Finance::Personal

Last Chance to Minimize Interest Expense!

Want to improve cash flow and enhance profitability over the next 5, 10, even 20 years? Convert variable-rate debt to fixed? Look into refinancing fixed-rate debt that’s currently higher than 7 percent or so.

Have a line of credit that is never fully paid off? Consider taking out a term loan and using the proceeds to pay off the portion that doesn’t “revolve.” You may want to consider doing the same with credit card debt.*

Companies Whack 401(k) Benefit Programs

Companies large and small are eliminating or suspending 401(k) matching fund programs as a way to cut expenses and stay afloat during this financial downturn. Some companies have said they will have to re-evaluate the matching funds program after the recession is over. Still, other firms have said the level of profitability will determine if employees receiving 401(k) matching funds. Employers must also examine if dropping the matching funds will drive away top talent.

Credit Cards More Expensive, Riskier as Source of Funds

Credit cards are a significant source of capital for small businesses. In fact, The National Small Business Association (NSBA) recently surveyed 288 small businesses and found 86 percent use credit cards as either their primary or sole source of funds! Nearly a quarter reported juggling more than four credit cards used for business purposes.

Pretty shocking, given the punishingly high cost. And since respondents reported using their credit cards as sources of funding, we can safely assume they carry balances. Add to this the turmoil in the credit card market today and we have at hand a real challenge for small companies.

Know Your Net Worth

Certain terms are important to know when calculating your net worth. The terms will help you better understand your overall financial picture as you push forward with your business.

S&P 500 Annual Rate of Return (1929 to Present)

Life Insurance Cautions

Do not cancel any life insurance without first determining the annual net cost, i.e., the annual premium less the annual buildup in cash value plus any annual dividends. Reason: You may find that the policy does not cost as much as you think. To determine the net cost, request what is called an "in-force illustration" from your agent.

IRS Targets College Savings (529) Plan Abuses

The law governing so-called 529 plans allows an individual to make generous gifts to a college savings plan (529 plan) for the benefit of another individual without any gift or estate tax consequences. A couple can make gifts up to $120,000 in one year for the benefit of another individual.