1. Make time to play like a little kid; run and jump, use your imagination and pretend
2. Cook a fancy 5-course meal from scratch and serve it to a group of friends who were expecting a simple barbeque
3. Keep a journal and re-read your entries a few times a year to reflect on your thoughts
4. Help a random person anonymously; Pay the toll for a car behind you or help a stranger in need and walk away without a financial reward
5. Sprint at full speed; Do something that makes you out-of-breath.  Jogging is great, but a good sprint every once in a while reminds you that you are alive…
6. Initiate a conversation with an interesting stranger, listen and learn about where they live, their history and what they do for a living
7. Rent a beach house at least once; You don’t have to get a fancy beachfront home, just something simple that let’s you wake up to an ocean view everyday you are there.  Swim in the ocean and under the waves
8. Own at least one custom suit or dress that fits you perfectly
9. Sing your favorite song at a packed karaoke bar
10. Learn the basics of sailing, the ocean and how to tie knots.
11. Call in “sick” to work and spend the day with your significant other or spouse dreaming about your future together
12. Take a least one trip where you “wing-it”: i.e. fly to a city or town you have never been to before without a hotel room booked or a plan, just a little money in your pocket and an open mind….
13. Own a convertible car at least once in your life
14. Take at least a few vacations (consecutive days off from work) that 2 full weeks or longer.
15. Go camping and truly “disconnect” from the world:  Shut off your phone, do not bring your computer and sleep under the stars with some good friends for a few nights
16. Catch and cook your dinner:  Go fishing or hunting and catch, clean and cook your own meal.   (Fishing works best for me. I am not much of a hunter, but I sure love fishing!)
17. Take a beer brewing or wine-making class
18. Spend the money to get a high-quality, full-body massage treatment.  You body (and your  mind) will love you for it.
19. Do something that is a little bit scary for you.  Take that 24-hour plane flight to Australia to swim with great white sharks that you always wanted to do, but were too scared.
20. Do whatever it takes to develop good sleep habits.  Sleep is so vital and the better you sleep, the better you live.

What have I left off the list??

What if I told you that I am a world-class coffee brewer and my coffee tastes wonderful, better than all my competitors.  Since my coffee is so amazing I command a premium of over 17 times the national average price of $1.38 for a medium cup of coffee.  I charge between $24.00 and $34.00 per cup depending on the flavor.  That’s how freaking good my coffee is!

However, Here’s the embedded risk that you won’t know unless your read my product offering memorandum:

- If I am able to pick the right coffee beans, at the right time and brew them correctly, then you will likely have above-average coffee for long periods of time.

- I can’t guarantee my coffee will be “the best” all the time, in fact my coffee could taste far worse than the average cup of coffee on any given day.  Although, I believe it to be unlikely.

- There is upwards of a 50% chance my coffee will taste the same or worse that the average cup of coffee.

Knowing what I just told you, would you pay $24.00+ for a cup of my “maybe it will be great, maybe not” coffee?

Well Ladies and gentlemen:  Welcome to the asset management business!

Please come and purchase my active mutual fund (i.e. premium coffee), but here’s what you won’t know unless your read my prospectus:

- If I pick the right investments and buy and sell them at the right time, you will likely earn a superior return on your investment.

- I can’t guarantee your investment returns will be above greater market returns.

- There is an upwards of 50% chance that I will underperform the s&P 500 index.

Knowing what I just told you, would you pay $1,500+ for my “I think I can beat the market” investment services?

Not All Returns are Created Equal

Consider the chart below I created using FINRA’s Fund Analyzer Tool,  which shows the returns, fees and expenses for 3 randomly chosen U.S. large cap mutual funds.   The first fund, the Vanguard 500 Index Fund, tracks the S&P 500 Index and is passive investment fund.  The other two funds are actively managed funds from Putnam and American Funds.  The fund managers for these funds are trying to “beat” the S&P 500 index returns through investment selection or “stocking picking”.

Using the tool I assumed a $10,000 initial investment, a 10-year holding period and a 5.0% annual return for each fund.  Take a look at the section I highlighted, it shows that the much cheaper Vanguard fund charging only $77.09 in fees dramatically outpaces the “premium funds” that focus on stock picking.  Notice that I did not use the word “outperform”, this is because the funds actually “performed” the same, earning a 5% return.  Only the fees are different.  In a nutshell, the two active funds spend more money to generate the same return.  Correction, spend more of your money to generate the same return.

Ok, so what if an actively managed fund outperforms?

Well, based on the chart above an active manager would have generate an average return of almost 6% to give an investor the same profits as the Vanguard fund when it returns 5%.  Generally speaking, this means an active manager has to outperform just to keep up with an index fund.

The reality is that active managers are paid higher fees even if they underperform the market.  The below shows the 10 year performance of the two active funds above versus the S&P 500 Index.  Over the 10-year period the Putnam fund generally underperformed in the first 6 years and has outperformed the index ever since, where as the American Fund has been a consistent lagger.  This means investors in the American Fund likely did even worse over the past ten years than the FINRA tool could have predicted.

According to S&P’s 2011 “S&P Persistence Scorecard” very few fund managers remain consistent performers with only 9.72% of large capitalization funds maintaining a top-half ranking over 5-years.  The bottom-line; it is extremely hard to beat the market consistently, so why pay a premium price for managers to “try”?

The Take-aways:

1) Fee management is SUPER important, not just for mutual funds, but also for financial advisors or wrap accounts (separate accounts).  Make sure you understand the impact of fees over the long-term.

2) Professional investment managers have a very hard time consistently outperforming the markets.  Don’t over-pay them to underperform, it will cost you more than simply buying the S&P 500 index tracking ETFs or mutual funds.

Do you own index funds?  Are you a believer in actively managed funds or costly financial advisory services? 

Related posts:

1. How to Use REIT Investments in Your Portfolio to Build Wealth
2. Heard of a ‘Fund of Funds’, Well This is a ‘Round-Up of Round-Ups’

The following is a Guest Post:

It’s easy to think about debt as a sort of deal-with-it-later type of problem or as simply being a product of economic forces beyond our control.  But what if the way you think about debt is actually part of the problem?  Not only are there myriad fallacies out there about debt, its effects, and how one can escape it, but overspending can be caused by off-base priorities, unreal expectations, and the way you value different forms of payment.  What’s more, when it comes to paying down debt and altering spending habits, at least half the battle is mental.  With that being said, here are five tips for dealing with debt by tackling the mental side of this problem:

1.       Evaluate what’s “necessary”

The biggest issue that many people face in trying to curb overspending is forgoing certain luxuries that have grown to be thought of as necessities.  The bottom line is that not everything we buy is needed, and when faced with a choice between stress, costly interest, credit score damage, even a lawsuit and giving up a few luxuries, scaling back is certainly the way to go.  You should therefore first rank your expenses in order of importance and then start adding them up starting with the most integral until the sum reaches your monthly income.  Anything below this threshold should be cut.

2.       Stick to your budget

Step 1 already involves writing down your budget, which can be very helpful in eventual follow-through because things just seem more real when actually written out.  People can easily justify overspending though, which means you might need some additional discipline.  Simply depositing your paycheck into your checking account and only making purchases with your debit card is a good option because if you end up having to use your credit card, you’ll know you’ve spent too much.  This will get you in the habit of only spending what you have so that when you ultimately switch to the optimum strategy of using a rewards credit card for everyday expenses, you won’t have anything to worry about.

3.       Segment expenses

If, for whatever reason, you have decided to use a credit card instead of a debit card, separating your debt from your everyday expenses will help you more easily evaluate and manage your spending habits.  When you designate one credit card as being only for everyday expenses, you know that its balance should be paid in full every month.  If ever finance charges find their way onto this card’s statement, you’ll know you’re spending beyond your means and need to adjust.  You’ll also be able to garner the best possible rewards since you won’t have to worry about this card’s interest rates.  Designating another card as being for debt will allow you to focus on finding the 0% credit card with the longest introductory term.

4.       Understand that not all debt is equal

In addition to addressing the problem of overleveraging (i.e. spending more than you bring in), it’s important to pay down what you already owe.  Too often, people with more than one credit card balance or debts with multiple lenders make equal monthly payments to each of their obligations.  This approach will cost you in interest charges.  You see, your debts likely have different interest rates and you should strive to pay down those with the highest rates fastest.  That means making minimum payments on all but your most costly debt until it is paid off in full and then applying this strategy to the rest of what you owe until you’re debt free.  It’s important to note that if you have multiple balances on the same credit card, only the amount of your monthly payment that is above the minimum will be applied to the balance with the highest interest rate.

5.       Be aware of a “play money” mentality

People often spend more with plastic (e.g. credit cards, prepaid debit cards, gift cards) than they would ordinarily because handing over a card is easier to swallow mentally than handing over cold, hard cash.  While certainly more abstract, money spent with a card is no different than physical currency, and you should strive to treat it as such.

Unfortunately, it seems that credit card debt is on the rise.  U.S. consumers added nearly $17 billion in credit card debt during the third quarter of 2011 alone, which is 154 percent more than they racked up during Q3 2010 and 58 percent more relative to the same time in 2009.  This merely underscores the need to take the above steps so that we can avoid a double-dip recession.

This article comes from our friends at Card Hub, a leading source for credit card tools and advice

Related posts:

1. Debt is a Killer; What was True Then is True Now – Opportunity Costs of Debt
2. 5 Steps to Eliminate Your Personal Debt Quickly

The Winner of the Net Worth Protect 2012 Super Bowl XLVI $30 CASH Giveaway is:

Luna B. from Alberta, CA

Congratulations Luna!   And thank you to everyone that participated in the Giveaway Contest!

Net Worth Protect has some new and exciting contests and promotions coming up.   Don’t forget to join our mailing list to keep informed and receive the latest updates from NetWorthProtect.com

My Favorite New Posts From Around the Web:

The WTF Search Awards - So Over Debt

The European Debt Crisis and You - Don’t Quit Your Day Job

Holding Stocks During Earnings Announcements – Invest In The Markets

5 Financial Tips I Learned From Watching MTV’s The Jersey Shore - Your Finances Simplified

What is personal finance? - World of Finance

Could I say ‘no’ to 2 million dollars? - The Money Principle

Learning to invest-Researching Stocks the Smart Way - Thirty Six Months

Does Owning a Home Really Put You Ahead of Your Peers? - No Debt Plan

Best Saving Money Tips of the Week: Super Bowl Edition - The Frugal Toad

Obama Mortgage Relief Refinancing Plan – A Tax on Big Banks and More - Free From Broke

Related posts:

1. 2012 Super Bowl XLVI Giveaway: Enter to Win $30 Cash
2. Winner of the Black Friday $25 Giveaway, Plus My Favorite Posts
3. Winner of the Christmas Hangover $50 Giveaway, Plus My Favorite Posts

The greatest wealth is health. ~Virgil by katerha, on Flickr

As the saying goes, “What’s life without your health?”.   Life is about many things, but feeling good and enjoying life are likely the most important aspects.  Here are 6 ways to stay healthy and enjoy life:

1. Focus on preventative health care and go for regular check-ups with a primary care physician.  Preventative care refers to techniques designed to prevent diseases and injuries, rather than focusing on the treatment of symptoms or the curing of diseases.  Regularly scheduled doctor  appointments increases the probability that major health problems will be identified early and addressed quickly.  Having affordable health insurance rates allows you to visit your doctor as often as necessary for the preventative care that you and your family need and deserve.

2. Manage your stress levels by finding ways to relax your mind and body.  There are several relaxation techniques such as meditation and yoga, as well as more straight forward methods including regular exercise (see #5) and better sleep habits.  Getting enough sleep is extremely important not only for reducing stress, but also for your general health.  The body needs its rest in order to function properly and lack of sleep is known to increase stress levels and anxiety.  Also, consider psychotherapy as a way to learn new tools to deal with life’s challenges.  Bottomline:  If you want to enjoy life than managing stress is an essential skill.

3. Create a family budget that allows you to save money toward financial goals, such as financial freedom.  In my humble opinion, one of the best feelings on the planet is knowing that you have saved a portion of your hard-earned money and built a nest-egg of cash and investments.  Knowing that you have a financial safety-net and that you have the ability to build wealth provides a tremendous confidence boost.  In addition, having a financial plan can actually lead to unique opportunities that you never had before.  Investment opportunities with attractive risk-reward profiles will tend to come your way more often and you are likely to feel more comfortable taking advantage of these opportunities because you have supplemental risk capital available to “take a chance”.

4. Exercising regularly has numerous physical health and mental benefits.  Exercising just 30 minutes threes times per week not only can keep your waist-line under control, but also acts as a mood-stablizer and stress reliever.  In addition, exercise has been known to improve body image and increase confidence levels.  Exercise is an important element of weight control (see #6).

5. Ensure that you and your family have individual health insurance plans.  Health coverage is vital to your family’s well-being ensuring access to health care.  Health insurance plans also offer peace of mind during times of medical emergency allowing you to focus on your health care rather than your medical bills.  I personally view “not having health insurance” as taking a risk that is low probability and high severity.  In other words, it is unlikely that you will be in a medical emergency that requires high cost health care, BUT if an emergency does occur than the costs associated with the emergency will likely be very high.  Therefore, I sleep better at night knowing I have solid health insurance coverage.

6. Manage your body weight and focus on keeping your body mass in the  acceptable range according to the body mass index (BMI). BMI is an alternative to direct measures of body fat and is used as a screening tool to identify weight problems in adults.  A keep aspect of managing your weight is maintaining a healthy and balanced diet, which also means minimizing your alcohol intake.  Weight management has several key benefits including increased energy levels and reduced risk for health issues such as diabetes, cancer and heart disease.

Facebook is expected to file a $5 billion initial public equity offering implying an estimated company valuation of $75 to $100 billion.  According to Facebook, the site has 800 million registered users and over half of these users log-on to Facebook at least once per day.   In addition, 80% of these users are from outside of the U.S.

Clearly, Facebook has a global reach and an active audience, however can Facebook live up to its valuation expectations?   Does “users” = “buyers”?   Do markets believe that Facebook should be valued in the range of these other U.S. companies?:

I am skeptical of Facebook’s ability to grow into the aggressive valuations that the sell-side analysts are forecasting.  It is hard to understand how Facebook can command anywhere near the valuations of these companies listed above.

When I take a look at other tech-company comparables such as LinkedIn and some of the rosey assumptions made by Wall Street I continue to be uncomfortable with jumping in on an over-heated Facebook IPO.

What are your thoughts on Facebook’s offering?  Is buying the IPO shares a wise investment or just jumping on the band-wagon of another  over-valued “Hot Wall-St. IPO”?

Here are my top 10 reads this week.  Enjoy and I hope you had a great weekend!

Neo

P.S. If you haven’t already, please subscribe to my mailing list here: http://feeds.feedburner.com/networthprotect  This will keep you up-to-date on our latest blog posts as well as upcoming giveaways and contests.

1. A Guide To Getting Ready For Your Tax Return -DollarVersity.com
2. Money Mistakes and Smart Money Decisions That I Made in College - YoungAdultFinances.com
3. 66 Famous Failures Of People Who Never Give Up - Goal-Setting-College.com
4. How To Save Money on Dieting - FrugalConfessions.com
5. The Idiot Proof Portfolio - NovelInvestor.com
6. Hara Hachi Bu and Money: The 80% Solution - Squirrelers.com
7. Ten Pieces of Inspiration #57 - TheSimpleDollar.com
8. Investing in Canadian Well Completion & Drilling Companies - BeatingTheIndex.com
9. Unsent Letters: Self Employed Still Means Working Edition - SoOverDebt.com
10. Parsing the South Carolina Exit Polls! (Debates Matter! Ron Paul’s Hand Strengthens!) - DQYDJ.net

1) Create a Personal Balance Sheet: The purpose of a personal balance sheet is to show you your financial picture at a specific point in time.  In a previous post I show how to create a personal balance sheet which is basically just a list of your assets (everything you own i.e. cash, stocks, bonds, house, etc…) and liabilities (everything you owe, credit card debt, auto loans, home mortgage, etc…).   By creating a balance sheet you will create a complete list of all debt you have.  Continuing from my balance sheet example in the previous post, here is example of “debts” (liabilities).

Download the Balance Sheet Template and Net Worth Calculator in MS Excel Format

2) Identify Your Most Expensive Debts:  The next step is to list your debt in order of the most expensive to the least expensive.  Your credit card debt and personal loans will likely be the most expensive debt you have with interest rates well over 10% per annum.

Download the Debt List Template in MS Excel Format

3) Calculate Your Average Cost of Debt: After you have listed all of your debt and the annual interest rates you can calculate your average cost of debt.  To do so simply determine the percentage of each debt relative to your total debt balance.  Then multiple this percentage by the interest rate for each debt and sum them.  The total is your average cost of debt in terms of an average interest rate.  The spreadsheet below may help you if you are not clear on this point.

Download the Average Cost of Debt in MS Excel Format

4) Reduce Your Average Cost of Debt:  The next step is to reduce your average cost of debt by decreasing interest rates by as much as possible for each of the debts on your list.  Clearly, it makes sense to focus on your high balance, high interest rate debts.   In this case, the student loans and mortgages have the highest balances but have relatively low interest rates at 4.5% and 3% respectively and the credit card has the highest interest rate at 13%.  Therefore it makes the most sense to focus on reducing the rate of higher interest rate debt such the credit card debt and also look into refinancing your mortgage. Consider applying for a new credit card with a lower interest rate on balance transfer and purchases.

If I assume a reduced introductory interest rate of 0% on balance transfer and purchases by moving the balance to a new credit card and re-financed the mortgage at a rate of 4.25%, then the average debt cost would decline to 4.23%.  An average debt cost reduction of .28% might not sound like much, but over years the savings on a total debt balance of $241,500 would amount to thousands of dollars.

5) Create a Debt Payment “Snowball”: The final step is creating a simple plan to pay down all of your debts as quickly as possible.   The approach I like to use is what may be referred to as a “debt payment snowball”, meaning that as you pay down each of your debts you continue to build the size of your payment applied to the remaining debt.  For example, below is the first 6 months of a “debt payment snowball” where we assume an extra $500 is applied for monthly debt payments.   We also assume the minimum monthly payments are made on the other debts and mortgage payments.  For simplicity, we are assuming these are principal payments only.

You will notice that after month 2, the $1,000 credit card balance is paid down completely.  However, we do not decrease the extra $500 debt payments, we simply now apply the $500 to the next debt, which is the line of credit.  Since that is a smaller balance with only $400 remaining it is paid off in full in month 3 and the remaining monies are applied to the auto loan.  By months 4, 5 & 6 and so on we are paying a chunky amount of $600 to the car loan even though the monthly payment is only $50.  If we continue to apply this approach to the last debt on our list we will reduce debt quicker by creating a “snowballing” monthly payment.

What is your approach to reduce your debt costs and pay down debt quicker?  Have you had success re-financing to reduce interest rates and payments?

Related posts:

1. Debt is a Killer; What was True Then is True Now – Opportunity Costs of Debt
2. Easy A: Debt Ratings Don’t Matter, Yields Do
3. 5 Key Planning Steps to Ensure Financial Freedom – #2: Define Your Personal Goals

Tiny dogs by Maggiejumps, on Flickr (What I will eat too many of at a Super Bowl Party)

That’s right, I am giving away $30 CASH to one lucky winner.  On Sunday February 5th either the Giants or the Patriots will be the winner of Super Bowl XLVI.  There can only be one winner!!  Who will it be?

Enter the Giveaway contest below and leave a comment about who you think is going to win:  G-Men or Pats??

And just like the Super Bowl, there can be only one winner of the 2012 Super Bowl XLVI Giveaway:  The Prize is $30 cash in hand (via PayPal).   And I pay quick just ask other winners….

This a personal finance blog and what better way to give back to my readers than to put $30 cash back into the pocket of one lucky winner.  Enter now for a chance to win $30 cash money!

Enjoy,

a Rafflecopter giveaway

Related posts:

1. Giveaway Alert: Christmas Hangover Giveaway, Win $50 CASH
2. Giveaway Alert: $25 iTunes Gift Cert or Cash; What’s Your S&P 500 Price Prediction?
3. Enter Our Logo Design Competition For Your Chance To Win $75 Cash!

You are reading the title of this blog post correctly.  The road to financial freedom is not just about planning, saving and investing, it is also about enjoying your life and taking some time to “smell the roses”.  The road to financial freedom is also lined with spending, which to many folks is a dirty word.  However, strategic spending to support the lifestyle and dreams that you want is the entire point of seeking financial freedom in the first place.

Spending money is not a mortal sin

It is a simple fact of life that each us needs to must spend money to purchase the basic necessities of life: food, water, clothing, shelter, etc…  In addition, each of us has personal needs and lifestyle desires, several of which we realistically expect to fulfill and others we consider dreams or wishful-thinking that we understand we can do without.

To me, there are three key elements to obtaining financial freedom and they are:

1. Planning – i.e.  Figuring out how much money and income you need to support your lifestyle assuming you do not work another day of your life (financial freedom means you have saved an amount of money that will generate enough income to support your lifestyle)
2. Saving – The actual act of saving to build enough money to meet your financial freedom money goal
3. Spending – The use of your money and income to purchase goods and services to meet your needs and fulfill your wants and desires

The road to financial freedom is really that simple:  Plan for Financial Freedom and then Save and Spend according to the plan, that’s it.

This means that if your plan calls for you to save 25% of income to achieve financial freedom; you have a whopping 75% of your income available to meet your basic necessities of life and spend as you please.   So, spend away because you have earned it and because you are saving according to plan you are spending strategically.

Take a vacation and re-charge your brain

So, you if have created a financial freedom plan and therefore have budgeted a portion of your income for spending then my advice to you is to allocate money to take a vacation, and if possible multiple vacations per year.

Why, vacations are expensive aren’t they?

Yes, vacationing can be expensive: hotels, plane tickets, food, car rentals, etc…  But the mental and lifestyle benefits greatly outweigh the financial costs as long as you stick to your financial freedom plan and are spending money that will not cut into your saving plan.

Benefits of Vacations:

1. Taking a break from your daily routine is a great way to rest your mind and experience something new
2. Perspective:  Seeing the world is a great reminder of just how lucky you really are
3. Just saving money is not fulfilling on standalone basis; using a small portion of your personal fortune on new experiences is valuable for personal growth
4. Re-connect with your spouse and/or children; Most of us are not able to spend consecutive full-days with our family and vacationing can give you an opportunity to catch up.
5. Adventure
6. Travel can be very educational; an opportunity to learn about new cultures
7. A fresh start is great by-product of long vacation.  Your mind has relaxed and you are ready to face new challenges.
8. Spark your creativity!  Some of your best business and financial ideas will come to you while drinking a cocktail with your feet in the sand.

Does your financial plan allow you to spend strategically?  Are you over-saving?  Are you willing to invest in great vacations to refresh your mind?

The following is a guest post:

The purpose of home insurance is to provide a safety net for when the cost of replacement or repair exceeds the financial capabilities of the policy holder. As such it can be disastrous when a claim to cover such cost is denied. While a denial is devastating, it isn’t the final word as long as you are persistent and well prepared for the appeals process. So here are a few things to keep in mind should you ever have a claim denied.

Try and Buy the Best You can Afford in the First Place

The best remedy is prevention, so try your best to get value for your money when in the shopping phase. First make sure that your prospective insurer is in good financial standing and won’t be closing its doors anytime soon. Also look for a policy that is adjusted for inflation over time and has a cancellation clause. Finally, make sure that whatever insurance policy you decide on the pay-out limits are appropriate to your building and your contents. Additionally, if you have special contents (i.e. a gun collection, valuable art work, etc.) see that the insurer offers appropriate add-ons for coverage.

Know What Your Policy Does and Doesn’t Do

While purchasing a home insurance it’s important for you to understand cover to cover what your policy guarantees and what specifically your policy excludes. Feel free to take notes and to even write on your copy of the contract. Just make sure that if you do not understand, you let your insurance agent know so that they may try to better explain it (I find asking for specific instances to illustrate a point help me better understand). Of course you won’t remember much of what is said, but at least you will have some grounding as to how your policy works for when you need to use it. If you are considering making a claim, make sure you review your policy; if your policy has been destroyed ask for a new one from your insurer.

Talk It Over With Your Agent

Be sure to discuss your possible claim with your agent before filing, as there can sometime be penalties associated with claims denial (for example, losing a no-claims bonus, should you have one). If your agent is not forthcoming with helpful advice, contact a third-party agent who can review your claim in the context of your policy without any conflict of interest (for a fee, naturally).

Keep Track of Paperwork

If your claim is denied make sure you keep a copy of the explanation of the denial as it will be useful should you choose to appeal or bring suit against your insurer. Review the reasons for denial against the terms of your policy to check for any inconsistencies. Additionally, make sure the denial wasn’t based on a ‘processing-error’ such as a timely filing violation (usually this has dubious legal standing in most places).

Make an Appeal

Only a little more than half of home insurance claims made are ever successful. Though of those denied, only about 1% of policy holders ever try to appeal the claim. However of this 1% who do appeal, about half of those receive some sort of relief from their insurers in the end. Try and use the terms of your policy to refute the points of the denial explanation.

Get a Lawyer, and Dig in for a Long Fight

Should your appeal be rejected, find a lawyer who specializes in this type of law. Lawyers almost universally provide consultations free of charge. Based on this interview, lawyers will decide if your prospective case has merit enough to proceed with litigation. And just because one lawyer says no, doesn’t mean another won’t, so shop around. Otherwise be prepared for a long and drawn out process that can take years.

Happy Friday! (and not a moment too soon).  This week NetWorthProtect.com is hosting a “Best of Slacker Team Personal Finance Round-Up”.   What’s that?  Well, The Slacker Team is a group of personal finance bloggers that are  supporting each other’s efforts to create successful and high quality blogs.  The bloggers are all challengers or members of the Yakezie Network.  A “Round-Up” is a compilation of blog posts by various bloggers.

I present the “Best of Slacker Team Round-Up”:

Recent Blog Carnivals I have Participated In:

Carnival of Wealth, Post-Epiphany Edition – Neo at Net Worth Protect wrote about how to manage your investment fund expenses.

Best Financial Articles of the New Year - Neo presents Roth IRA & Roth 401k: Another Sham Designed to Tax the Middle Class posted atNetWorthProtect.com, saying, “You know the wonderful Roth IRA or the Roth 401K contributions everyone has been raving about? Well, it might not be so shiny and wonderful after all.”

Understanding and calculating your personal net worth is easy to do and extremely useful, yet many people do not take the time to do it. So, I am going to make it  insanely easy for you to calculate your net worth.

Here is the magic formula:

The Value of Everything You Own  -  The Value of Everything You Owe  = Net Worth

Like I said, so so simple.   No technical terms, no crazy calculations, just some addition and subtraction, nothing more.

But, I know somewhere, somehow, someone is still shaking their head and thinking:  ”I still don’t get it”.

Let’s make it even easier to calculate your Net Worth: Build a Balance Sheet

A balance sheet is simply a statement that shows you your financial picture at a specific point in time.  A balance sheet really consists of two main things:

1. Assets (everything you own)
2. Liabilities (everything you owe)

Balance Sheet Example:



Download the Balance Sheet Template and Net Worth Calculator in MS Excel Format

Why should I care about my net worth?

Tracking three numbers: Personal Assets, Liabilities and Net Worth over time can tell you vital information regarding the performance of your savings strategy and your spending habits.  Tracking changes to your net worth over time will help you identify patterns in your behavior.  These patterns can tell you if you are on course or spinning out of control financially.

In a nutshell:  Tracking your net worth will help make sure that you are saving enough to meet your goals and that you are living within your means.  If your net worth is going down while the stock market is going up and you have not had any major expenses (such as medical expenses) then it might be time to re-evaluate your spending habits.

Do you track your net worth? Do you exclude certain assets or liabilities from your calculation?

If you do not track your net worth, then what’s stopping you from doing so?  

Business As Usual by ShnapThat!, on Flickr

This is sponsored post written by me

For a budding entrepreneur the launching of a new business venture is one of the most exhilarating and stressful endeavours that can be experienced.   To be successful, an entrepreneur must become a master planner, organizer, marketer, leader and communicator.  It is not an easy task and it certainly does not happen quickly.  In the words of the late, great comedian Eddie Cantor, “It takes 20 years to make an overnight success.”

Although, starting and maintaining a business is around-the-clock hard work, it is totally manageable with proper planning. Here are 6 essentials for entrepreneurs and small business owners that will help transform an idea into an operating and profitable business:

1. Business Plan:  Think of your business as a long road trip.  You can not begin driving without identifying your destination and plotting a course to get there.  A business plan is a framework that “maps out” exactly how your business will operate and what it will take to make it a success (i.e. arrive at your destination).   The level of detail required in the business plan is highly dependent on the type of business you plan to operate.  Check out the SCORE  web site for free downloadable business plan templates that will help you to evaluate your needs and plan your business. SCORE is a nonprofit association dedicated to educating entrepreneurs and helping small businesses start, grow, and succeed nationwide.
2. Legal Representation: You heard me correctly, “You need a lawyer”.  When you are first starting your business there are many decisions that need to be made and these early decisions will impact your business as it grows.  One important decision a lawyer can help you with is “What type of business legal structure should you establish?”  Should you go with a Corporation, S-Corp, LLC, LP, Sole Proprietorship, etc…?   Not sure, don’t sweat it, that is why you are seeking advice from a lawyer who can explain the various options and their benefits and disadvantages.
3. Liability Insurance: Suppose a client trips and falls while visiting your office for a consultation and files a claim against your for personal injury.  Liability insurance is designed to protect your business (and you) by providing coverage for personal injury and damages. There are various policy types to consider and you should compare public liability insurance to ensure you obtain the appropriate coverage for your business needs.  The last thing you want to do is face the high costs associated with defending your business alone and without insurance.
4. Blog:  These days it is common knowledge that a web site is a very important marketing tool for your new business.  However, a static web site is simply not going to cut it.  In order for your business web site to stand out from the crowd fresh content is essential and the quickest way to provide this content is through a blog.  The word, “BLOG” actually is an acronym for “Better Listing On Google”, so a blog itself is intended to be a marketing tool and it is a very good one.   New and relevant content is a great way to keep your prospective and current clients engaged.  Check out WordPress.com to learn more about blogging.
5. Logo, Business cards and Letterhead:  Many people think they can “cheap-out” on this element of their business, but to do so is dead wrong.  A comprehensive and consistent visual representation of your business is an important part of establishing your image as a provider of excellent products and services.   Try Vivalogo.com to search for a designer in your country and local area.
6. Accountant:  If you thought doing your personal taxes is tough then wait until you try and calculate and file business taxes.  Business tax policies are changing constantly and the cost of missing something can be quite high due to penalties and fees.   Also, your business will likely need to make quarterly estimated tax payments that an accountant should be able to calculate for you or show you how to calculate it on your own.  If you are self-employed you will also need to pay self-employment taxes.  My 2-cents, find a good accountant and hold on to him/her.  Check out Dave Ramsey’s Endorsed Local Providers to find an accountant or other service provider near you.

Are you an entrepreneur?  What are your business essentials?   

Watch out world, here are my financial and life goals for this year.  I know it is 2012, but for me it is the “Year of 10″:

The most important goal

1. My number one goal is more of a “prayer” because it is something I can not control: I pray that my wife and I have a healthy new baby on or around April 10, 2012 and my goal is to be ready for the challenge of raising this new little one.

Blogging Goals

Goals by JohnONolan, on Flickr

1. Establish relationships / partner with at least 10 other bloggers and write a guest post on each of their sites.  (Bloggers, let me know if you are interested)
2. Search Engine Optimization (SEO):  Get my site to be in the top 10 listings in Google when searching for 10 keywords or phrases that are relevant to my site.  In other words, “I want to be in the top 10 listings for Google searches on keywords like, “financial freedom” or “how to retire wealthy”.
3. Write 10 “Power Posts”; posts that really get people talking and challenge conventional thinking.
4. Earn $10,000 in Blogging revenue!  This will be VERY tough!  Still trying to figure out how to do it…  But I like the challenge.
5. Get my Alexa ranking below 110,000 (it is currently at 190,000)
6. Comment on at least 10 other web sites and blog posts per week.

Financial Goals

1. Increase our household savings rate by 10%.
2. Generate a 10% rate of return on our household investment accounts; hopefully the financial markets will cooperate.
3. Take the extra $10,000 in revenue earned from blogging and invest right back into blogging and other ventures.
4. Increase our household net worth by 2x 10% (so 20%; I really wanted this posted to be ‘10‘ focused ;o)

Health and Fitness Goals

1. Run 10 races this year and one of them has to be a marathon.  I ran the Barcelona marathon in March 2011 and I run regularly so this a fun goal for me.  My Marathon time goal is to break 3:40.
2. Lose 10 pounds!  I am not doing this because I “need” to lose weight, I am doing this because I know I will feel better just walking around this world if I do.  Plus I will be faster!   I will likely sign-up for the 10-pound challenge at NewlyWedsOnaBudget.com, it starts on January 9th.
3. Begin a weight training program that puts me in the gym 10 days a month (2 or 3 days per week).  I used to always lift weight but I stopped a few years ago.  This time I am going to do circuit training that is more inline with my running and weight loss goals.

What are your goals for 2012?   Should I add a weight-loss and race tracker on this web site so you can watch my progress or see if I fail in heroic fashion?