The eco-struggle: a tricky task for businesses

If there’s one thing businesses struggle with, it’s maintaining an air of social responsibility. In a world of corporate greed and unfettered capitalism, the free market reigns – and any notion of social enterprise, particularly when it comes to the environment, is placed on the backburner.

It’s a problem we’ve covered in this blog before – but there’s still little sign of change from governments and businesses.

December 2015 marked major environmental talks in Paris between leading heads of state, one heralded by attendees as a major step forward for eco-concerns. But the praise hasn’t been universal.

The talks, intended to establish a viable predecessor to the Kyoto Protocol, have been called a “triumph of mediocrity” by Spiked columnist Ben Pile.

The problem? It didn’t go far enough. Governments agreed to cut carbon emissions however they pleased, rather than reaching a real consensus. In short, it wasn’t an agreement at all.

Hypocrisy from governments

Without any kind of protocol in place, heads of state can continue to favour capitalism over the environment.

In Britain, for instance, The Department of Energy and Climate Change (Decc) is expected to cut subsidies for solar panels by up to 90 per cent, a move announced only a few days after the Paris climate talks ended.

Instead of green measures being bolstered, funds are being funnelled into oil mining in Scotland, fracking in England and Britain’s first nuclear power station in over a decade.

Governments, then, appear to have found a way to make it look like they’re doing far more than they actually are when it comes to the environment.

But green concerns can be tackled without the help of world leaders, albeit on a smaller scale. With collective action, the rapid pace of climate change could be slowed.

Becoming the force of change

As was alluded to in the first paragraph, businesses can be the real force for change if they choose to be. What can they do?

Even minor improvements can help in a small business. If you’re the owner of an SME, invest in a few office plants (we’d recommend this company for great service) to further oxygenate your workplace. Thanks to photosynthesis, plants will “breathe in” carbon dioxide and “breathe out” oxygen, offsetting much of the waste in your company.

To go even further, reduce waste by cutting down on paper, car journeys and electricity. You could even persuade your employees to ride bicycles to work, or get the bus instead of using their company cars.

As governments continue to frustrate green activists with their refusal to help the environment in a meaningful way, your business could become a pioneer in eco-concerns. So consider how you can cut back on wasteful resources.

Why Buying Second Hand Items Is the Easiest Way to Help the Environment

When you consider environmental issues, we all know that there is a lot we should be doing to make sure we waste as little as possible, recycle wherever we can, and conserve energy both in our homes and businesses. We also know we should look to buy items with recycled, recyclable packaging and which have wasted as little fuel as possible, and created the least amount of carbon emissions in getting to us. All of these things are good, but can be fairly easy to neglect in our every day lives as convenience sometimes gets in the way of what we know we ought to be doing to look after the planet.

One thing that is very easy to do and to remember to do, and which gives benefits to us as well as the environment, however, is buying things second hand where we can. Here, we take a look at why second hand shopping is environmentally friendly, and also good for you and your household.

Second Hand Shopping Reduces Both Waste and Over-production

When you buy items second hand, you are making good use of something that may otherwise have been thrown away forever. This will usually be something perfectly good which the original owner simply didn’t want anymore (as there is no market for completely used up items), or something which can be refurbished into a great item fairly easily (like an old piece of furniture in need of new upholstery). These items could easily have ended up in landfill or being disposed of in other environmentally damaging ways, but when bought second hand, can live out the full extent of their useful lives. Of course, for every appliance, device or other item bought second hand, there is one less brand new product needed too, so in general terms, as long as people willing to accept second hand items (or happy to for cost savings) will do so, less wasteful manufacturing will go on.

Second Hand Shopping Saves You Money and Is Easier Than Ever

It is obvious that a second hand item will cost less than a brand new one that is equivalent, however in the past buying second hand often meant compromising on the thing you wanted. You may have had to take a slightly different style of furniture, you may not have been able to find second hand clothes you liked in your size, or they simply may not have had the thing you wanted in your local thrift store or second hand market. However, now, online, there are lots of marketplaces where people all over the world list items they want to sell like ebay and gumtree, and this means that you can just about always find exactly what you want at a good price. Even having second hand items sent to you from abroad can be cheaper than buying new, and even with shipping by air it can still be better for the environment (given many new products are imported as well).

If you want to do your best for the planet and get great value into the bargain, buying second hand goods really is a great place to start.

Is My Modded Ride Insurable?

Jeff’s Note: Personally, I think anything beyond gas & insurance is a waste of money for your car. Never throw money into a depreciating asset. 

The world of car enthusiasts is filled with true individuals who pride themselves on expressing their personalities through their distinctive and eye-catching vehicles. Some modify their cars for performance, others for aesthetics, but many drivers who make extensive modifications to their vehicles may wonder if their auto insurance policy even covers the monster their humble set of stock wheels has become.

Definitions

For insurance purposes, a “modified vehicle” is one that has undergone significant improvements in its manufacturer specified performance potential or structural alterations to the body of the vehicle that may impact the way it behaves on the road. Replica vehicles also fall under this standard, as they are not officially manufactured or endorsed by the automaker.

A premium custom paint job may also qualify as a significant modification is the value of the service totaled $10,000 or more, as the entire vehicle usually requires professional repainting if just one flaw develops.

Reporting

Most motorheads are totally unaware of their responsibility to report any substantial modifications to their insurance provider immediately. You can contact the HBF car insurance department directly on this link.

Failure to report modifications to your vehicle in a timely fashion could result in the voiding of the policy as a whole, as the insurer can justifiably claim that the vehicle involved in an incident is not the same as that insured by the policy. The vast majority of vehicles an insurance companies are standard factory products with reliable values and attributes, making it easy for them to determine your suitability for coverage.

In the case of modified vehicles, the practical effects of their uniqueness is far more difficult to quantify, and if there’s anything an insurance company cannot stand, it’s unpredictability. The fact is that most insurance companies are ill-equipped to address the needs of custom car enthusiasts, and typically do not respond well to being asked to do so unexpectedly.

For this reason, all modifications to your vehicle should be listed and submitted for the review of your insurer before the alterations take place if at all possible. This will allow you to determine whether a modification poses a risk to the validity of your current coverage, and if so, find an insurer more amenable to your automotive passions.

A custom car can be an unmistakable statement of personal style, but their total uniqueness can make finding effective insurance for these pieces of art a challenge. Check with your insurer to verify your current automotive coverage supports any planned modifications made to your vehicle and if your ride already features heavy modifications, be sure your insurance policy is made to be as one-of-a-kind as it is.

6 Important Accounting Tips for Small Businesses

Jeff’s Note: Even though I enjoy running this micro business, there are a lot of things that need to get done behind the scenes that I dont really like doing, and one of them is accounting. I’ve been better about in the last 2 quarters of 2014 than I ever have (and I hope my taxes reflect that) but it’s still a huge chore for me. I thought I’d share some tips on how to get it done with a bit less pain.

Among the long list of essential items that occur naturally from managing your small business lies the fundamental issue of accounting. While having an advanced degree is definitely not a prerequisite for running a small business successfully, some fundamental accounting skills could save you considerable frustration and money.

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Even if you have the resources to employ an accountant, a lack of knowledge in accounting could permit fraud from an unscrupulous accountant. Many small businesses fail due to the lack of appropriate bookkeeping. One of the most essential elements shared by every successful business of whatever size is maintaining accurate records; this is also legally required.

An advanced course in Accounting 102 could equip you with the necessary skills. However, you would have to initially graduate from the accounting basics. Although this accounting task may prove monotonous or tedious, it is crucial to the success of your business. If you are seeking a way to improve your business management, these accounting tips will prove invaluable.

  1. Engage Professional Services

For a considerable period, accountants have been revered and respected allies to proprietors of small businesses. Their vast professional knowledge and familiarity with tax and finance laws will save you considerable money.

Although hiring an accountant is costly, it will give you a peace of mind. These professionals are likely to process fiscal data rapidly, keep abreast of tax law amendments, and answer your queries. While it is tempting to save money by performing this task on your own, it is almost never cost-effective.

A professional will usually discover more deductions while helping you avoid penalties. The suitable accountant could also become a trusted advisor to your business. You will have an opportunity to collaborate and consult on forecasting and budgeting, cash flow management, and business performance. Finding the appropriate accountant is vital for small businesses, which have fewer resources and complex needs.

Manage and Track Expenses

Tracking expenses is crucial to your business’s success and maintenance of accounts. You can accomplish this by recording payments and gathering receipts. The infrequent meal expenditures or traveling costs also require documentation and appropriate handling.

A failure to maintain accounts could prevent you from building a dependable financial statement or prepare reliable reports on tax returns. Furthermore, it becomes hard to monitor your business’s growth or expenses.

Keeping track of your expenses is crucial for tax purposes and enables adjustments during economic or market changes. Although most small business proprietors do not look forward to managing their expenses, staying on top of your accounting tasks is an excellent means of decreasing your stress when preparing your taxes.

Separate Personal and Business Finances

Numerous business owners mix their professional and personal finances. Open separate accounts and debit/credit cards that you will use exclusively for managing business expenses. For instance, it is easier to track business receipts if you do not use the same card to pay for office supplies and groceries.

If you need to locate a forgotten expense, you simply need to go through a single account instead of several. Maintaining separate credit card and bank accounts will save you hours of work and help track deductible expenses.

You should also maintain separate business records when using financial or accounting management software. You should consider using a program designed specifically for small businesses for instance QuickBooks or Mint.com.

Document Business Transactions

It is important you document every business transaction. If you record an amount for expenditures and fail to maintain receipts, you may not recall what the figure was about after a few months. Ensure you file receipts and documentation in an accessible manner.

Documentation is necessary for your business to operate effectively. Information is also necessary for accounting purposes to determine whether you are making losses or profits. Backup documentation is also important if you need to conduct research, have questions, or for audit purposes.

Reliable Accounting System

You should use a reliable system that you have previously tried. Accounting software, especially online software can revolutionize the functioning of your business. Numerous affordable options aim to simplify accounting tasks and maximize financial performance.

Accounting systems offer numerous benefits including accessibility and user friendly features. You can also examine real-time economic data at whatever time and location since the system stores information online. Online software can incorporate with numerous business applications. This implies that you can manage all your business’s aspects without performing manual data transfer.

Establish Payroll

Small business owners perform various roles. Completing payroll is one of the most essential tasks in operating a small business. Payroll affects all aspects of a business from your employees’ morale to your business’s financial stability.

Whether you have independent contractors or employees, they have to receive payment for their services. A payroll system will help streamline your capacity to stay on top of your regulatory and legal duties as an employer. Moreover, this system can also protect you against costly penalties.

Conclusion

Small businesses usually face accounting challenges since proprietors normally assume the role of bookkeepers. Nevertheless, these friendly Shopify tips will help you observe tax laws and place you in a better position to monitor your cash flow and finances.

Why Avoid Pre-Paying a Mortgage?

This is a guest post from Tali Wee of Zillow, and she’s talking about mortgage prepayment, something that I’ve struggled with in the past – and still am not sure I’m making the right decision about.

Buying a home is likely one of the most expensive purchases in an individual’s lifetime. Although some homebuyers purchase properties with all cash, most finance the transactions. Once the emotional process of shopping, bidding and closing on a home is complete, mortgaged homeowners commit to 15 or even 30 years of monthly costs. These payments include repayment of loans (principal), interest due to lenders for loaning capital, property taxes and homeowners insurance.

Many homeowners opt to pay down their mortgages ahead of their payment schedules to save on interest costs. Once completely repaid, homeowners only owe annual property taxes and homeowners insurance on one of life’s fundamental needs – a home. Some homeowners pre-pay their mortgages because they despise the burden of debt, while others prefer to pay more now to free-up future income for alternative financial goals.

Although these are all major advantages, numerous homeowners decide to pay their mortgages on schedule. Here are a several reasons to avoid pre-paying mortgages.

Tax Breaks

The interest paid on mortgages is tax deductible. Even though the monthly cost of the mortgage remains the same, the breakdown of principal and interest varies on an amortization schedule. Borrowers pay more interest than principal during the first half of their loan terms and more principal than interest in the second half. Some buyers value the tax break more than rapid principal reduction, especially during the preliminary, high-interest years of ownership.

Jeff’s note: For some, this just does not hold. My wife and I bought a modest house with a great interest rate, and our yearly interest does not even come close to being more than the standard deduction. We do live in a low cost of living area though.

Alternative Debts

Borrowers should always tackle their highest-interest debts first. If borrowers have credit card debt with 15 to 20 percent interest rates, they should focus surplus income to those debts. Student loans also have high-priced interest rates from 5 to 10 percent. These debts compound rapidly making them higher priorities than current mortgage rates of 4 percent.

Pre-Payment Fees

Not all lenders allow borrowers to reduce their interest profits, so they penalize borrowers for pre-payments. Additionally, bi-weekly payment programs that coordinate with standard employee payment schedules to pay down mortgages every two weeks come at a cost. Third-party programs charge activation fees ($150-$500) and bi-weekly fees with each payment ($5-$20). These penalties and charges defeat much of the cost benefits of pre-payment.

Vary Investments to Limit Risk

Borrowers diversify their investment portfolios for reduced risk. In the last seven years, real estate values have fluctuated dramatically. It’s risky to lock substantial funds into a single asset with potential for major depreciation. Many borrowers stay current on their mortgage payments while investing in higher-producing, more liquid assets and saving cash.

Higher-Return Investments

High-return, low-risk investments are more lucrative than fully paying off a low-interest loan. If borrowers’ employers offer 401k matching programs, retirement investing potentially doubles borrowers’ money. Although still risky, many borrowers opt to invest in stocks and bonds for high-return assets. Home equity is simply too low-producing compared to other investment options without diversified, high-return assets.

Emergency Funds

Before allocating all savings toward mortgage debt, borrowers should amass an emergency fund. Because emergencies require urgent funds, it’s important to have liquid assets. Emergency funds cover urgent home repairs, unexpected medical bills and job loss to prevent further debt or defaulted loan payments. Before pre-paying mortgages, many homeowners save three to 24 months in emergency savings.

Deep Savings

Beyond emergencies, many homeowners do not pre-pay their mortgages because of their alternative financial goals. Beyond mortgage payments, borrowers most often keep deep saving accounts for retirement, travel, emergencies, education, cars, pet funds, hobbies or start-up businesses. If all excess cash is tied up in mortgages, the lack of liquidity can affect borrowers’ quality of life. Homeowners must prioritize their lifestyles and needs before investing completely in their mortgages.

Underwater Loans

If homeowners are underwater on their loans, it’s beneficial to pursue refinancing options instead of investing completely in an overpriced property without potential for fair returns. Refinancing often results in smaller payments and less total cost to the borrower, depending on pre-payment penalties for the original loan. Refinanced mortgages are typically borrowed at reduced interest rates and terms are generally shorter, limiting total interest paid over the life of loans. In these cases, aggressively paying down underwater mortgages is cost prohibitive. Beyond, refinancing underwater homeowners might consider the benefits of short selling to offload the negative equity.

Ultimately, homeowners must evaluate their financial goals to decide whether mortgage pre-payment is right for them. Is carrying debt more of a stressor than lack of liquid assets? Are college funds for the kids a higher priority than early retirement? Can owners pre-pay their mortgages while saving for their goals and investing? Home equity doesn’t work as hard for owners as other investments, but outright ownership is still preferred by some. Homeowners should consider all of the advantages and drawbacks of mortgage pre-payment before fully investing.

So readers, what say you? Would you rather prepay (given todays rates in 2014) or invest?

New Mortgage Rules Can Make it Tougher to Borrow

Consumer safeguards that went into law in January of 2014 make it harder for mortgage companies to get away with sketchy and predatory lending practices. That is good news for consumers and big news from the federal watchdog agency, the Consumer Financial Protection Bureau (CFPB). The regulations contain many long-overdue changes meant to curb a repeat of the recent housing crisis and mortgage industry meltdown.

What is not being discussed very much by the media, however, is that tighter underwriting standards also create hurdles for some borrowers. Those who used to be able to qualify for mortgages when lending policies were more lenient may be denied under the stricter guidelines. “No documentation” loans are now illegal, for instance, and lenders can no longer qualify a borrower for a loan based on the low monthly payments offered by special “teaser” introductory rates that later expire.

Tougher Loan Application Criteria

From now on, most banks will be instituting underwriting rules based on what the feds call a “Qualified Mortgage,” or QM, and if you don’t qualify you won’t receive a loan. That’s true whether you find a great deal on a property or you just want to avoid throwing money down the drain to pay for rent. Those who want to refinance an existing mortgage to secure a lower interest rate or pay off a nagging home equity loan will likely face tougher QM criteria.

QM Criteria Highlights

  • Points and fees have to be 3% or less of the total loan amount, although higher thresholds may be allowed for loans less than $100,000.
  • Negative amortization is prohibited, as are interest-only loans and loans that include large balloon payments.
  • The maximum loan term for a QM is 30 years – which eliminates the 40-year loans borrowers have been using to lower their monthly payments.
  • The debt-to-income ratio of the borrower must be 43% or less (with some special and rare exceptions). That means that the total cost of your monthly mortgage payment and other fixed debts like car loans cannot exceed 43% of your gross monthly income.

QM Promises Protection for Banks

Since the QM is now the new “gold standard” by which the CFPB will judge the ethical and professional behavior of lenders, those lenders who fail to meet that standard open themselves up to liability and investigation. Banks do not want to get into legal trouble and be accused of predatory lending practices, and lenders that meet the QM underwriting standards are promised protection from legal challenges related to those mortgages.

Although instituting the criteria of a qualified mortgage as defined by the CFPB is voluntary, most lenders began to make changes to their underwriting to meet this higher standard as soon as it was unveiled. Consumers should expect that even though the QM is not the rule of law it will still be followed by virtually every mortgage lender. That sets the bar higher for borrowers who need to anticipate the additional restrictions they will have to overcome in order to take out a loan in the new QM category.

Your Credit Union May Offer Fewer Mortgages

Credit unions, which are run as nonprofit institutions, are typically much smaller than banks and have fewer resources to help implement these kinds of changes. Credit unions asked for a delay in implementation of the new CFPB rules for that reason, and now many of them are even considering eliminating mortgages from their product inventory. Half of the credit unions surveyed last fall by a credit union trade association were still deciding whether they would write only QM mortgages, only non-QM mortgages, or some of each. Some credit unions are expected to simply stop offering mortgage products and services until they are able to sort out their options and come into full QM compliance.

Credit unions have, for the most part, never offered exotic and hazardous loans – and have always maintained underwriting policies that don’t let borrowers take out loans they cannot afford. Credit unions traditionally have stronger guidelines regarding debt to income ratios, for example, to ensure that consumers don’t borrow loans they cannot repay. As nonprofits, they exist for the sake of their customers and that’s why credit unions are a great source of affordable loans with fewer fees and lower interest rates. If they stop making mortgage loans that is bad news for the consumer.

How to Improve Your Chances of Loan Approval

To improve your chances of getting approved for a mortgage that meets the QM criteria, you will need to pay special attention to your debt to income ratio. That means eliminating as much debt as possible from such things like credit cards. The goal when managing plastic is to achieve an excellent credit utilization rate, which is the percentage of the available credit you actually use. Using only a small fraction of what is available helps improve your credit score and helps ensure you are low-risk to borrowers.

Of course you also need to keep an eye on your credit score and the information contained in your credit report. Oftentimes the information in a credit report may be erroneous or outdated, and it takes time to resolve that kind of issue by filing a complaint with the credit reporting agency. Since the process can take several weeks or even a few months to erase the problem, it is always a good idea to start working on your credit profile at least six months before applying for a mortgage or refinance.

Tom Kerr writes for the blog at CompareCards.com in addition to others. He has been an avid writer for years, even winning awards for work he’s done.

Financial Tips: Your money and wireless service contracts.

Wireless carriers are constantly competing for your business with marketing tactics that include free hardware upgrades, expanded data-sharing plans, flexible contract options, and faster communication speed. Understanding what you’re buying and how much it actually costs can be difficult.

Let’s take a look at some examples.

Contracts versus Month-to-Month Plans

One of the confusing choices is between a month-to-month plan and a contracted commitment. Let’s take a look at this example:

  • One of the major carriers offers a hotspot modem service. You can buy the gadget for $200, or get it for free if you sign a 2-year contract, but which offer should you take? No matter which way you go there is a $20 per month access fee, and you need to also have cell phone service with that carrier. That’s $240 per year, so the gadget wasn’t really “free.” Signing a 2-year contract locks you into the service while it also guarantees your pricing plan for two years. You can terminate a month-to-month contract at any time, for any reason. The penalty for canceling early is generally around $175, though, and you are not required to pay the remaining months of access fees on the contract.

In the example above, the worst case scenario for someone who signs the contract is that they get a free gadget worth $200 and can potentially lose only $175 by cancelling. They still come out $25 ahead versus doing a month-to-month deal.

Do your own math to figure out the cost for breaching your contract by studying the specific terms and conditions. Crunch the numbers and make your decision based on a comparison of the pros and cons. Oftentimes it is cheaper and less of a financial risk if you go ahead and sign the contract, even if you do break it prematurely.

Are Free Phones Really Free?

Phone carriers market services that include a free upgrade of your phone. If you’re a steady customer, you’ll likely receive additional offers every year or two, but we all know nothing is free in this world. Here’s how it really works.

  • You sign up for a 2-year service and the carrier offers you a free smart phone with a retail value of $400. In order to add that device to your calling plan you usually pay a monthly access fee. If the fee is $40, then over the period of one year you pay your carrier $480, just for the privilege of being their customer and subscribing to their calling plan.
  •  Meanwhile the carrier doesn’t pay full retail price for the phones it gives away, so chances are that in one year’s time the carrier has already made a 100 percent profit, or more, on the so-called “free” phone you were given. Over the lifetime of a full 2-year contract, that free phone will generate $960
  • in access fees alone, not counting the money the carrier makes from your data, text, and talk. You ultimately wind up paying plenty for those free phones.

The above scenario doesn’t mean that free upgrades aren’t a good deal. As long as you still have to pay access fees and phone usage charges, you might as well take the phone they’re offering to you. Free phone upgrades aren’t charity – they are sophisticated marketing incentives.

Is Insurance Coverage a Wise Investment?

When it comes to insuring those expensive smart phones, make sure you read the small print on your policy. The insurance offered by cell phone carriers is reasonable and it covers a lot of different kinds of loss – from theft to accidentally dropping it on concrete or in the pool.

The premiums are affordable, too, with coverage for a $400-$500 gadget running about $10 or less per month. The tricky part is the deductible, however, because it can be as high as $200 on a typical iPhone policy. So if you pay $100 or more a year in monthly premiums and also have to fork over $200 as your deductible, the value of your coverage is not that wonderful. Suddenly you’re paying $300 to a company to reimburse the loss of a $400 phone. You may still come out ahead, but it won’t be as good of a deal as it appears at first glance.

Looking for an alternative? Many credit cards offer extended warranty protection. Just purchase your next smart phone with your credit card –check the terms and conditions first- and you should be covered for at least the next year. No monthly fees, no extra charges.

Do You Pay $75 for a $60 Phone Bill?

Ever buy something from the grocery store tax-free? Not likely, and a phone bill is no different. The taxes added to wireless bills tend to fly under the radar because most consumers just pay them without a second thought, but they can be exorbitant. According to CNN local, state and federal government taxes add an average of more than 17 percent to every cell phone bill in America. This was originally reported on a couple years ago, explaining that the taxes added to wireless bills can go as high as 23 percent or more in some states.

Jeff’s Note: I recently wrote about lowering your cell phone bill and how I was deciding between two carriers. Well, Republic wireless released the motoX as their new phone, and that made my decision for me. As of Thursday, you could buy a moto x through republic for 299 and a plan as low as 5/mo.

Tom Kerr writes for Comparecards.com in addition to others. He has been an avid writer for years, even winning awards for work he’s done.