Financial Independence Compilation

Welcome to the November 7, 2010 edition of financial independence.

Your Financial Independence Articles

Top 10 money tips to become debt free - One of the purposes of this blog is to help myself to learn more about money in order to help me to become debt free and, hopefully, financially independent.

Being debt free is almost a dream for me at moment, with the power of compounding interest working against me I keep on paying my credit card debt every month and it doesn’t seem to go down no matter what I do.

This post is a result of my own research around the internet on 10 strategies to help me to become debt free.

The Australian interest rate is up, the average bloke and the Australian prosperity -  Yesterday the Reserve Bank of Australia decided to increase the interest rates by 0.25% once again. The banks already started to move with the Commonwealth Bank increasing their rate by almost twice as much as the RBA increase.

The government then starts to make a lot of noise, the shadow treasurer continues to blame the government and the average bloke feels the pinch…

Organise your finances with online banking - Using online banking can be a quick way to take control of your finances. These days online banking offers many tools that can actually hep you to save money. Here are some ways online banking can help you.

A few tips to save money - Do you want to save some money? When times are tight and you are struggling to make ends meet you will face the inevitable decision to cut back in some expenses. Here are some ideas to help you to cut back on those expenses without sacrificing too many of life’s pleasures.

Reader’s Articles

Khaleef @ KNS Financial presents 5 Things You Can Still Do To Increase Your Tax Refund! posted at Faithful With A Few, saying, "Here are 5 things that you can still do in 2010 to reduce your tax liability and hopefully increase the size of your tax return."

BackTaxesHelp.com presents Ever Hear of the Inflation Tax – Your Taxes Could be Raised Indirectly posted at Back Taxes Help.

Tax Debt Help presents Home Prices Falling but Property Taxes Going Up posted at Tax Debt Help.

debt kid presents Real Costs of a Car posted at DebtKid.

Alexander Peter presents Applying For Tax Credits posted at UTR.org.uk, saying, "Information on what tax credits are and how to apply for them."

Aaron Durant presents Chocolate company posted at uba-blog.co.uk, saying, "make money by starting a chocolate company"

David de Souza presents What Everybody Ought To Know About Capital Gains Tax posted at UK Tax Blog, saying, "Guide to what Capital Gains Tax is and how it works"

Sam presents NEW !! The Best Stocks to Buy from the S&P 500 Index posted at Surfer Sam and Friends, saying, "Thanks for including my article on the best stocks to buy. Here's an excerpt... Bypass all the hype and noise you hear about the best stocks to buy. Go right to the facts. Here are 25 stocks from the S&P 500 with the best price increase over the past 12 months. The S&P 500 is a broad index of stock market performance. If you want to find the best stocks to buy from the S&P 500 Index, this table is a good place to start. It shows which were the best stocks, that is, the stocks with the largest price appreciation during the past 12 months. In addition to price appreciation, buyers of some stocks also receive dividends as part of their total return. The table includes companies from diverse industries like Internet Information Providers, Travel, Titanium, Engines, Cars and Trucks, Communications, Software, Auto Parts, Mining, Real Estate, Hospitality, and Retail, to name just a few. Of course, past performance is not a guarantee of future performance. But the numbers show you how much money these stocks made for the investors who bought them."

CardWisdom presents Minimize Credit Card Interest on Holiday Purchases posted at Card Wisdom, saying, "If you need to take on new credit card debt during the holidays, use a 0% credit card to reduce your interest expenses."

Susan Howe presents Can You Really Be Murdered for Insurance Money? posted at Insure, saying, "Although murder-for-life-insurance plots in movies typically end with the culprit being marched off to prison, real-life incidents are not often black and white."

Mike Piper presents 401(k) or IRA? What to Do If Your 401(k) Stinks posted at The Oblivious Investor, saying, "If your 401k has high fees and expensive funds, should you contribute to it or to an IRA?"

CreditShout Kevin presents Dealing With Credit Card Debt From a Spouse posted at CreditShout.

FIRE Getters presents 15 Financial Failings That Will Prevent An Early Retirement! posted at FIRE Finance, saying, "For those of us who want to retire comfortably and do so while we still have the energy to enjoy our free time, personal vices must be kept to a minimum. Eliminate or at least put off indulging in bad habits that will cost you money in both the short and long term, and you will reach your goal of a relaxing retirement that much sooner ..."

FMF presents Free Money Finance: How to Buy and Sell Physical Gold and Silver, Part 1 posted at Free Money Finance, saying, "Ever want to know the specifics of how to buy physical gold and silver? This interview with a gold/silver expert will give you all the details!"

Jim Nariel presents How you can trust an Internet Master and earn money by online marketing fast posted at Point and Click Program Revealed, saying, "blog post showing how to pick the right internet teacher for making money online"

MoneyNing presents Should We Shield Our Kids From The Economic Reality? posted at Money Ning, saying, "Would you want to talk to your kids about your financial situation, or should you hide everything from them so they can have a happy upbringing?"

BWL presents Tax Treatment for Inherited IRAs posted at Christian Personal Finance, saying, "Everyone is going to leave this earth some day and, yes, everyone will pay taxes – but, we can try to prolong facing these two guarantees as long as possible. A Stretch IRA is a way to prolong your tax payments when you receive an inherited IRA. So let’s take a look at the tax treatment of Inherited IRAs and what a Stretch IRA actually does…"

Thursday Bram presents Friendly Financial Advice: Get Educated, and Get Experienced posted at Currency.

Jeff Weber presents How Much Can You Save with a 0% APR for 21 Months posted at Smart Balance Transfers, saying, "A person with $3000 of credit card debt who pays $60 a month can save just over $400 with a 0% balance transfer for 21 months. A person who pays $150 a month can save a similar amount and be debt free before the rate expires."

Neal Frankle presents Find A High Paying 2nd Job Using Craigslist posted at Wealth Pilgrim: Money Management Advice, Financial Stess Management, Addiction Recovery Plan & Resources, saying, "You Can Find A High Paying 2nd Job Using Craigs List If you’re looking for high paying 2nd jobs, look no further than your computer screen. You can create your own 2nd job using Craigs List."

Silicon Valley Blogger presents Sony Discount Code, Sony Promotion Code: Electronics For Less posted at The Digerati Life, saying, "You can pay less for goods and electronics by using discount codes."

PT presents If You Can Earn $5, You Can Change Your Life posted at Prime Time Money.

freefrombroke presents Five Ways to Invest Without Buying Stocks posted at Free From Broke, saying, "Buying stocks has been seen as risky for many these days. No worry, there are other ways to invest besides stocks."

presents Printable Calendar 2011 posted at Home Life Weekly, saying, "Help get your finances in order for next year with this free printable calendar"

Youdondour torres presents Apply now for a 1 hour payday advance loan! posted at Pay Day Loans For You Today!.

Youdondour torres presents Get approved now for a no hassle payday advance loan posted at Quick and easy payday loan!.

Youdondour torres presents Bad credit, no credit payday advance loans posted at Quick and easy payday loan!.

Youdondour torres presents Cash in advance loans, apply now! posted at Pay Day Loans For You Today!.

That concludes this edition. Submit your blog article to the next edition of financial independence using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

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Share Types

Types of shares

Depending on their capital requirements, many companies issue different types of shares in addition to ordinary shares. Each type of share and separate classes within each type may have different rights attached.

Your stockbroker can help you to understand the advantages and disadvantages of various types of shares before you invest in them.


Ordinary shares


• Represent the bulk of a company's basic ownership money or equity capital.

• Shareholders benefit from any distributions of dividends and can vote at company meetings. The more ordinary shares they own, the greater their control over the company.

• Rank last behind other types of shares if the company is wound up


Preference shares


• Are entitled to a preferred dividend paid before the ordinary dividend is announced. The dividend is often paid at a fixed rate.

• Have priority over ordinary shareholders for repayment of capital if the company is wound up.

Trust units


• In the form of property trusts and equity trusts.

• From an investor's point of view, units in listed trusts are similar to ordinary shares except that a full distribution of profit is made to unit holders instead of a dividend.

Contributing shares


• A company may issue new shares without requiring full payment immediately. In such a case, it may issue the shares on a contributing or partly-paid basis.

• Shareholders make further payments on certain dates or in some cases, may forfeit their shares.

• Have equal voting rights with ordinary shares and dividends are usually paid on a pro-rata basis.

Rights and bonus issues


Companies can make special issues of rights or bonus shares to shareholders. As a shareholder, it is important for you to understand what each issue entails and the important dates involved. If you have any doubt about such issues you should contact your client adviser/stockbroker.

Bonus issues


Bonus issues are shares issued free of charge to shareholders. The size of the issue reflects the improved value of the company's assets.

Bonus issues are made on a predetermined pro-rata basis, for example, one for ten.

This means you will receive one new share for every ten you currently own. For example if a company in which you hold 1,000 shares announces a 1-for-10 bonus issue, you are entitled to 100 more shares at no cost, which would bring your total holding to 1,100 shares.

Once a bonus is issued, the price of the shares is likely to drop as the value of the company's assets is now spread over a larger number of shares. Bonus shares dilute the market price of the shares in direct proportion to the increase in the total number of shares on issue.

This price adjustment occurs on the ex-bonus (XB) date. An investor who buys the existing shares on or after the XB date is not entitled to the bonus shares - they belong to the previous owner of the shares.

Rights issues

A rights issue entitles existing shareholders to take up additional shares in the company at a below-market price and without having to pay brokerage. Rights issues enable the company to raise additional funds from shareholders, perhaps for expansion or to repay debt. For example, Company X may have a rights issue to raise $300 million to fund its takeover of Company Y.

The process for a rights issue is similar to a float, in so far as a prospectus is prepared and an underwriter is often appointed. Shares are offered on a predetermined pro-rata basis, for example, 1 for 4. This means that for every four shares you own, you can purchase one additional share at the discounted price.

A rights issue may be renounceable or non-renounceable. Renounceable means shareholders are entitled to sell their rights to other investors on the sharemarket if they do not wish to take up the additional shares themselves. Non-renounceable means only existing shareholders can participate and you must either take up the shares or forfeit the rights.

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Financial Independence Compilation

Welcome to the August 4, 2010 edition of financial independence.

Your free gift - We are offering you a free gift that we are sure that it will inspire you on your road to success. The book the Science of getting rich has inspired me and started me on my road to financial independence. I encourage you to download the book and join the SOGR network. You have nothing to lose. Click here to download your free book.

 Your Financial Independence Articles

The most important money advice - There is only one rule that should direct your personal finances. If you are able to understand and apply this rule you have mastered all that you need to achieve financial independence.

Investing in shares - learning from the financial press - In this article, we discuss how to read the financial newspapers and look at other areas of the media that can provide you with information on share market investment.

The science of getting rich - acting in a certain way - Do not bother as to whether yesterday’s work was well done or ill done, do today’s work well. Do not try to do tomorrow’s work now, there will be plenty of time to do that when you get to it.

Do not wait for a change of environment, before you act, get a change of environment by action. Cause your environment to change. You can so act upon the environment in which you are now, as to cause yourself to be transferred to a better environment.

Buying and selling shares - The share market can be thought of in terms of its two main functions: The primary market where companies raise money by floating their company and selling shares to investors. Following this Initial Public Offering, the shares are then able to be traded on the share market (the secondary market).

So as an investor there are two distinct points at which you can purchase shares...

Real riches - I am right now on my way to work on a Monday morning. It seems to be a normal Monday morning, however, I have this empty feeling inside of me. This is unusual, as far as I can remember this has never happened to me.


Reader's Sponsored Articles


Charlie Kimball presents 7 Steps To Get Out Of Debt posted at Consumer Credit Guide, saying, "The toughest part is changing your attitude about spending money, using credit cards, and disregarding the future. Nothing is easy, but it is possible to get out. Even small steps make a difference . . . make a plan and attack your debts!"


Ellesse presents Can You Be Financial Independent Before 40? posted at Goal Setting College.


Nissim ziv presents Finding your Dream Career and landing the Job of your Dreams posted at Job Interview Guide, saying, "Here are some tips that you might use:
Make Yourself Competent for your Dream Career, Hone Your Core Competencies"


Mitch Archuleta presents How to Prioritize Multiple Retirement Accounts posted at RothIRA.com's Retirement Planning Blog, saying, "How to decide what order to contribute to retirement investment accounts."


Sam presents Investing in Gold posted at Surfer Sam and Friends, saying, "Thanks for including my article. Here's an excerpt...

When people buy and own gold they consider it as a store of value and a safe haven for wealth in economic crisis. One of gold's important properties is psychological, because it is so closely associated with money. This gives it an immeasurable advantage over other tangible stores of wealth. Most people readily associate gold's distinctive color with wealth, and consider the color of gold beautiful. King Midas of mythology, who could turn everything he touched into gold, had the first fatal case of “gold fever,” the frantic need to seek and hoard gold."


David de Souza presents The Inland Revenue posted at UK Tax Blog, saying, "An interesting article outlining the history of the Inland Revenue and taxation in the UK, dating back to the Roman invasion."


Abbott Efrain presents Fast Cash Loans For The Fastidious! posted at Cheap Payday Loan Blog, saying, "The payday loan industry is popular today this is because it recognizes the need of people.It understands that not everyone wants a big loan or has the time to wait for the advance to get approved."


Daniel M. Wood presents Here is a Method That is Helping People All Over The World to Accomplish Their Goals posted at Looking to Business, saying, "Knowing you goals, knowing where you are going and what you want to achieve makes a huge difference in your life. It gives you lots of motivation, it helps you focus all your efforts towards your goals and moves you towards your goals in a much faster pace."


Rick Todd presents Is retiring abroad actually cheaper? posted at Expat Investing.


Two Becomes One presents Debt Consolidation Company: How To Make The Right Choice « Debt Relief Blog posted at Debt Consolidation Company: How To Make The Right Choice, saying, "Paying off debt is a back breaking exercise. It works like a domino; debt begetting more debt until the entire financial edifice crumbles."


Aileen Black presents Debt Consolidation Company: How To Make The Right Choice « Debt Relief Blog posted at Debt Consolidation Company: How To Make The Right Choice, saying, "Paying off debt is a back breaking exercise. It works like a domino; debt begetting more debt until the entire financial edifice crumbles."


That concludes this edition. Submit your blog article to the next edition of financial independence using our
carnival submission form. Past posts and future hosts can be found on our

blog carnival index page.

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The science of getting rich - acting in a certain way

"You must give every man more in use value than he gives you in cash value."

We continue in our journey to look at the timeless advice contained in the book "Science of Getting Rich"  by Wallace D. Wattles.

This article is based on the chapter of the book where Mr Wattles teaches us to act in a certain way that will take us closer to our financial objectives.

Mr Wattles says that if your dreams are firmly impressed upon your mind, if you use your will power in the right way, if you have an attitude of gratitude, if you give to every person more than you take from them and you act in a certain way you will attract your dreams and the what you want to achieve will come to you.

You must not interpret his words as mere dreaming without no action. What he means is that you need your mind set in a way that will continually motivate you. The road to riches, financial independence or whatever it si that you want to achieve is not easy so you need to remain positive.

Those advices are followed by some concrete actions that you can take today that will take you further in your road to wealth. The first one is giving everyone more in use value than he gives you in cash value. This means that you are doing your very best to serve your customers and to deliver value to them. Your customers, which can be your employer, needs to have the impression of more use value than in cash value that he gives you.

I have used this advice and it worked wonders in my life and it continues to work. To find out more how this advice has literally changed my life  click here.

The nest advice is to act in a certain way that will take you closer to achieving your dreams. But exactly are you meant to act?

Do not bother as to whether yesterday’s work was well done or ill done, do today’s work well. Do not try to do tomorrow’s work now, there will be plenty of time to do that when you get to it.

Do not wait for a change of environment, before you act, get a change of environment by action. Cause your environment to change. You can so act upon the environment in which you are now, as to cause yourself to be transferred to a better environment.

Hold the vision of yourself in the right business, with the purpose to get into it and the faith that

you will get into it and are getting into it, but ACT in your present business. Use your present business

as the means of getting a better one, and use your present environment as the means of getting into a

better one. Your action, if performed in the certain way, will cause you to move toward the business.

Hold the vision of yourself in the job you want while you ACT with faith and purpose on the job

you have, and you will certainly move into a better job.

Do the best that you can do today, don't wait for tomorrow.

If you want to start investing in shares, do so today. If you to learn how to manage your finances, start today. If you in debt and want to get out of it, start today. Don't stay where you are, use your mind and will power to motivate you to move towards your dreams and act today in a way that will take you closer to your financial dreams.

Buying and selling shares

Buying and selling shares

The share market can be thought of in terms of its two main functions: The primary market where companies raise money by floating their company and selling shares to investors. Following this Initial Public Offering, the shares are then able to be traded on the share market (the secondary market).

So as an investor there are two distinct points at which you can purchase shares:

1. From the company itself in the very first instance of the shares being offered in the float.

2. Following the float, shares are bought from other investors via the share market. Shares can only be sold on the secondary market.

Buying shares in a float or Initial Public Offering

The word float is used when a company seeks to raise money by offering its shares to the public for the first time. The company must first submit details of its business and the proposed share issue to the Australian Securities and Investment Commission (ASIC) in a document called a prospectus.

Once the prospectus is lodged with ASIC, it is then available to potential investors for consideration. If you wish to buy shares in a float, you must first review the prospectus, fill in the attached application form, specifying the number of shares you want to buy, and send it with your payment to the company or lodge it with your adviser.

Lodging and/or registering a prospectus with ASIC and listing on the ASX does not guarantee the company will be successful once share trading begins.

Among other things, a prospectus is required to contain all the information that investors and their professional advisers would reasonably require to make an informed assessment.

When assessing a prospectus it may be useful to answer the following questions:

• Who – who is involved? (stockbrokers, underwriters, management, board, others)

• What - what is on offer? (growth, income-yielding, tax-effective or speculative shares)

• When - when does the issue take place? (bull/bear market)

• Why - why are they raising funds? (expansion, retire debt, sell down, takeover)

• How - how to participate in the issue? (public pool, firm share, entitlement, demutualisation)

If there is a great deal of investor interest in a new float, you may be allocated fewer shares than the number you applied for or none at all. With some floats, the initial share price (issue price) is not set until just prior to the first day of trading. You should obtain independent advice from a licensed professional adviser prior to making any final decision.

Following the float the shares are now listed on the share market. From this point shares can only be bought and sold on market through a stockbroker.

Buying and selling shares through a stockbroker

Establishing a relationship with a broker is easy. Each broker will have a slightly different process, but most require you to establish a client account. They may also need bank account details for the lodgement or receipt of trading proceeds.

When you place an order to buy or sell shares, you have a choice of two ways to tell your broker what price you will accept. You can place your order 'at market', meaning you will accept a price at or about the market price of the shares at the time you are placing your order.

Alternatively, you can place your order 'at limit', and inform your broker of the highest price you are prepared to pay or the lowest price at which you will sell. Orders where you set a 'trigger' point are known as conditional orders.

Determining entry and exit prices for shares is important. Investors are very capable of buying shares, however many fail to consider when to sell. Setting a target price to sell is an often overlooked skill.

When placing an order with your adviser, make sure you are fully informed and that your order is confirmed. Ask the current market price and write it down. Then tell your broker the details of your order (i.e. the amount of shares to be bought or sold and the price at limit or at market). They should then repeat the order back to you.

Internet based stockbroking websites provide confirmation screens for you to double check your order before it is processed.

Following a transaction on the share market you will be sent a contract note (confirmation). This outlines the details of your trade, including the number of shares and the amount paid or received for them.

Happy trading!

The science of getting rich - the will power

We continue in our journey to look at the timeless advice contained in the book "Science of Getting Rich" by Wallace D. Wattles.

This articles looks at the chapter regarding the will power. The bottom line about this article is simple: "what comes around goes around".

When you know what to think and do, then you must use your will to compel yourself to think

and do the right things. That is the legitimate use of the will in getting what you want — to use it in

holding yourself to the right course.

If you have a financial goal you have to use your will to remain focused. If you have such a strong will that you have no shadow of doubt that you are capable and that you will achieve your goals, this frame of mind will keep you motivated.

Let's face it, the journey to financial independence is very hard. My objective is to generate enough passive income to support myself and my family. By the very definition, passive income is income that once setup, will keep on generating income without your contribution, without you having to work on it.

Passive income is very difficult to get. People don't just give you money, they need to get value. We learned from Wattles that we need to give others more in use value than in cash that you receive from them, in other words, give people valuable and useful things that will positively affect their lives.

It is all very difficult and we will certainly face some failures on the way. Nevertheless your will can help you to stay motivated and on the path, don't quit it half way.

Some good advice on money matters

The following list is a compilation of various financial advices I have come across over a period of time. Some of these have been of great importance to help me to get on the path towards financial independence.

No matter how much you earn always save a little bit

There is no excuse for not saving money. No matter how much you earn you should always strive to save a little bit. I am not talking about a set amount or percentage. Depending on your circumstances the amount you save may change periodically.

Nevertheless always save a little, no matter how little.

If you have bad debt such as credit card debt, then strive to always pay a little more each month. As you do that you are saving on interest that would be charged to your account.

Know the difference between needs and wants

This advice goes towards wise spending, especially when you are working towards achieving a certain goal.

You have to be able to differentiate what you need from what you want. It is actually simple. In summary, you need food, clothes and shelter. Those will cover the basics. Take a step back and think, do you really need that expensive coat, or shoe or watch. Most people have those basics and if you really think hard you have all you need and probably quite a lot of what you want.

Have fun too

I decided to position this advice right after the one regarding your needs and wants. It is important to have fun too. Don't give yourself too much pressure if everything is going well, don't relax too much either.

I like to enjoy things that don't cost a lot such as spending time with m family on the beach, or going for a walk, or simply playing with the kids, renting a movie and having a night in, etc...

There are many ways of having fun that won't cost a lot, or that won't cost anything.Don't live pressured, remember to relax, it is vital to you and your family.

When you buy something, ensure that you buy a quality item

When you buy something ensure that you buy the best item that you can. Buying items that are not of good quality will probably mean that you will have to purchase it again in a short period of time, there fore spending more money that you would otherwise.

Don't pay interest purchasing depreciating assets

Most of us will need to buy many things that loose value. The couch, the car, electrical appliances, clothes, shoes and others. When buying those items ensure that you don't pay interest for the purchase.

Don't borrow money to buy a car and don't buy anything on your credit card that you cannot pay before interest kicks in.

I usually say that when you purchase things on credit card or borrow to buy depreciating assets such as cars, they are taking your money while you sleep.

They do, think about it, the interest is charged to your account usually during night calculation done in the bank computers, so you actually loose money while you sleep.

Buy real assets

This advice is the very opposite of the previous one, when you buy something buy an asset.

An real definition of asset is something that puts money in your pocket. Your personal car does not do that. Following are some real assets that put money in your pocket: dividend paying shares, positive real estate investments, a business that generates money, some say that even your education is a real asset because you can use it to earn more money, etc...

The idea is simple, do you need what your are buying? Is the item you are buying a real asset?

Avoid using your home equity to pay your credit card debt

I see many professional financial advisers saying that your should use your home equity to pay off your credit card. I don't think that this advice should be always followed.

I believe that it is more important to pay the credit card debt though other means rather than your equity. If you effectively manage your finances and eventually pay off the debt you are better of many ways.

• Learning how to manage your finances - if you find other ways of paying the debt, you are actually managing your finances in a wise manner which can go a long way once you finish paying the debt.
  

• Taking money from your home equity can be a short term solution if you continue spending on the credit card.

• The money you borrow from your home equity is at first cheaper than the credit card but in the long term you will continually pay interest to the bank, so in reality it is also costing you a lot.

Before closing on this topic, if you are in financial difficulties and need to get rid of the credit card debt, then consider using your home equity to do so. This may help you to avoid a disaster. But remember, your mortgage repayments will go up and you need to have the cash flow to be able to afford the higher payments.