Saturday, February 28, 2009

8 Tips to Help Authors Survive the Recession

Many small businesses are suffering from the effects of the recession. The book business is suffering along with every other business in this recession. Some small business include authors who are frequently trying to find ways to save money and reduce expenses which can be a difficult task. Here are 8 tips to help authors save money during the recession.

1. Network. Since we are in a recession and many small businesses and authors lack a marketing budget, attend as many free networking functions as you can. Check your local newspaper or local civic organizations for networking events in your area.

2. Create a website. If you don't already have a website, create one. If you can't afford to pay for a website, create a free one on or Authorsden.

3. Sell. Think of creative ways to sell your books. Sell them at barber shops, hair salons, networking events, conferences, grocery stores, libraries, and community events. You can also sell your book on eBay or Amazon.

4. Create a shopping cart. Create a shopping cart on your website or use Google or PayPal. Make it easy for customers to purchase your book and any other products you wish to sell.

5. Learn. Learn everything you can about marketing your book, selling your book, and how to run a business. As an author you are a business and you must promote yourself as a business. Some great books to use as a reference are 1001 Ways to Market Your Book by John Kremer and The Publishing Game by Fern Reiss. Do research on web marketing by visiting websites such as Wilsonweb and Writers Market, and Writers Digest.

6. Barter. Barter services with other authors or small businesses if you cannot afford to pay for them. This will save you money and help out someone else.

7. Create a newsletter. Create a newsletter and provide a sign-up sheet at each event you attend. Use websites like Icontact or Constant Contact to create your newsletter. You can also find free newsletter templates on Microsoft's website. A newsletter is a great way to promote your book without spending a lot of money.

8. Develop a plan. Develop a marketing plan for your book, plan at least 6-12 months in advance of what you hope to accomplish with your book. Set target dates for each goal and document steps taken to accomplish each goal.

Wednesday, February 25, 2009

Tips for Investing in 2009

Many people are asking for advice from friends, co-workers, family members, strangers and their financial planners about what they should do with their investments or retirement plan. Many people panicked and spent all or a large portion of their retirement money or moved their retirement money to a savings account, CD or hid it under their mattress.

Every investor has different financial goals and objectives and should work with a financial planner to assist with meeting your goals. Financial planners have expertise in how to survive the ups and downs of the stock market and can provide the best advice and if and when you should move your money. Here are 7 tips to help you invest your money in 2009.

1. Diversify. If you have all of your investment in one area, re-allocate your investments to at least 3 areas to minimize losses.

2. Review. Review your financial goals with your financial planner at least once a year to ensure you are on track to meet your goals. Also, check your statement for any errors and notify your financial planner immediately.

3. Loan. If you plan to take out a loan on your retirement plan or sell shares of stocks, consult a tax professional and your financial advisor to determine what options you have to minimize losses and taxes and ensure you will be able to continue to meet your financial goals.

4. Time. Your money cannot grow if you take it out too soon. It is the timing in the market, not the timing of the market. It takes a minimum of 5 years to see a significant return on your investment. The rule of 72 states that it takes at least 72 months for your money to double so be patient.

5. Don't panic. Don't panic and get overwhelmed by the media, fear, anxiety and nervousness of those around you. Stay calm and follow the plan you have setup with your financial planner. Don't torture yourself by checking the stock market everyday or checking your retirement account balance every week or every month. Don't let emotions cause you to make bad decisions.

6. DRIPs. To offset any losses you may have experienced you can purchase a Dividend Reinvestment Plan (DRIP) or use it as an easy way to start investing.

7. Buy now. The motto is "buy low, sell high" is truly appropriate during this recession. This is a great time to buy stocks or to invest in a mutual fund. When the market bounces back you will have achieved great gains.

Sunday, February 22, 2009

Freddie Mac and Fannie Mae to Fund Loan Modification Program

The Obama Administration will only use $50 billion from the $700 billion financial industry bailout package to fund the government foreclosure prevention program. Fannie Mae and Freddie Mac will contribute over $20 billion to the $75 billion loan modification program.

The money will be used to subsidize interest rates to assist distressed borrowers' so their monthly payments can be lowered to affordable levels.

The foreclosure prevention program requires doubling the Fannie Mae and Freddie Mac lines of credit they have with the federal government to $200 billion each.

The Department of Housing and Urban Development will contribute the remaining money towards the modification program which will be used for credit counseling programs for consumers in extreme debt.

The government will use the money to provide incentives to borrowers, mortgage loan servicers and mortgage investors to encourage loan modifications. HUD is conserving the remaining $350 billion from the package by drawing on Fannie Mae and Freddie Mac for funds.

The Obama Administration will use the money to stimulate consumer and business lending and provide additional capital to banks.

An excellent way to keep the bailout money focused on the financial industry is by using other federal funds to support the loan modification program. However, the federal government is the one providing the funds which ultimately comes from the taxpayers.

Thursday, February 19, 2009

President Obama's Middle Class Task Force

The Obama Administration has begun working on several different initiatives to help get the country back on its feet due to the lack of effective leadership of the previous administration. My interest has been peaked by one of the administration's initiatives - the middle class task force that will be led by Vice President Biden.

The newly formed task force will address problems middle class America is experiencing. Vice President Biden is the chairman of the task force. The president stated "the strength of our economy can be measured by the strength of our middle class" and I agree.

The Vice President and members of the task force including Jared Bernstein who is the Executive Director of the task force will work with several federal agencies that address issues affecting the middle class. The President's goals for the task force are:

1. Expanding education and lifelong training opportunities
2. Improving work and family balance
3. Restoring labor standards, including workplace safety
4. Helping to protect middle-class and working-family incomes
5. Protecting retirement security

The first task force meeting will be held on February 27, 2009 to discuss Green Jobs: A Pathway to a Strong Middle Class.

The Census Bureau states the median income for Americans is $50,000 a year. The Vice President describes the middle class as "any family that can’t afford to miss more than two or three paychecks without financial difficulty".

For more information visit the newly formed task force website

Monday, February 16, 2009

Freddie Mac Rents Foreclosed Homes

Freddie Mac will allow some mortgage borrowers to rent out their homes they lost to foreclosure. Freddie Mac wants to prevent foreclosed properties from becoming vacant so they won't fall into disrepair and be vandalized. Foreclosed properties also reduce property values and cause an increase in crime.

Freddie Mac will also allow renters to remain in their homes even if their landlord's property will be foreclosed. There are approximately 8,500 properties that have begun the foreclosure process but many of these properties are vacant. Renting out the property will help the housing market recover at a faster rate.

There are some guidelines that homeowners must follow under the Freddie Mac program. Former homeowners and tenants have to demonstrate they have enough income to pay the rental fee. Freddie Mac is also considering reinstating mortgages for borrowers who can qualify for a modified loan.

Freddie Mac recently announced it will stop all foreclosure sales involving occupied single family and 2 - 4 unit properties with Freddie Mac owned mortgages through March 6, 2009. The suspension however does not apply to vacant properties.

Fannie Mae is offering a similar plan and boasts that it has prevented the sale of 20,000 foreclosures and stopped the eviction of 6,300 homeowners and renters this winter season.

Fannie Mae also announced it will stop all foreclosure sales and evictions of occupied properties through March 6 in anticipation of the Obama Administration's national foreclosure prevention and loan modification program. For more information visit the Fannie Mae and Freddie Mac websites.

Friday, February 13, 2009

More Jobs Cuts and Counting

Last month employers announced more jobs cuts are expected, a total of 12,000. Several companies are still struggling to generate a profit and are forced to cut staff, close offices or reduce employee salaries and benefits to stay afloat. Thus far 2.6 million people are unemployed.

Eastman Kodak will eliminate 2,000 to 3,000 more jobs this year, Cessna will eliminate 2,000 jobs, Oshkosh will eliminate 1,050, Charles Schwab will eliminate 500 to 600 jobs, AstraZeneca will eliminate 6,000 jobs.

If you hear rumors that your company will have layoffs update your resume, take on additional responsibilities at work and reduce your spending by at least 30% each month. Use the extra money to pay down debt or create an emergency fund.

It is predicted that more jobs cuts will occur before the end of this year. Let's hope things start to turn around before then.

Tuesday, February 10, 2009

Should You Buy a New Car

The Obama administration has requested that automakers GM and Chrysler provide plans to turnaround the companies. Both companies are required to submit plans to restructure their businesses as part of the $17.4 billion received in government loans to keep the companies afloat.
The economic stimulus package includes a one year interest deduction for purchasing a new car.

I don't recommend buying a new car during this recession unless you have done everything possible to keep your car running and your car is no longer reliable and you have enough money in your budget to pay a car note. Your transportation costs should be no more than 15% of your total monthly income which includes your car note, gas, insurance, maintenance costs, and parking.

Initially it may seem as though buying a new car will ease all your worries. Buying a new car will make a huge difference in your budget. You will have to pay a car note, plus regular maintenance. Your new car should not have any major problems for at least 3-5 years. When you own a used car you should save money each month in a car maintenance fund to have money available if your used car needs repairs.

If your used car needs a new engine or several new parts, you should compare the cost of buying the parts on your own plus the cost of having the parts installed in your car, versus the cost of buying a new car with a car payment for 12 months. I am pretty sure the repairs will be much less than the new car note.

If you still decide to buy a new car, who should you buy a car from? The big 3 automakers are still struggling financially. Chrysler is struggling the most while GM is struggling but has been able to stay afloat with the government loan money received. Ford is in the best shape financially. Here are 6 tips to consider when purchasing a new car from the big 3:

1. Models Eliminated. Due to the recession, the big 3 may eliminate some models. The weaker models that do not generate enough revenue will probably be the first to be eliminated. Finding parts for discontinued models may become harder to find.

2. Warranty. You need to be concerned about a car's warranty. If the automaker files bankruptcy your warranty may no longer be valid which will instantly increase the costs of getting your car repaired.

3. American vs. Foreign. Many auto buyers prefer to buy foreign made cars. Unfortunately this has a dramatic impact on US automakers whose revenue has been steadily declining over the past few years. One major way to help jumpstart the revenue of the big 3 is to buy American made cars such as Cadillac, Buick, Chevrolet, Jeep, etc. You can always check the Consumer Reports survey to find out about the pricing, quality and reliability of Americans made cars.

4. Research. Research the automakers financial report, prices and incentives, warranties and clauses that address how the company honors customers if it has financial problems such as being sold, filing for bankruptcy or completely going out of business.

5. Trade in. Don't trade in your old car. You will get a better deal by selling your car to Carmax, Craigslist, eBay or the newspaper.

6. Temptation. Don't fall into the trap of temptation with low car prices. Do your homework and ask lots of questions, take a friend or relative with you who has experience buying cars to assist you with buying your new car.

This is the time to buy only "needs". A new car is usually a "want" and should be evaluated in your list of financial priorities and financial goals.

Saturday, February 07, 2009

What the IndyMAC Sell Means

The FDIC announced last month that it would sell IndyMAC to a group of private investment firms for $13.9 billion. The buyers include J.C. Flowers & Co. and hedge fund Paulson & Co plus several other firms.

The bank will be controlled by IMB Management Holdings and managed by Steven Mnuchin, who is chair and co-chief executive of Dune Capital Management. Terry Laughlin, will serve as chief executive of IndyMac and previously headed Merrill Lynch Bank & Trust.
The failure of IndyMac bank will cost the FDIC between $8.5 billion and $9.4 billion and the deal is expected to close within the next three months.

The private buyers will put $1.3 billion in capital into the IndyMAC bank. IMB Management has agreed to continue the streamlined loan modification program that FDIC Chairman Sheila Bair put into place to continue to receive the FDIC's loan loss protection.

The IndyMac loan modification program will assist homeowners who are experiencing problems by adjusting their mortgage payments to no more than 38% of their monthly income. This is achieved by either reducing the interest rate or extending the length of the loan.

According to the FDIC, more than 8,500 mortgages have been modified and over 9,400 are in the process of being modified. The new bank will have 33 branches in the Los Angeles area.

Wednesday, February 04, 2009

Beware of Predatory Lenders

According to the Daily News two mortgage companies, Consumer One Mortgage and HCI Mortgage have been found guilty of overcharging African Americans and Latino mortgage loan applicants versus similar Caucasian applicants. Both companies were ordered to pay $665,000 in payments to 445 African American and Latino borrowers.

The Housing and Urban Development has charged: a New York City cooperative and Mississippi Regional Housing Authority with discrimination against disabled persons, various landlords in Alabama wrongfully evicting Caucasian tenants, the Wayne County Housing Authority for housing discrimination against African Americans, and landlords in New Mexico for evicting a couple expecting a baby because the woman became pregnant after moving into the apartment. These are just a few of the thousands of incidents that occur each year against African Americans and Latino mortgage applications and homeowners.

The Fair Housing Act (Title VIII of the Civil Rights Act of 1968) prohibits discrimination in the sale, rental, and financing of dwellings, and in other housing related transactions, based on race, color, national origin, religion, sex, familial status (including children under the age of 18 living with parents or legal custodians, pregnant women, and people securing custody of children under the age of 18), and handicap (disability).

When you are considering buying a home follow these 8 tips to prevent being a victim of predatory lending and discrimination:
1. Do you research before applying for a mortgage loan
2. Shop around to several lenders before making a selection
3. Ask questions if you don't understand something
4. Take the paperwork home and read it over, contact a real estate lawyer or law school student to help explain any legal terms and information you don't understand
5. Make sure all of your questions regarding the loan are answered
6. Make sure you are comforable with the terms provided
7. If the terms keep changing find another lender to do business with
8. When all else fails go with your gut instinct, if it seems too good to be true it probably is

Also refer to the Housing and Urban Development Fair Housing website for more information on predatory lending and how to protect yourself or file a complaint.

Sunday, February 01, 2009

Proposed Tax Cuts

The new administration wants to offer taxcuts to all Americans and businesses. The proposed tax cuts by the House include:
1. Payroll tax credit of 6.2% of earned income in 2009 and 2010 with a max of $500 for single filers and $1,000 for joint filers each year. It would be phased out for higher income filers. Congress may offer this tax credit by the end of the year.

The proposed tax cuts by the Senate include:
1. Retirees would get a one-time payment of $300

2. The remaining tax cuts are similar to the propsoed House bill

Tax cuts proposed by the House and Senate include:
1. First-time homebuyer credit of $7,500 for purchases made after 4/8/08-7/1/09 must be repaid over 15 years starting 2 years after the credit is claimed. However, if you buy a home in 2009 you don't have to pay back the credit as long as you don't sell your house within 3 years.

2. Increasing the Hope credit to $2,500 per student in 2009 and 2010 to cover college costs and would be available for all 4 years

3. Increase the earned income credit for low-income filers with 3 or more children

4. The tax credit for energy saving home improvements will increase and extend to 2010. The credit may be increased by 30% with a cap of $1,500.

Business tax cuts:
1. Revive 50% bonus first-year depreciation for assets purchased in 2009

2. Carry most or all of their losses for 5 years except for businesses that received aid from the government

3. Extending the renewable energy credits for wind, solar, biomass, and geothermal

4. Continue the higher $250,000 limit on expensing assets through 2009

5. Expand work opportunity credit to cover businesses that hire out-of-work youth between ages 16-25 or unemployed veterans