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From Refund to Riches: How to Turn a $2,300 Refund into $723,000!

With tax day upon us here in the United States, a lot of people will get a refund soon. So today, we’ll discuss how to turn that refund into riches.

But this blog is really about “found” money – money you weren’t expecting. The average refund last year (paid in 2007 from 2006 tax returns) was $2,287, according to the IRS.

That’s a nice down payment on a plasma TV!

That’s what a lot of people do – spend their refunds on things that won’t be worth much in a few years.

Instead of that, you could save and invest it. But isn’t that’s boring?

Boring can be exciting when your money starts to compound!

How to turn your $2,300 refund into $643,000!

Say you’re 25 years old and you get a $2,300 refund every year until you retire at 65. We’ll assume that you earn 8% on that money, which may be a little conservative depending on what you invest in.

Under these assumptions, that $2,300 a year invested will turn into a nest egg of over $643,000 when you retire!

Now is that boring?

Age makes a difference. Take the previous example for a 35-year old. Your nest egg is still significant – it’s over $281,000. But by waiting just ten years to start, it will be less than half as much!

But even then, you still create a nest egg of nearly $300,000.

2 ways it can be even better

#1 – Quit loaning the government money at 0%.
That’s what you’re doing when you get a refund – you’re getting your money back, but you don’t earn any interest on it while they hold it. So redo your W-4 so you only withhold what you expect to owe.

Then you won’t get a refund, but you’ll have more money in every paycheck. But here’s the key:

You have to be disciplined enough to invest that money!

Let’s say you do that – Invest your refund check this year, adjust your W-4, and then invest the extra money that shows up in your paycheck. You’re that 25-year old we talked about earlier. Only now …

… you’ll have over $723,000, instead of $643,000. It makes an $80,000 difference!

Doesn’t that open your eyes about the “cost” of a refund?

#2 – Pay off debt that’s costing you more than 8%.

We assumed an 8% return. If you have any debt that’s costing you more than 8%, pay it off first and your returns will be even higher! Once your debt is paid off, start investing to build your nest egg.

Jake’s Take – Top 5 signs that you hired the wrong accountant

#5 – He insists on filling out your return using only Roman Numerals.

#4 – He offers to help you boost your deductions by renting you his wife and kids.

#3 – He spends most of your consultation looking nervous and asking if you're wearing a wire.
 
#2 – He does all his calculations on an Etch-a-Sketch.
 
#1 – His client list includes Leona Helmsley, John Gotti, and the Unibomber.

Our bigg quote today is a Proverb.

“Money grows on the tree of patience.”

So do you want to watch your new plasma TV or do you want to watch your money grow? The choice is yours!

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Next time, we’ll discuss why being imperfect is perfect. Until then, here’s to your bigg success! 

 

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Review: The Richest Man In Babylon

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Getting Aggressively Passive: Creating A Passive Income That Sets You Free

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Are You Good, Fast, or Cheap?

There’s an old saying …

You can be good, fast, or cheap. Pick any two.

So you can be good and fast. You can be good and cheap. Or you can be fast and cheap.

So why can’t you be all three?

 

Because you can’t deliver all three. More specifically, you can’t defend all three. It costs money to be good; it costs money to be fast.

If you’re trying to compete on all three, a competitor can come along who only competes on two. Let’s say they’re good and cheap. Their cheap is cheaper than your cheap because they’re not trying to be fast. So now you’re only competitive on two of the factors – good and fast.

“Good, fast, and cheap” is really just a way of discussing the three components of value:

  • Quality
  • Service
  • Price

6 strategies to beat your competition

Defensive strategies 

#1 – Improve quality, keep price constant
If quality increases but price doesn’t, you increase the value your customers receive. You focus on trying to make your “good” better so you gain business.

#2 – Improve service, hold price constant
If you improve your level of service, while keeping your price the same, your customers will perceive it as a better deal. You focus on making “fast” even faster. This actually applies to anything having to do with customer service, not just speed. 

#3 – Decrease price, keep quality constant

If you can decrease your price without sacrificing quality, you’ll increase the value to your customers. We all love a good deal, right?

#4 – Decrease price, maintain service levels
If price falls without sacrificing service, your customers will realize they’re getting a better deal. More people will buy more!

So here’s the caveat to these four strategies – you have to make a profit to stay in business. These defensive strategies give you a competitive edge, but they all cut into your profit margin.

So what you’re trying to do with these strategies is increase profit by increasing sales enough to compensate for the lower margin. It’s risky! Because if you don’t get it right, you’ll work harder (because you’re selling more) for less money (profit).

Compounding strategies

#5 – Improve quality, increase price
If you can improve your quality, but increase your price, you’ll hold value constant. Your customers are still happy, because they’re getting the same value as before. They’re paying more now, but they’re getting a better product.

#6 – Improve service, increase price
This is the same as #5, only here you’re delivering a higher level of service.

These final two are designed to increase your sales and at least maintain your profit margin. Therefore, your profit should go up. Of course, we’re assuming that you’re able to maintain your customer base, even at the higher price. 

As you consider these strategies, think across your whole business. You may find it valuable to use different strategies for different products or services.

Our bigg quote today is by Michael LeBouf:

“A satisfied customer is the best business strategy of all.”

Create value for your business by delivering what your customers value.

Next time, we’ll answer a question from a member of our community about getting started on a project. Until then, here’s to your bigg success!

 

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5 Places to Find Cash for Your Business Today

cash

We have a friend who is setting sales records in her business. However, she recently faced a severe cash crunch. She felt overwhelmed and discouraged, to the point of giving up. She was scared. What should she do?

We told her to find the low-hanging fruit!


When you’re faced with a cash crunch, think about all the places, prospects, and possibilities where you could get cash today. Then spend your time on the things most likely to pay off TODAY.

5 things to understand about this strategy

#1 – Long-term strategy

This is not a good long-term strategy – in fact, it distracts from it! However, when survival is the issue, who cares? Survive today so you can thrive tomorrow.

#2 – Perceptions
This strategy can create misperceptions with customers, employees, vendors, and investors. For example, customers may expect discounts if you offer them frequently. They’ll sit back and wait for the next one.

#3 – Frequency
If it happens occasionally, perhaps seasonally, that may be okay. Even then, you should plan for those occasions in advance. If you’re in this position frequently, it’s probably a sign of a bigger problem.

#4 – Financial statements
To find the real problem, understand your financial statements. What are the numbers telling you? How can you prevent this from happening again? Is it a short-term problem? Or do you need to make some adjustment for the long-term?

#5 – Mindset
Get over any reluctance to cut special deals. Some people really struggle with this. For example, they find it hard to sell inventory at less than cost. But if it’s not selling at its current price, it’s not worth its current price! Mark it down so it moves and you get the cash you need!

5 places to find cash today for your business

#1 – Call people who owe you money.

See when they will commit to paying. Consider a discount if your situation is severe enough.

#2 – Contact customers.

Find the customers who are the far along in the sales cycle. Follow up on proposals you’ve already made. Once again, if your situation dictates, offer them a discount for signing on the dotted line and paying today.

#3 – Work your contacts for referrals.

Who do they know that might do business with you? Tell them you have a special deal that you want to share with as many people as possible.

# 4 – Sell assets you don’t need any longer.

They’re costing you money sitting around. This includes inventory as we discussed earlier. Also think about your receivables. If you have customers with good credit, you may be able to sell your receivables to a factoring company.

#5 – Borrow.
This is similar to #4, only here you use your assets as collateral for a loan. You have a short-term problem; get a short-term loan!

One final tip – don’t appear desperate. People do business with successful people. So don’t present it as your problem; show them an opportunity.

Our bigg quote today is unclaimed, but still good.

“Money is not the most important thing in the world. Love is. Fortunately, I love money.”

And absence makes the heart grow fonder!

Next time, we’ll discuss six factors that will help you succeed when opportunity knocks. Until then, here’s to your bigg success!

 

Related posts 

How To Get Your Customers To Finance Your Business

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Stop Being So Happy

happy entrepreneur

Maybe the Rolling Stones were onto something with their song, I Can’t Get No Satisfaction. We say that because a new study shows not getting satisfaction is good!

This study, called The Optimum Level of Well-Being: Can People Be Too Happy?, was recently published in Perspective on Psychological Science. Participants rated their happiness on a scale of 1 to 10, with 10 being the most happy. Not surprisingly, the researchers found that happy people tend to:

  • stay married longer
  • be healthier
  • volunteer more often
  • get more favorable reviews at work
  • make more money

But the researchers also found that people who rated their happiness level at 10 made significantly less money than those with a happiness level of 8 or 9.

So today, we’ll offer three reasons why less happy people make more money.

#1 – Less happy people respond to changes.
If you’re too happy, you don’t adopt new technologies, new strategies, or new approaches. You’re just fine with the way things are! The problem is that things are changing faster than ever. It’s easy to fall behind.

#2 – Less happy people look for an edge.
When you move past what you know to what you don’t know, you grow personally. That’s what makes life meaningful. So they constantly test their limits, and continually improve, because they’re most comfortable on the edge of their comfort zone.

#3 – Less happy people ask, “What’s next?”
When they reach a goal, they celebrate. They should … they’ve earned it! But then, they set another goal. They look for the next highest mountain to climb. The glory comes from being on top, but the challenge of getting there is the fun part!

How do you get your appetite back?
Think back to when you were first starting out in your career. Do you remember how hungry you were? We don’t mean physically hungry, although that may apply, too! We mean hungry for knowledge, for growth, and for opportunity.

Can you go back to that time in your mind? Can you visualize it as if it were happening right now? That’s where you start – visualize it using ALL of your senses.

Now, with that same sense of hunger, answer this question:

What is one thing that you haven’t already done, but really want to do?

Visualize it, using all your senses. Keep visualizing it until you’re as hungry for this endeavor as you were when you first got started.

Take yourself to another level – for some of you, this may be a level you never thought you would achieve. Congratulations! You’re ready to go for it!

 If your next bigg thing is starting a second business,
check out our FREE special report,
Don’t Make These Mistakes When You Start Your Second Business.
You’ll learn important lessons that often trip up second-time
entrepreneurs, even those who have succeeded wildly the first time out.

Just e-mail us at bigginfo@biggsuccess.com.
Type “2nd business report” in the subject line.

Our bigg quote today comes from Thomas Edison, who said,

“We shall have no better conditions in the future
if we are satisfied with all those which we have at present.”

So don’t worry … be happy! Just don’t be content.

Next time, we’ll ask, “Can you walk and chew gum at the same time?” It’s all about multi-tasking. Until then, here’s to your bigg success!

Subscribe to the Bigg Success feed 

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(Image in today’s post by ba1969)

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Top 5 Signs You’re Managing Your Money Like Wall Street

Some of the smartest people in the world work on Wall Street. Yet the news is ripe with Wall Street’s woes. Today, we’ll discuss some lessons that you can learn from their mistakes.

We talked with Jake Novak on The Bigg Success Show. He shared his five signs that you’re managing your money like Wall Street. You can hear all of the fun if you listen to the show.

About Jake Novak
Jake is a comedy writer whose material is used by more than 100 radio stations across the world! His humor is also featured in weekly columns in Newsday and The Jewish Week. When Jake's not making people laugh, he teaches Journalism at New York University. Jake is also with the recently-launched Fox Business Network.

Top 5 Signs You’re Managing Your Money Like Wall Street

#5 – You'd run up huge debts on your credit cards, then demand that the government forgive those debts, cut interest rates, and then send you and everyone else you know checks for $600.

#4 – You'd hire someone to handle your finances, and even after he failed miserably, you would give him a $100 million severance bonus. Then you'd prove you learned from that mistake by hiring a new financial advisor with a guaranteed severance of at least $200 million.
 
#3 – After losing your shirt in a string of bad investments, you'd immediately go on a crusade to convince all your neighbors that your problems are their problems too. CNBC would give you as much air time as you want to get that message across.
 
#2 – You'd spend 364 days a year exaggerating how rich you are, then spend all of tax day telling the government you haven't made a dollar all year.

#1 – After going over your finances and finding you're nearly broke, you decide to blow your last dollars getting the local little league baseball field named after you.

Lessons

  • Beware of following the herd.
  • The herd often gets over-exuberant. Smart investors often do the opposite. We recently wrote an article on how John Paulson made $3 billion last year [article, 169] with his hedge fund doing just this.

  • Don’t pay more taxes than you owe.
  • You must pay taxes, but you don’t have to pay a dollar more than you owe. Studies of Main Street millionaires show that they take tax planning seriously. Take a lesson from Wall Street and Main Street – hire a good tax planner!

  • Watch your debt load.
  • Don’t buy it unless you can pay cash. If you do use a credit card, pay it off in full every month. If you can’t do that, you can’t afford it. After all, YOU can’t count on the government to bail you out!

  • Look out for ego boosters.
  • Forget the little league field. Dump the stock when your company gets their name on a major league stadium. That’s just one of the signs that the CEO is likely building his or her legacy, not your nest egg!

If you’ve laughed with the lessons learned today, share it with a friend!

Our bigg quote today is by the writer Gertrude Stein.

“Money is always there but the pockets change.”  

In every market, there are winners and there are losers. Use these tips so you end up with more than pocket change.

Tomorrow is Valentine’s Day so we’ll discuss the heads-up way to follow your heart.

We give a bigg thanks to Jake Novak for sharing his wit and wisdom with us today!

Until next time, here’s to your bigg success.

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