Archive for February, 2008

February 12th, 2008 Is a Work at Home Job Profitable?

A work at home job is pretty much self explanatory; it’s a job where you work from the comfort of your own home. Thousands of people all over the world are seeking a work at home job that suits their particular circumstances.

Even before the World Wide Web opened its doors in the early 1990s, people were using Bulletin Boards and Usenet to market online with their own work at home job. The web made things a whole lot easier though, and over the years since the early beginnings, the many refinements have meant that having a work at home job can be child’s play.

However, not everyone can make it work. Some struggle for years and seem to get nowhere. They just can’t seem to find a workable plan to follow, or when they do, they can’t seem to make it work for them.

The work at home job market is extremely buoyant nevertheless. New offers and programs come out every week, vying with those already there in what has become a highly competitive marketplace. Unfortunately there is the dark side of the work at home job market too. Scams are commonplace, and many succumb to them and understandably they conclude that nothing works.

Scams are an unfortunate evil that follows any market where people are eager to buy. They prey on the vulnerable, the inexperienced and the gullible that are all hypnotized by the incredible claims of wealth and riches. In many cases, they cover their disappointment over the failure of one program by jumping straight into another one that is equally bad and destined to failure.

It’s not all doom and gloom of course. Good quality work at home job offers are plentiful. You just have to know where to look. Scams tend to be over hyped and incredible. The real work at home job tends to be dull by comparison, but believable. The scam often offers riches for little if any work, while the real thing will always require some dedicated work. There really is no such thing as a free lunch!

If you are seeking a good work at home job, be discerning and careful. Don’t rush in to the first good sounding offer you find. Check out everything you can as carefully as you can. Look for independent reviews, the kind that tells you the warts and all type of details. Don’t be too suspicious or you’ll never get anywhere, but take it slow and steady. You will find excellent work at home job offers with simple commonsense.

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February 6th, 2008 Paying Off Your Debt

Whether it’s a mortgage, car loan, student loan, credit card, or medical bills, you probably have some amount of debt in your life. It is only natural that you want to pay it off as soon as possible, but what do you payoff first and how do you plan for investing?

Since the amount you can pay towards these items is predicated by your income level, a decision normally has to be made between investing and paying off your debt.

What should you do? The answer depends on two variables:

1. The rate of after-tax interest you are paying on your debt
2. The after-tax rate of return you expect to earn on your investments

Before you answer the first question, you must understand that there are two different kinds of debt. On one end of the spectrum is high-interest credit card debt that originates from things such as credit cards and department store charge accounts. This type is the deadliest and generally should be avoided unless absolutely necessary.

The second type of debt is the lower interest variety; your mortgage, student loans, etc. Often, the interest on these types is partially or wholly tax-deductible, making it even more attractive.

With that in mind, the answer to the debt reduction vs. investing problem can be solved with this one statement: If you can earn a higher after-tax return on your investments than the after-tax interest rate expense on your debt, you should invest. Otherwise, you should pay off your balance.

Example of Debt Reduction vs. Investing - Calculation

Scenario 1
Assume you have a thirty year, $150,000 mortgage with a six percent rate. Also assume you are in the 25% tax bracket. Due to the itemized deduction of mortgage interest, your after tax annual percentage rate is really 4.02% (not the 6.00% you are paying).

Hence, if you expect to earn an after-tax return higher than 4.02% on your investments (odds are substantial you will if you have a long-term horizon), then you should invest.

Scenario 2
You have a $10,000 balance on a credit card with a 22% annual percentage rate. Credit card interest expense is not tax deductible, meaning you should only invest if you think you can earn a 22% after tax return on your investments.

Given that the historical long-term return on equities has been somewhere around 11-12%, this seems highly unlikely. In this case, it would be foolish to invest.

The Bottom Line

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