whether your family income is $10,000 or $100,000.Setting Up A BudgetA budget is nothing more than a way of setting aside money now for expenses in the future. This can be accomplished with a loose-leaf notebook, or if you have a computer, either a spreadsheet program or a commercially available program. Plan on spending 1 to 2 hours per week maintaining your budget.The first step is to break down all of your spending into categories. Make a list of what your money is spent on. Go through your checkbook and look at old receipts for ideas. Remember, you are not interested in what store you made your purchase in or where you bought your last hamburger. You are interested in breaking your spending down into categories. Great care should be taken to get a complete list as these are the categories that you will be saving for. If you miss one, an unexpected bill will result! Some sample categories are listed below:Automobile Payments
Automobile Insurance
Hair care
Home Improvement
Homeowners / Renters Insurance
Property Taxes
Life Insurance
Misc. Household Expenses
Mortgage / Rent
Utilities (Gas & Electric)
Auto Repair
Fuel Oil
DentistOnce you have your categories set up, you need to assign a dollar value to each. This is the amount that you will put away each week for every expense. Note that some of your expenses are paid weekly, such as food; some monthly, such as your rent or mortgage, and some quarterly, such as water bills and property taxes. With each, you will calculate the expense at a weekly rate. The weekly expenses are easy. For example, weekly food purchases can be calculated by looking through your checkbook and getting an average cost. This will become your food budget. Monthly expenses, such as rent and auto payments are a bit more work. Because some months have four weeks and some have five, you will need to use the following calculation: Take your monthly expense, multiply it times 12 (the number of months in a year) and then divide that number by 52 (the number of weeks in a month). Here’s an example. Say your mortgage payment is $1200.00 per month. Multiply 1200 times 12 and you get 14,400. Divide that by 52 and you get $276.92. Round this up to the nearest dollar, which would be $277.00. This would be your budgeted amount for your mortgage. Note that on five week months, you will have some money left over. It’s not really left over, though, so don’t take the family out to dinner with it. It will be used during the four week months. Do these computations on every monthly expense that you have. On your quarterly bills, you will do a similar exercise. Take your quarterly expense and multiply it by 4 (the number of quarters in a year) then divide that by 52 (the number of weeks in a month.) Let’s take a quarterly water bill as an example. Say your water bill is $110.00 per quarter. Multiply that by 4 to get a yearly expense of $440. Then divide that number by 52, and your weekly budgeted amount, rounded up to the nearest dollar is $9.00.Notice in the sample categories listed above that “Vacation” and “Gifts” are listed. There is one big advantage of budgeting these yourself, as opposed to Vacation and Christmas Clubs at your local bank. With the clubs, you can’t always get to your money when you need it. Vacation clubs mature in May, while Christmas clubs mature in October. That’s fine until you want to take a vacation in December or you see a gift that you would like to buy for someone and it’s only July. By budgeting for these items yourself, you have the control over your money.A similar situation occurs with budgets to heat your house in the winter. Whether you use gas, oil or electricity, most fuel suppliers and utility companies allow you to set up a budget with them. They calculate your cost to heat the house over the winter months and divide that up over the entire year. This is exactly the same process that we went through calculating weekly budget amounts. You then pay the gas or oil company a fixed amount every month. That’s great, except that for eight or nine months out of the year, they have your money, and are earning interest from it. By you budgeting your heating bills yourself, you earn the interest. Even if it only comes out to a few dollars in interest over the year, it’s better in your pocket than someone elses.For those who purchased their car (new or used) rather than leasing it, your loan may run for between three and five years. Once this is paid up, don’t stop budgeting for it. Continue putting away the same weekly amount. This way, when it comes time to purchase another car, you will already have a sizable amount of money saved towards a down payment. Remember that the larger the down payment, the lower the amount that you will be financing. Two things are actually happening here. The first is that the money that you are saving towards your next car is earning you interest. That’s free money. The second is that by reducing the amount of money that you will be financing on your next car, you are cutting the amount of interest that you will be paying towards it. More free money!One of the categories listed is Entertainment. This is an important one. Just as all work and no play makes you a dull person, you can budget yourself out of all of your fun. Set aside a little bit each week to go out to dinner, movies etc.Pay Yourself FirstA very common practice is to make the decision to pay all of your bills first, then take what ever is left over and put that towards your long-term savings. The reality is that more often than not, there is nothing left over! By using the “Pay Yourself First” method, you incorporate a fixed amount into your budget to go towards savings every week. It’s very important that you don’t try to over-extend yourself here. If you budget an unrealistically high amount for savings, you will constantly be short on the rest of your budget, and will “borrow” from your savings. Borrowed money from your savings will never be repaid! It is better to set a realistic, affordable budgeted amount that you can afford, even if it’s only fifty dollars a month (that’s twelve dollars a week). The idea here is consistency. As your savings grows, you will want to transfer it out of your passbook savings or checking account into something that has a higher interest rate. CD’s, mutual funds, stocks and bonds are some choices.An easy way of adding to your savings is with pocket change. We all come home with some coins in our pockets, but who knows where that change ends up. Get an empty 2 litre plastic soda bottle and cut a small slot in the top. At the end of each day, deposit your change into the bottle. Don’t break it open till it’s full. A full 2 litre bottle can hold more than $300 worth of change. That’s a nice weekend getaway, a new TV or whatever you want.ConclusionThere’s no big mystery to setting up and maintaining a budget. It’s easier than you think, and doesn’t take a lot of time. Give it a try. You have nothing to lose, and a whole lot to gain.

The Top 5 Types of Business Names

A great business name is sticky and flexible. Whether you hear it in a crowded room or say it yourself, it resonates and remains. So what are the naming strategies behind some of the greatest companies of all time? Apple was able to make people believe that the high-tech world of personal computing was friendly and inviting by choosing a common, every day name. Samsonite created an image of strength and durability that only Samson himself could uphold. BlackBerry used our sense of touch by associating the phone and its small keyboard buttons to the drupelets that form the blackberry fruit.There are a variety of different strategies that entrepreneurs use to create a memorable and unique name for a new business. Some strategies are more successful than others, yet they all seem to co-exist, making it important to review each type to get a feel for what is available. The dynamics behind choosing a business name are easy, but the final selection is one of the most important decisions you will make as a business owner. Your company name is the doorway to your product or service. It must be nothing short of spectacular.With that goal in mind, here are the top 5 most common business name types, with a few pros and cons of each. If you are in the process of considering a name for your new business or thinking of renaming your current business, you can refer to this as a guide to help you navigate the world of exceptional, extraordinary and mind-blowing business names.No. 1: The Real Word Business NameWe all recognize certain names in the English language because they have become household names. They refer to products or services we use everyday. Quaker, Shell and Twitter are familiar to us because they are real words, yet they have been given arbitrary meanings on account of being associated with very successful businesses. Sometimes new companies looking to capitalize on the familiarity of a word will choose to use a name that already exists as part of a new business name. These names are best described as Real Word business names.Amazon, Yelp and Adobe are more examples of highly successful businesses that began by employing simple, recognizable names that grew into multi-million dollar companies. In fact, most people today would probably tell you that “Amazon” is an online retailer before telling you that it is a female warrior or river. On the downside, real words are next to impossible to obtain the.com URL for and notoriously difficult to protect. Real word business names, while easy and convenient, are not necessarily recommended solutions, despite the powerful potential for recognition.No. 2: The Descriptive Business NameThere is no doubt that when consumers hear the name “Super Cuts” they envision that there is some cutting going on, and more than likely, it’s super. A Descriptive business name is one that essentially describes a product or service by identifying some ingredient, quality or characteristic of that product. While naming strategies that employ descriptors are easy to understand and informative, they are hardly unique, and far too common. At best, descriptive names are boring, lack appeal and in most cases, are not worthy of trademark protection.Yet, there are a few benefits to using a descriptive name to identify your business. For one, there is no ambiguity in “All Bran Cereal.” And from a marketing perspective, sometimes it’s not so bad to be direct. At their worst, descriptive names can cause consumers to associate the business with a lack of creativity and innovation. And unless you have an unusually large budget and the ability to quickly rise above the competition, a descriptive name is a tough bet.No. 3: The Compound Word Business NameHere is where it starts to get interesting. Many businesses have been very successful employing a combination of two common (or uncommon) words to make one new name and concept. Compound Word business names tend to be interesting and unique, particularly if new meanings can be created through the combination of words that are not typically used together.Compound word business names are generally easy for consumers to remember because of their uniqueness and memorability – think SalesForce and FireFox. In some respects, the right combination can also incite strong curiosity, which is always a good thing for business. With compound business names, the possibilities are endless as there is virtually no end to the number of winning combinations that can be created. It is tough to find any drawback to using a really good compound word for a business name, but if there is one, its length.Compound words have the tendency to carry more characters than other styles of business names. It may be tough, but resist using any compound name that exceeds ten characters. Keep it short and sweet and you can’t lose.No. 4: The Associated Word Business NameSometimes, business names resonate because they blend two or more words together, making it fun to think of two unrelated objects as one. “NetScape” is basically a blend of “net” and the word “landscape,” which denotes an Internet landscape, making for a perfect business name for an Internet web browser. Associated Word business names include all kinds of unique names that are simply blends of other words, words with prefixes or suffixes affixed, even misspellings of other common words.Associated words can be highly successful business names. Cisco (from San Francisco), Wikipedia (from encyclopedia) and Google (from “googol”) certainly did not have difficulty gaining credibility. These business names have strong underlying meanings and provide a much better back-story than other types of names. Associated words make great business names and can be quite successful if chosen carefully. However, getting it “right” can be tricky, and it’s easy to sound contrived or unnatural if you are not careful.No. 5: The Brandable or Generic Business NameWhen it comes to trademarking and ease of use, nothing comes close to the Brandable or Generic Business name. Brandable names are among the easiest business names to protect and one of the simplest and most effective ways to ensure uniqueness for the product or service you are offering. The biggest advantage to choosing a brandable name lies in its brandability. As consumers use and enjoy your product, your name develops a definition that describes what your company offers.Startups and even established businesses forever look for ways to build brand awareness. The right brandable name will successfully launch any branding campaign. Consumers recall your business name and along with it, your product. For every company, across all industries, this is a huge advantage, as it prevents external “noise” created by the associations people make with Descriptive and Associated style names. It’s surprising how many people have a negative opinion of a particular business name simply because it evokes negative feelings that stemmed from a past circumstance. A unique or “nonsense” name prevents this and gives your company an edge over the descriptive competition.Your business has a lot to gain, or lose, in your choice of name. Your business name is the gateway to your products and services and by default, your livelihood. When you are unsure where to begin, review these strategies and make an informed decision on a name that will resonate with your customers and excite curiosity. After all, you only have one business name, get it right and get peace of mind that comes from knowing you have made the right choice in a high performing, exceptional name that consumers will continually be drawn to.

Captive Insurance Details

A captive insurance company (CIC) is an insurance company that insures the risks of operating business entities within the same “economic family”.

A CIC benefits its owner(s) generally through a combination of factors.
1.1 As with any conventional insurance premium, premiums paid from a business to the CIC are tax deductible expenses under IRC § 162(a).

1.2 A CIC that elects treatment under IRC § 831(b) is exempt from income taxation of premiums received up to $2.65 million annually. There is a public policy rationale for this favorable tax treatment. By including this provision in the tax code in 1986, the US Congress intended to increase competition among insurers and increase the range of choice for insurance consumers.

1.3 An 831(b) CIC is taxed only on its investment income. The “dividends received deduction” under IRC § 243 provides additional tax efficiency for dividends received from its corporate stock investments.

1.4 Policy premiums paid to the CIC stay in the economic family. Roughly 35–50% of premiums paid for conventional “retail” insurance go to overhead, administration and profit. A CIC reduces those costs. Further, since a CIC invests its reserves and surplus in its own investment accounts, investment gains benefit the CIC’s owner(s) (not an outside insurer).

1.5 A CIC customizes insurance policies directly to the needs and preferences of a business to improve insurance coverage and/or decrease premiums.

1.6 A CIC customizes policies to insure risks that are otherwise uninsurable or too expensive to insure using conventional insurance. Thus, a CIC is a tax-efficient substitute for “self-insurance” (i.e., no insurance). Instead of using post-tax dollars to make a “rainy-day” fund, up to $2.65 million no-tax dollars can be shifted as insurance premiums to the 831(b) CIC annually.

1.7 A CIC is particularly well-suited for insuring “business loss” risks; for example, loss of business revenue resulting from loss of key employee or customer, change in government regulations, loss of operating license, etc. (see Section 6 below).

1.8 A CIC has access to reinsurers. For a high-premium policy (e.g., $1 million), a CIC can negotiate directly with a reinsurer for favorable “wholesale” insurance rates.

1.9 A CIC established in an offshore jurisdiction incurs no state income tax liabilities.

1.10 Although a non-831(b) CIC must recognize premiums as income, deductions under IRC § 832(b)(5) for IBNR (incurred but not reported) loss reserves provide arbitrage opportunities to the CIC. The “dividends received deduction” under IRC § 243 also applies.

1.11 A CIC offers flexible financing of annual premiums (and capitalization requirements), accommodating a business’s cash flow problems. For example, a significant portion of annual premiums may be paid at the end of the premium year.

1.12 CIC reserves and surplus are not exposed to general creditors of the operating business. Insurance reserves are available for paying insurance claims only. At the end of a policy term, corresponding insurance reserves become surplus. CIC surplus is not subject to claims and can be invested to maximize return.

1.13 Since 2017, a family trust may not own an 831(b) CIC. Nevertheless, a CIC can be a valuable part of an integrated wealth accumulation, asset protection, and generational wealth transfer plan.

A well-designed CIC managed by a “turnkey” service provider can be operated and properly reinsured for about 12-16% of annual premium payments. For example, if premiums of $1.2 million were paid to the turnkey CIC, total management costs including the cost of reinsurance could be less than $150K, potentially resulting in a profit of $900+K at the end of the year if there were minimal non-reinsured claims.
Generally, a CIC makes good economic sense when the CIC receives about $250K or more in premium payments annually. The insurance licensing agency in the jurisdiction of formation requires initial capitalization of a CIC, typically about 20 percent of the first year’s premiums.

Generally, formation of a CIC is less expensive in one of the traditional foreign jurisdictions than in one of the states in the US. In any case, an 831(b) CIC usually elects to be taxed as a domestic company under IRC § 953(d), its operating account is located in the US, and its investment account (holding the bulk of its assets) can also be located in the US and controlled by its owner(s).

Unrelated owners of businesses (i.e., owners from different “economic families”) can form a multi-owner CIC, a so-called “group captive”. For example, four unrelated owners of businesses having similar types of risk could form a group captive that insures some or all of their operating business entities.

CIC assets can be accessed in several ways.
3.1 Dividends. Qualifed dividends are taxed at 15% for taxpayers in lower tax brackets, at 23.8% in highest tax brackets.

3.2 Direct investments. The CIC can invest directly in new business ventures.

3.3 Shareholder loans. Loans should be transacted only with strict formalities at arms length to avoid problems with the IRS and the licensing agency.

3.4 Liquidation of the CIC will be treated as a long-term capital gain.

To qualify as insurance, an insurance policy must shift a genuine risk from the insured to the insurer. A rule of thumb used by actuaries is that there should generally be a 10% chance of a 10% loss of the policy limit. In any case, a good CIC manager employs underwriting and actuarial skills to provide sound insurance coverage, satisfy statutory and IRS requirements, and maximize profits for a given set of circumstances.
To avoid scrutiny by the IRS concerning the appropriateness of deducting insurance premiums under § 162, total annual premiums paid by a business entity to an 831(b) CIC should not exceed 10% of the business’s gross revenue. For example, if a business has annual gross revenues of $3 million, insurance premium payments should not exceed $300,000.

For discussion purposes, risks can generally be characterized as follows.

4.1 Low-frequency/low severity risks. A CIC can issue a policy that is efficiently priced and avoid paying overhead costs of retail insurers.

4.2 High-frequency/low severity risks. Conventional insurance for such risk can be expensive because of high administration costs. The operating business can purchase a low-cost high-deductible (stop-loss) conventional policy and pay the numerous small claims up to the deductible amount. The CIC can then issue an indemnification policy to the business that covers the high deductible.

4.3 Low frequency/high severity risks. A CIC is well suited to insure this type of risk. Operating businesses often pay high insurance premiums for high severity events that rarely if ever occur. Other businesses are completely exposed to such high severity events because they do not insure against them, simply because they occur so rarely. Such risks are efficiently covered when the operating business purchases a conventional low-cost stop-loss (catastrophic) policy and the CIC writes an indemnification policy to cover rare, high-severity events.

4.4 Premiums approach policy limits of insured risk. There is little benefit from conventional insurance if premiums paid are close to policy limits. A CIC can underwrite risks more efficiently by reducing overhead costs and investing the premiums in its own accounts.

4.5 Risks that the business manages better than the industry average. A CIC enables the operating business to customize its insurance to meet its own risk profile, rather than indirectly subsidizing other companies having high claims histories.

Business Liability Policies. Liability policies cover claims made against the operating business by third-party claimants.
Direct policies directly pay claimants and legal fees and expenses. They could create an asset for plaintiffs to pursue and, therefore, are not preferred for a CIC.

Indemnification policies indemnify, or reimburse, the business for third-party claims that the business pays. The business decides whether it will pay third-party claims. In other words, an indemnification policy could cover the risk for the business without offering an asset for plaintiffs to pursue.

Litigation expense policies pay only legal defense fees and expenses. These are good policies for a CIC because they do not create any rights in favor of third-party claimants.

Business liability risks commonly exist in the following exemplary areas:

Vehicle use

Construction and design defects

Performance liability

Structural defects

Title insurance

Environmental impacts

Product liability

Professional malpractice

Advertising liability

Copyright and trademark infringement


Unfair trade practices (e.g., Lanham Act violations)

Director and officer liability

Errors and omissions

Sarbanes-Oxley violations

Employee relations (e.g., discrimination, sexual harassment)

Failure to investigate/control employees and agents

Libel and slander

Workers Compensation (subject to limitations)

Employee Health Insurance (subject to limitations)

Business Casualty Policies. A good type of policy for a CIC to issue is a business casualty (i.e., business loss) policy because only the business can assert a claim and no third-party claimant is involved. Most businesses consciously or unconsciously self-insure many potential business casualty risks.
Business casualty risks commonly exist in the following exemplary areas:

Unforeseen administrative action of a governmental body, e.g., pandemic lockdown

Changes in state or federal law

Judicial or administrative delays

Extortion (even if not provable legally)

Market volatility

Inability of key individual to work

Loss of professional or business license

Loss of key client or investor

Business credit (e.g., credit loss, delayed or withheld loans)

Labor cost or strike

Property damage

Unfair calling of guarantees

Litigation costs

Tax audit defense

Business interruption (e.g., computer, supply chain, weather, pandemic)

Lawsuit interruption (i.e., interruption by lawsuit into business operations)

Consequential damages

Contract frustration

Advertising and marketing failure

Business reputation

Commercial crimes (e.g., theft of trade secret)

Currency risks

Bonds. CICs are also suitable in some circumstances to underwrite surety, performance and other types of bonds.
Warning & Disclaimer: This is not legal or tax advice.

Internal Revenue Service Circular 230 Disclosure: As provided for in Treasury regulations, advice (if any) relating to federal taxes that is contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any transaction or matter addressed herein.

Guidelines to Fix Bad Credit Effectively Through Dispute

Is it possible to live with bad credit? Yes, but it’s going to be tough. Having a bad credit score can make things impossible, pricier and a lot more complicated. For instance, drivers with bad credit scores are usually charged higher interest rates by most insurance companies. Also, if you are acquiring new utilities, the company will have to verify your credit history before deciding whether you should shell out a security deposit or not and since banks examine credit scores, it would also be difficult to get a loan or a credit card if you have bad credit score.

Fixing bad credit is important to save money on loans, insurance and credit cards. Additionally, having a good credit score means having more opportunities such as employment, salary increase and promotions so it is important to fix bad credit in order to secure your finances in the future.

There are credit repair companies that can help you with your credit score but be careful in choosing credit repair help. Note that not all services operate legally so it is important to distinguish the legitimate companies from the bogus ones. Another important tip to remember is that there are certain methods that you can do on your own to repair your bad score so it is recommended to determine your options before signing up to something that may cost you a lot of money.

Acquire a copy of your credit report, and then examine it.

The first step on how to fix bad credit is identifying the things that require fixing. Credit reports include the errors you have done that resulted to bad credit score. Examine your credit report to know the negative items that affects on your score. According to the law, you have the right to get a free copy of your credit report every year.

Do not get too overwhelmed by the information in your credit report. Familiarize yourself with the data included in your credit report such as your personal information, comprehensive history of your account, bankruptcy and inquiries that you’ve made. The following are the usual kinds of information that that need credit repair help:

Due accounts that are charged off, late or have been forwarded to collections.

Wrong data including payments, which have been mistakenly reported late, and accounts that are not yours.

Accounts that have reached their credit limit.

Dispute Errors

Everybody has the right to dispute any incomplete or inaccurate information in a credit report. You can dispute online, which is easier and faster. However, you may not be able to acquire written records for it unless you take screenshots of everything. Therefore, it is recommended to deal with your disputes via mail so that you can send evidence that backs your dispute. Your dispute should have your credit report copy together with the highlighted items you are disputing as well as a duplicate of the proof supporting your dispute. This way, the credit bureau will be able to conduct a better and more effective investigation.

Another option to fix bad credit is to send disputes to the business or bank that recorded the data on your credit report since they also have the legal responsibility to examine your dispute and eliminate incomplete, incorrect or unverifiable data from your credit report. After a successful dispute, your credit report will be updated. The bureau will then make the modifications needed and notify the other credit bureaus.