Monday, December 5, 2016

Are You Ready for a Credit Card?

The Importance of Good Credit 

In our society having good credit has almost become a necessity. It may not seem logical to you, but a good credit score can reduce what you pay for car insurance. It can even make the difference whether you can get a job or rent an apartment. It is used to determine how much you pay in interest on house or car loans. The logic is that if you have good credit, you are probably also a responsible person in other ways. That is why your credit rating matters in contexts you would have never thought of.  

How to Establish Credit 

So how do you get a good credit rating? Well, the reverse is also true. If you are financially responsible, you will be rewarded with a good credit rating. This article is about how you go about getting that when you are first starting out. Years ago, no credit usually meant good credit. You were assumed innocent until proven guilty. Getting your first loan approved was pretty easy. Those days are basically over. Many are now required to take some kind of action to establish a good credit rating and one way to do that is to get a credit card. How to go about that will be the topic of discussion for another day. 

The Danger Zone 

Credit cards make it easy to pay for all your everyday purchases. All you have to do is pay one large bill at the end of the month. That is how it goes for most of us anyway. Of course there is a dark side as well. The convenience can lead to big trouble. For some, it is far too easy for that bill at the end of the month to become much bigger than they can comfortably handle. The result could be a vicious and out of control cycle of debt that is difficult to break. How do you know you will not end up like them? How do you know if you are ready for a credit card?  

Are you Responsible in General? 

The banks have already made an assessment of you based on the general information they have about you. That is why some of us get pre-approved applications in the mail. Before you respond, you would be wise to make a self-assessment that applies to you specifically. Here are some things to look at. Are you a responsible person in other areas of your life? Are you able to get up on time every day? Do you arrive at school or at work on time? Do you complete work or school assignments on time? If you are disciplined with these things, you probably also are in money matters. 

This personal character inventory exercise was not to determine whether you can qualify for a card. It is for you to know for yourself whether it is safe for you to get one or not. You want to be successful. You do not want to fail. Most who get a credit card will be just fine, but a few will not. Credit card debt can have serious consequences. Some have even committed suicide because of overwhelming debt. You do not want to be in that category. A credit card should be a rewarding convenience for you, not a burden.   

Are you Financially Responsible? 

Here are some money related questions you might want to ask to see if you are ready. For example, 

1. Do you have bills such as rent or utilities you need to pay every month? How is that going?  
2. Have you ever overdrawn your checking account?  
3. Do you have an emergency fund? Are you able to deal with a significant surprise expense like a car repair, a medical bill or if you lose your job?  
4. Do you have a budget? Do you know what comes in and what goes out on a regular basis? Can you stick to it without deviating from it no matter what?   
5. Have you made an impulse purchase recently? Do you always carry a shopping list when you go shopping?  


If you have positive answers to these questions, you might be ready to be responsible for a credit card. If not, you might want to think twice before diving in. Remember, a credit card does not add one penny to the money you can spend. On the contrary, if you are not careful, it can quickly become a serious drain on your hard earned cash. Interest rates are high and so are fees. Avoid them at all cost. 

Wednesday, August 17, 2016

Save on Health Insurance

Section 1501 of the Patient Protection and Affordable Care Act (PPACA or just ACA) of 2010 also known as Obamacare requires you to "maintain minimum essential coverage." If you do not, you will have to pay a penalty. For 2016, that penalty is at a minimum $695 per adult. The idea is that if you do not voluntarily participate in the "shared responsibility" to keep costs down, you will be forced to contribute in this other way. 

However, there are a number of ways you can avoid the penalty. You can get an exemption. Some exemptions have to do with income levels. Others have to do with hardship and several other situations. The interesting one is membership in certain groups. Members of recognized tribes are exempt. Certain religious sects, e.g. the Amish, object to insurance of any kind including Social Security and Medicare. You can also get an exemption if you participate in a recognized "health care sharing ministry."  

Health care sharing ministries are not-for-profit member organizations created to share medical costs among their members. There are only about a handful of them and there will be no new ones unless the law is changed. To be recognized, they have to have been in continual operation since 1999.  

Because they are not insurance companies, they are not regulated by insurance laws. This is what allows them to discriminate when accepting participants. By accepting only healthy participants without pre-existing conditions, avoiding the ones who need it the most, and excluding common procedures, their costs are much lower than insurance companies who are required to accept everyone and adhere to minimal care standards. 

Thus, if you can get past the moral dilemma of this supposedly Biblical practice, you can save substantial cash without a penalty and still have basic health care coverage. Each of them have their own rules usually spelled out in a document called guidelines or something to that effect. You will need to examine the document carefully to determine if it meets your needs. It is usually quite simple and in relatively plain language. 

Some of the major players in this arena are: 

Christian Care Ministry:  
Christian Healthcare Ministries:  
Samaritan Ministries International:  
Liberty HealthShare: 

Some new ones have emerged on the scene lately, but it is unclear how they get around the continual operation provision of the PPACA. 

Altrua HealthShare: 
Medical Cost Sharing, Inc.: 

In this age of Uber, ZipCar and AirBNB I am sure people are tinkering with ways to make health care sharing the norm rather than the exception to avoid contributing to the profits of insurance companies and their shareholders. I would personally like to see a cost sharing organization that would accept everyone and cover all common procedures as they have need. That could be accomplished by transforming an existing organization or change the law to allow new ones. In the meantime, if you were to assume the burdens of everyone as well as the ones who shirk their responsibility, that would truly be Biblical. 

Saturday, March 21, 2015

Passive Income - Fact or Fiction?

Dream About Quitting Work?

Passive income seems to have become the illusive Holy Grail of wage slaves everywhere. That's not really a big surprise. Well over half of workers are dissatisfied with some aspect of their work place. The vast majority has to do with people problems. No wonder the urge to stay home seems overwhelming. If only the paychecks would keep coming, though. There is no shortage of ideas how to make that happen. Go ahead, make a search for "make money at home" or some other term like that. You'll see.

What is Passive Income?

Passive income is income received on a regular basis without performing an effort to receive it.

IRS Definition

  1. Active, also known as wages, salary or small business. Commissions from e.g. insurance policy renewals is active income for IRS purposes.
  2. Passive, income from rent or from a business partnership in which you do not materially participate.
  3. Portfolio, such as dividend and appreciation of stocks and bonds. Royalties from intellectual property are also included in this category.

Four Approaches


While  managing a portfolio of stocks and bonds is not completely work free, it comes pretty close. You do not have to manage it on  a daily basis although you could.  In fact, frequent trading may actually harm your performance.  The hard part is accumulating a portfolio large enough to make a meaningful return in the first place.

You can minimize the work you have to do by turning the whole thing over to a professional manager.


Royalties are the income you get when books, songs or plays you have written  or movies you have directed or acted in are sold or performed in public.  Obviously, getting to the point where you have a portfolio of works people will actually pay money for is the hard part in this approach.

You may not be able to hire someone to do your acting for you, but you can purchase the rights from actors or writers who would rather have a little less cash now than wait till their work actually gets sold.  This seems like a rather risky proposition, however.

Affiliate Marketing

Product sellers provide code you can insert into your own blog or web pages.  When a visitor clicks one of those links, you will earn a small percentage of the sales resulting from your work. 

This may seem like an easy way to earn passive income.  It is not difficult to make a blog or website and insert the code.  The difficulty lies in getting people to click on them and actually make purchases. However, once you accomplish that, those sales will continue to happen maybe long after you have forgotten about the page.  

Many affiliate marketing tasks can be turned over to other people.  The difficulty then lies in recruiting and training them.


Buying rental property has long been a popular way to generate passive income. The unique thing about real estate is that, thanks to mortgages, you can control large assets with very little of your own money invested.  However it is not work free.  Much effort goes into screening tenants and making repairs and other maintenance.  However, if you have a knack for dealing with people, renting property may be downright enjoyable.

If you prefer not to be personally involved, you can hire a property manager - for a fee, of course.

Small Business

Owning a small business has long been considered one of the most lucrative ways to accumulate real wealth.  The catch is that you need to learn to delegate, otherwise it will seem just like another job with long hours and little reward.