Interview with Pat Flynn-Internet Marketer

Let me tell you a secret: I love internet marketing.   The whole concept fascinates  me and as I’ve seen my blog grow exponentially, it fascinates me more and more.  What is even more captivating is when you read a story of someone that took being laid off from what was supposed to be his dream job and then turn into a life changing business venture on the web.  We all hear stories of how to make passive income on the web and many of them are scams.  (If you want to see a bona fide scam, check out this post) I assure you, this is far from it.

Pat Flynn has quickly rose to one of the Internet’s elite in internet marketing and in a short time has made a large chunk of cash that will have you in disbelief.  What makes this story that much more exceptional is that Pat is an awesome guy.   He goes out of his way to help his readers and answers their questions.   I was excited to have Pat stop by the blog and sit down for quick interview.

Interview With Pat Flynn

1. Pat, can you give us a little bit about your background and what prompted you to start Smart Passive Income?

Sure Jeff!

I studied architecture at the University of California at Berkeley and started working in a large architectural firm soon after graduation. I quickly excelled in the workplace, becoming the youngest Job Captain in the 250+ person firm, and was later assigned to some really high-end, multi-million dollar projects. I truly loved what I was doing.

Pat Flynn-Smart Passive Income

Unfortunately, that didn’t last long. After 3 years, I was laid off.

The lay off was tough, but it helped me realize that even what may seem like the most secure of jobs can be taken away from you in a flash. The only way to truly establish financial security in my life was to take matters into my own hands, and start a business of my own. So, that’s what I did.

I decided to start an online business that revolved around an exam (http://www.greenexamacademy.com) that people in the design and build industry take, which I was quite familiar with. Long story short, in just a year I had grossed over $200,000.00 – obviously far more money than I ever made while working in an architecture firm.

As much as I’m happy about the amount of money I’ve earned online, it’s the amount of hours that I now spend working on this business each week that I’m the most pleased about. On average, I spend about 2 to 4 hours a week on that business, which continues to bring in a full-time income. Because of the business model and the services I use to almost automate the entire process, from customers payments to delivery of my electronic products, I am truly able to live a 4-Hour Work Week (which if you didn’t know, was a NY Times Bestseller by Tim Ferriss). Tim was definitely an inspiration for me as I structured my online business.

I spend all of my free time with my family, creating new businesses and projects, and blogging about how I got to this point in life. That’s what The Smart Passive Income Blog is all about. It’s basically a free resource for people who want to learn how to do business online in a way that can generate a passive income – meaning you don’t have to trade your hours for dollars. You put in the hard work at the beginning, and reap the benefits later.

The Smart Passive Income Blog is my way of giving back for all of the fortunate things that have happened to me in my life. It is my hope that anyone with a drive and passion to succeed can learn from what I do (both from my successes and my failures), and create an online business for themselves too. I’m not anyone special, and there are a ton of people out there who are smarter than I am, so I know this is possible.

2. What would you say are 3 common characteristics that one must possess to cross over into being an Internet marketer?

First and foremost, an internet marketer must be willing to take some risks. Luckily, doing business online is much less risky as far as the initial investments required to get started, but it still takes some guts to buy your first domain name, to create your own products or deal with other businesses online. That being said, what drives us is that we all know that the possible rewards of starting an internet business far outweigh the risks involved.

Secondly, one must be able to welcome failure. As weird as that may sound, a failure is actually one step closer to finding success. I’ve personally had many failures online, but they’ve all lead me to this point because I’ve learned from each and every one of them.

Lastly, an internet marketer should always be self-controlled and disciplined. It’s hard, especially when working from home, to stay focused on certain tasks that need to get done. There are a lot of distractions out there that will try to hold back our productivity, but by keeping systems in place and our goals in mind, we can keep on progressing.

ebook Success

3. You recently just launched an Ebook called The $mart Way. What was your inspiration for creating the ebook?

eBooks The $mart Way

An eBook is what I used to help launch my successful online business. I love eBooks because they are relatively easy and cheap to create, you can automatically deliver them to your customers (no going to the post office to package and ship after each order), and you can get started right now.

eBooks the $mart Way is all about how to publish, market and automate a killer eBook. I wrote this guide because I really want to help people who may be interested in creating an eBook of their own. And yes, the guide is absolutely FREE, much like all of the other material on my website. As I said before, it’s my way of giving back for all the good things that have recently happened to me in my life.

Publishing an eBook changed my life, and I’m hoping this guide can help people improve their businesses and change their lives too.

4. You write and sell Ebooks, you maintain an awesome blog, your extremely active on Twitter and Facebook, you have a new child: Where you find the time to keep your business growing and what keeps you motivated?

My primary motivation behind everything I do is my family. My beautiful wife April, and our newborn son, Keoni, are the inspiration and motivation behind everything I do online and every decision I make.

For example, because I want to spend more time with them, I’ve created a business that allows me to do just that. Furthermore, I have systems in place and schedules that I follow that allow me to make sure I get the things in a productive manner so i don’t waste any time.

Additionally, I truly love helping other people succeed. I get a sense of fulfillment, almost a “high”, when someone sends me a thank you email for the eBooks I’ve written, or when people tell me that I’ve motivated them to start working on their own ideas again. To go along with that idea, I also believe in Karma. The more you help others, the more fortune you’ll have. So far, in my experience, this has always been the case.

5. You’ve had great success with your LEED Ebook. Do you foresee any challenges to sustain your income levels in the future as others try to mimic what you’ve done?

There are always challenges that we face, especially in today’s world where everything seems to be changing so fast. One of the biggest challenges that I face with my current primary business is that the company that the exam is about has recently released their own set of study guides to help people pass the exam.

That being said, I almost take it as a compliment because I know for a fact that they knew about my business and how successful it has been. Maybe it was a direct response to what I was doing, maybe not – but either way, I am still seeing strong earnings each and every month. I think it helps that I’m just “a normal guy”, not a large company, who is helping people pass the exam and who is here to immediately respond to any questions they may have. I have the track record, and people who have used my website before are usually more than willing to help spread the word.

Furthermore, I have other projects in other niches that are there for diversification purposes. If any one of my current businesses or income streams were to disappear tomorrow, I’d still have a generous income to provide for my family. Plus, I know that if everything were to disappear tomorrow, i could easily come back and do something else and succeed.

New Additions

6. Having just had my 2nd son and seeing you just had your first, how has having a child impacted your life?

Like Father, Like Son

Words can’t even express how wonderful being a father is and seeing a “mini-me” enter the world. It truly puts life into perspective and makes you think about what’s really important in this world. Seriously.

Beyond just wanting to succeed so I can provide for my son and his future, I want to do so in way that can be a good example for him when he grows up.

I wouldn’t trade any of it for the world – not even the sleepless nights, spit-ups, or poopy diapers

7. What’s on the horizon for Pat Flynn and Smart Passive Income in the upcoming year and beyond?

I’ve got a lot planned for the future.

Besides the blog and all the businesses that I have now, I’m working with others on potential business ventures and passive income projects as we speak. I can’t get too specific at the moment, so you’ll have to check in to the blog to keep updated as things progress.

Specifically for the Smart Passive Income Blog, I’m coming out with a podcast that should be ready to go by mid year. I’m hoping to provide some motivational and useful content for those of you who want to get into online business, and have some extra time during your commute or while at the gym to listen in.

Jeff, thank you so much for the opportunity to share a bit of my story and some of my thoughts about internet marketing and entrepreneurship. if there’s anything that you or any of your readers ever need from me, please do not hesitate to come by The Smart Passive Income Blog and shoot me an email.

Additionally, I’d love for any of you to come by and say hi to me on Twitter (@patflynn) or on my Facebook Fan Page. I hope to hear from you soon!

Thanks again Jeff! Cheers!

Be Sure To Check Out: Pat recently did an interview with Darren from Problogger.net.  Definitely worth checking out.

In my earlier working years, I wasn’t complete sold on disability income insurance.  I had good health insurance coverage, what I considered  a good portion of term life insurance coverage, and felt that I was pretty well set.  Luckily, my current firm, LPL Financial, had an awesome arrangement with a disability insurance company and I was able to get a long term disability insurance policy at a good price.   Even without the the reduced cost, I now seem the importance of having a disability insurance income policy; especially as I see my family grow.

How much disability insurance do you need?

Surprising Disability Probabilities

Like I said, I knew the importance of having life insurance, but was surprised when I saw the following statistics from the Life and Health Insurance Foundation for Education, November 2005:

• If you are between the ages of 25 and 55, you are more likely to become disabled that die.  How about them apples?

Here are two more for you:

• 60-percent chance at ages 30, 40 and 50 that one in a group of five people will suffer a long-term disability before age 65 .
• There is a 1 and 3 shot that before they age of 35, that will be disabled for more than 3 months during the rest of your working days.

Still don’t think you need a long term disability insurance policy? Disability insurance provides you with cash that you can use for paying your mortgage or rent, buying groceries and meeting other ongoing living expenses.

Putting Disability Insurance Policies in Perspective

For most people, there are two main forms of disability income insurance to consider: employer-sponsored policies (called “group” policies) and private insurance policies. Group policies are relatively inexpensive and generally remain in effect for as long as the individual remains with the employer. But there are often significant limits on the benefits provided by these policies, so it’s important to determine whether coverage is adequate for your needs. I had this available to me at my old firm, but didn’t take advantage of it.

Private insurance policies, paid for by individuals, typically are more expensive than group policies but may also provide a higher level of coverage. In certain instances, those with a group policy may want to consider purchasing a private policy to fill in the income gaps frequently associated with group-only coverage.

How Much Disability Income Insurance Do You Need?

The key to determining your needs is to assess how much you would be required to spend during each week or month that you would be unable to earn your normal pay. For example, if you would need 80% of your pretax earnings but your group policy would only pay an amount equal to 60%, then you may need additional coverage.

The policy I had bought capped me off at a certain amount, but what made the policy so attractive is that it would pay the full benefit up until I was 65 or started taking Social Security benefits.  Just to make sure I was getting a good deal, I shopped around and other policies I checked paid a smaller benefit and only paid for a certain number of years (around three).  Plus, it was more expensive!  Buying my policy was a no-brainer.

Disability Defined

The way in which an insurance policy defines disability can determine your eligibility to receive benefits. The following is a quick overview of three basic definitions:

• Own-occupation. The most comprehensive definition of disability, it states that you are unable to perform the duties of the occupation you were performing at the time of the disability.
• Income replacement. Policies with income replacement coverage define disability as sickness or injury that doesn’t allow you to perform the duties of your occupation and typically stipulates that you are not currently engaged in any other occupation.
• Gainful occupation. These policies define disability as the inability to perform the duties of your occupation or any occupation that you are considered to be reasonably qualified for by way of your education, skills or training.

A qualified insurance professional can help you assess your need for disability income insurance and find a policy that is most appropriate for you.

Jeff Rose is a Certified Financial Planner and co-founder of Alliance Investment Planning Group.

Have you reported the loss of your stolen credit, ATM card or debit card? Luckily, I’ve been fortunate to have never had my wallet stolen so I haven’t had to mess with it.  I have had two minor cases of identity theft, and that was a nuisance in itself.   This guest post is by Debbie Brown and she shares what to do when your credit card is stolen or lost.

Credit card is the most common financial accessory that people possess. Whether they are buying from stores or shopping online, credit cards are an integral part of our lifestyle. But are you aware that your credit card is like a key to unlock your account details? Yes. There are numerous scammers hovering around you to take a sneak peak into your purse or hack your card details online perhaps with a deadly Trojan!

photo credit: Louis Abate

Most credit card holders feel that they are smart enough to spot a scammer. However the fact remains that within a bat of an eyelid or might be within a click of your mouse, your credit card will be ripped off. FBI has surveyed and found out consumers have to incur a heavy loss of around $125.6 million as seen in the last year due to these swindles. During this economic turbulence, when money is scarce and people are running into debts, it is essential that you become careful. Recession has increased these fraud activities. As a result it is you who will run of money. So if you are using credit cards or ATM cards or debit cards, you must know about certain things in case your cards are stolen. Did you know that the Fair Credit Billing Act (FCBA) and the Electronic Fund Transfer Act (EFTA) offers a number of procedures for the safety of your cards?

Losing a credit card

Mostly when people loose their credit cards, either they are panic stricken or they give ample amount of scope to these scammers to steal all their finances. The result is getting into debts and resorting for a debt management plan to stabilize the situation. But why would it be so? If you loose your cards, you must report it instantly to your card issuer. You will find toll-free numbers or a round the clock customer service where you can place your grievances. At times even your homeowner’s insurance policy takes up the cause of your credit card theft.

As placed by the federal law, you cannot be charged more than $50 for unauthorized card usage. You must make sue to report the loss of your credit card before it is used and in that case the card issuer cannot charge you anything as put by FCBA. If you just loose the card number and not the card, there are no charges for unauthorized use. This is same with your ATM card or debit card as well as put by EFTA. The best way to avoid these frauds is to keep your cards safe and handle them carefully. Never use your birthday, address, phone number or Social Security number as your PIN.

Tips to prevent credit card theft:

• Many a times people tend to divulge their account number while dealing with a company. Never do that. Always ensure that the company is reputable.
• It is also advisable not to write your account number on the outside of a postcard or an envelope.
• Make sure that you draw a line wherever there is a blank space such as on debit slips. This should be drawn above the total amount so that the amount cannot be altered.
• Never sign on a blank slip or charge.
• Keep your receipts handy and dispose off old credit cards or unused cards.
• Check your monthly statements and tally them with your receipts. If you find anything wrong, then report it without a second thought. As per FCBA and EFTA, the card issuer will start investigations regarding your matter within 60 days of the date you got your statement.
• If you are an avid user of ATM cards, check your account at regular intervals. Check your withdrawals or transfers and all the purchases you made and compare them with your current balance.

You can also opt for buying a registration service where for a yearly fee; companies will be intimidating you about your credit cards issuer about the loss of your cards. With this service you just need to make one call and report the loss of all your cards instead of making calls. Even if you do not want to use this service, you must know that you have the right to contact your card issuer as put by the FCBA and the EFTA.

For more help and information on credit card theft, contact the Federal Trade Commission. You can call them toll-free at 1-877-382-4357; TTY: 1-866-653-4261. Visit www.ftc.gov for more assistance.

This is a guest post by Debbie Brown is a financial writer and offers free advice to get out of debt.

Securities offered through LPL Financial, Member FINRA/SIPC.

Jeff Rose is a Certified Financial Planner and co-founder of Alliance Investment Planning Group.

Starting a Roth IRA can easily be the single best choice you’ve made of your entire life.  Well, other than ordering a Double Double from In-N-Out Burger, of course. –if you haven’t tried it, you’ll just have to take my word for it    Maybe you want to open a Roth IRA, but don’t because you think it takes a large chunk of money to get one started.

photo credit: ambert

Guess what? It doesn’t. This is a common misconception that I run into with many investors wanting to get started but thinking they just don’t have enough. I’m here to tell you how easy it is to open a Roth IRA and how a little bit of money can go a long way to receiving tax free money at retirement.

1. How much can you contribute to a Roth IRA?

For the 2009 and 2010 tax year, the Roth IRA allows you to contribute up to $5,000, if you’re under the age of 50, or $6,000 if you’re over the age of 50. Keep in mind that you have from January 1st until April 15th of the following year to be able to contribute that amount.

For example, for the 2009 tax year, you could make a contribution to the Roth on April 15, 2010 and still have it qualify for the 2009 tax year. If you’re a new investor, $5,000 seems like a pretty large amount to get going. You don’t have to put the $5,000 all at one time. Instead, you can do a monthly contribution. To be able to max out $5,000 over a 12 month period would take $416.67 to do so.

Once again, you don’t have to max out the Roth IRA. It’s not a requirement, but if you can swing it, I would definitely encourage you to do so. But, if you can only afford $25 a month, for example, that would allow you to get a good start going on the Roth. The saying “every little thing counts’ definitely hold true here.

2. Deadline to Contribute to Roth

You don’t have to have the Roth IRA account opened in the tax year you’re looking to contribute.  For example, if you decide in February of 2010 that you want to open a Roth, you can open a Roth and then characterize the contribution for the 2009 tax year.

For example, if you decide you want to open a Roth, you can put as much money as you can possibly afford, have it be characterized for 2009.  For 2010, you have up until April 15th of 2011 to be able to put as much in for that 2010 tax year.  The key is is informing the financial institution that holds your IRA how to “code” the contribution.  Even if a mistake is made, the IRS can be fairly lenient in letting you fix the problem.

3. How Much to Start a Roth IRA

photo credit: roujo

How much money it takes to start a Roth IRA all depends on where you go to open it.  Most brick and mortar brokerage firms don’t have a minimum to “open the IRA” but you’ll have to at least cover the investment you are purchasing. As an example, if you want buy 100 shares of stock XYZ, you best have enough to cover the cost of the shares plus any commissions.  This applies to my firm and my broker/dealer LPL Financial.

If you want to open a Roth IRA at a bank and/or a credit union, you’ll most likely be limited to just savings and CD’s as your investment options.  Curious to know their limits, I called our local credit union to see what there minimums were.  If you plan on just sticking with savings, you’ll need at least $200 to get going.  If you want to purchase a CD, you’ll need a minimum of $1,000.  Be sure to double check with your financial institution to see what their policies are.

Online brokerages will vary.  I’ve seen some online outfits require anywhere from $250 to as much as $1000.  Many investment companies may allow no money up front so as long as you set up an automatic withdrawal from a checking or savings accounts.  You’ll have to double check with the desired company to see what their limits are.

4. Dollar cost averaging.

By investing on a monthly basis instead of doing the one time lump sum contribution, this will allow you to participate in what’s called dollar cost averaging. A quick disclaimer: dollar cost averaging does not guarantee higher rate of returns over the long-term.  In times of volatility, it can prove to be helpful  Here’s an example.

Benefits of Dollar Cost Averaging
Month	Share Price (In $)	Shares Bought
January	15	3.3
February	13	3.8
March	12	4.2
April	14	3.6
May	13	3.8
June	12	4.2
July	13	3.8
August	14	3.6
September	16	3.3
October	16	3.1
November	17	2.9
December	16	3.1
Total Shares		42.7
Avg. Price Per Share		$14.25
Avg. Cost Per Share		$14.05

Dollar cost averaging is a technique often used in which investments of defined amounts are made on a regular basis. As a long-term, disciplined strategy, DCA can help you take advantage of the benefits of compounding to potentially build a sizable sum.  Inside a Roth IRA, it’s that much sweeter.

Haven’t Started a Roth IRA Yet?

photo credit: randomwire

What are you waiting for?  Stop reading this article and investigate your options now! Do not pass go.  Do not collect your $200.  Get off your butt and start investing for retirement and consider opening a Roth IRA today!

*Restrictions, penalties and taxes may apply. Unless certain criteria are met, Roth IRA owners must be 59 1/2 or older and have held the IRA for 5 years before tax-free withdrawals are permitted. A Roth IRA should be considered as an option but not everyone reading this blog should open one.

Securities offered through LPL Financial, Member FINRA/SIPC.

Jeff Rose is a Certified Financial Planner and co-founder of Alliance Investment Planning Group.

This is the first post my our new staff writer Miranda Marquit. Since Miranda has excelled at being a freelance writer, I thought what not a better introductory post than for her to share how she has become successful at what she does Enjoy!

Freelance writing can be a great way to make money. I know. I’ve been supporting my family with my freelancing writing for more than five years while my husband works on his Ph.D. As far as writers go, I’m reasonably successful. I make decent money, I rarely work more than 30 hours a week, I get to set my own schedule, and I work from home — allowing me to be here for my son. When people I know see my lifestyle, many of them want to know how they, too, can be successful freelance writers. While success isn’t something I can just bottle up and hand around, I can offer a few insights gleaned from my experience.

photo credit: markkow

Write what you know

It sounds overused and cliché, but it really is true that you find more success if you write what you know. It provides you with a knowledge base to draw on, and if you are experienced in some area, editors and administrators are more likely to trust you as a source of information. Even if you don’t know something particularly well, you can learn about it. If you are interested in a subject, and would like to write about it, do your research. My first freelancing gig was as a reporter for a physics web site (I still write for this site), since in a former life I was a physics major. I thought I would do science writing, and even did a couple of small pieces for Discover magazine. But when someone wanted me to write about finances (hey, it’s just math, right?), I decided to learn what I could about money. I studied up, and learned what I could. Now most of my writing revolves around business, personal finance and investing.

Get a little training and practice

If you want to make it as a freelance writer, it helps to have some sort of training. You don’t have to get a M.A. in Journalism (like I did), but it helps to take a writing course or two at the local college, learning the basics of sentence structure and grammar, and practicing your skills. Even just taking some of your writing to someone you trust in order to get a critique can be very helpful. But if you don’t practice, and if you aren’t willing to learn ways to improve your writing, you landing gigs becomes difficult. Practice so that you deliver quality pieces regularly, and you will find your skills in demand.

Network

Finding gigs requires a little legwork. Whether you look at online job boards, put the word out through family and friends, or sign up for LinkedIn, networking is essential for freelancing success. Carefully consider social media outlets likely frequented by your target clients. With online writing, I have found success with my profiles on LinkedIn, Twitter, Facebook and StumbleUpon (yes, I have landed gigs through StumbleUpon). Offline, my twice-monthly column in the local newspaper, as well as my willingness to interact with others, has provided a number of opportunities. Networking also requires that you help others. Turn and turn about. When you provide what assistance you can, others will be more open to returning the favor. Just remember, though, sometimes helping out with networking is more of a “pay it forward” thing than a “I’ll scratch your back if you scratch mine” thing. And, of course, be sure to maintain your professionalism throughout.

Be willing to start small

I took a lot of crappy jobs that first year or two, just to gain experience and build my portfolio. Your willingness to start small and do a good job with those initial gigs is essential if you want to move up. Just make sure that you pay attention to where you are going. You want to be able to upgrade to better paying jobs, and eventually set your own rates. So, be willing to start small, but be ready to move on when your hard work results in better opportunities.

Success is freelance writing is largely individual, and requires hard work. But if you are willing to put in the effort, chances are that you will be rewarded with a satisfying career.

It is budget season in Washington and rising budget deficits remain at the forefront of the economy and financial markets. On Monday, February 1, the Obama Administration proposed a $3.8 trillion budget package that would result in a further increase in the budget deficit to $1.6 trillion, much more than the $1.3 trillion announced last week by the non-partisan Congressional Budget Office (CBO). While an increase in the budget deficit was expected, the President’s proposed budget showed persistent, and still substantial, deficits in future years [Chart 1]. This relatively bleak outlook is of particular importance to bond investors since deficits are financed by the issuance of Treasury bonds. Record Treasury issuance has been a bond market fact of life for nearly a year now but investors continue to question what impact record deficits will have on the level of interest rates.

Deficits and Interest Rates-Chart 1

Investors Fear

Investors fear a large and increasing deficit due to the ever-increasing amount of debt needed to finance the deficit. As the amount of debt grows, investors fear that massive debt issuance will require higher and higher interest rates to attract sufficient demand from investors. Not only might this lead to higher interest rates and lower prices for existing bond investors, but the higher interest rates might discourage private sector investment, which in turn might retard economic growth overall. How the private sector and financial market react to deficits is still a source of debate among economists, however, market history shows little correlation between deficits and the level of interest rates [Chart 2]. As the deficit began to deteriorate in late 2000 through 2003, interest rates actually declined. As the deficit was reduced from 2003 through 2007, the 10-year Treasury yield showed a modest upward bias, again contrary to what investors might think. In addition, since the federal deficit recently began to increase sharply recently in response to stimulus measures to counter the Great Recession, the 10-year Treasury yield is lower. Comparing the budget deficit as a percentage of GDP to the 10-year Treasury yield is useful since it takes the size of the deficit (or surplus) in terms of the output produced by the economy and compares this to the cost to service the national debt. This measure also produces no discernable relationship between the deficit and interest rates. Comparing the federal surplus that began under former President Clinton is perhaps most notable.

The federal government operated in surplus from early 1998 to early 2002, with the surplus peaking in early 2001 at 2.6% of GDP. The 10-year Treasury note yield averaged 5.4% over the period compared to a 4.1% average yield from February 2002 through January 2010. Despite a surplus, bond yields (interest rates) were higher compared to deficits from 2003 onward. Since the deficit is financed by selling bonds (which are repaid much later), outstanding debt as a percentage of GDP is a focal measure for bond investors. The greater the amount of debt relative to the size of the economy (GDP), the greater the debt burden is and the risk of not servicing that debt.

Chart 2

Japan Stands Out

On this front, Japan stands out as an argument against deficits leading to higher interest rates. At 160% of GDP, Japan’s debt-to-GDP ratio is by far the largest among developed countries yet 10-year Japanese government bonds yield a mere 1.3%. While a growing debt relative to GDP is certainly a negative, it is just one factor affecting the level of bond yields. Although a few years old, the most recent Federal Reserve study on deficits and interest rates cites the debt-to-GDP ratio as potential guide to the path of interest rates. The authors concluded that for every 1% rise in the debt-to-GDP ratio, long-term government bond yields would increase by 0.03% to 0.05%. However, the authors also stated the impact would be longer-term in nature and take three to five years to be fully reflected in interest rates. At the start of the financial crisis, the US debt-to-GDP ratio was 70% and is projected to peak near 100% in coming years, an increase of 30 percentage points. Applying the 30 percentage point increase to the expected 0.03% to 0.05% yield increase indicated by the Fed study shows the deficit will push interest rates up by 0.9% to 1.5% over three to five years. The 10-year Treasury currently yields 3.6% and implies that such a move would result in a 4.5% to 5.1% 10-year Treasury yield excluding other factors. While a notable change, it is hardly the level many investors fear in response to much higher deficits.

At a projected 9.9% of GDP, the U.S. federal deficit is unprecedented in modern times and we do not intend to dismiss the significance. As stated in our 2010 Outlook, we believe the absence of Fed bond purchases coupled with record Treasury supply needs is a negative factor for bonds later in 2010. However, inflation has historically had the greatest correlation to intermediate and long-term bond yields  while the Fed has a greater influence on short-term yields. In Japan, persistent deflation has been the driver of very low government bond yields. We will continue to assess the deficit and subsequent Treasury issuance needs but it is just one factor affecting the level of interest rates. Treasury valuations and rates of returns on competing investments will also affect the level of interest rates. Expected real (inflation adjusted) economic growth also affects the level of interest rates. Lower real economic growth suggests lower investment returns and therefore lower yields. In our view, lower real economic growth in the 2000s, compared to the 1990s, contributed to low Treasury yields. We believe the main drivers of interest rates will continue to be inflation and the Fed but many factors ultimately contribute to interest rate levels.

IMPORTANT DISCLOSURES

• This report was prepared by LPL Financial. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance reference is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.
• Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of funds shares is not guaranteed and will fluctuate.
• The market value of corporate bonds will fluctuate, and if the bond is sold prior to maturity, the investor’s yield may differ from the advertised yield.
• Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and are subject to availability and change in price.
• High yield/junk bonds are not investment grade securities, involve substantial risks and generally should be part of the diversified portfolio of sophisticated investors.
• International and emerging markets investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors.
• Stock investing involves risk including loss of principal.
• Investing in mutual funds involve risk, including possible loss of principal. Investments in specialized industry sectors have additional risks, which are outlines in the prospectus.
• Municipal bonds are subject to availability, price and to market and interest rate risk is sold prior to maturity.
• Bond values will decline as interest rate rise. Interest income may be subject to the alternative minimum tax.
• Federally tax-free but other state and local taxed may apply.
• Mortgage-Backed Securities are subject to credit risk, default risk, and prepayment risk that acts much like call risk, where you get your principal back sooner than the stated maturity, extension risk, the opposite of prepayment risk, and interest rate risk.

In these uncertain times, life insurance is probably not your top financial priority. However, no matter how tight your budget already is, life insurance is the one thing you can make affordable and should never cut out from your budget.

photo credit: alancleaver_2000

When times are tough, it might sound foolish to follow the above advice. Yet, there’s no denying that your passing away will put your family in a dire financial situation. In addition to coming to terms with your death, they will have to deal with not just everyday expenses, but also pay off all outstanding mortgages and loans taken out in your name. Their grief would be compounded by having to grapple with the huge financial obligations that you would have left behind. Even if you were to die totally debt-free, they would still have to manage financially without you. It’s certainly not the best way you would want them to remember you.

Consider term life insurance

To avoid situations like the above, obtain a life insurance policy. In these difficult days, it’s the smartest way to save your family from further distress, in the event of your untimely demise. You are probably thinking that there is no way you can fit expensive monthly life insurance payments into your already tight budget. However, life insurance is a lot cheaper than you think. Contrary to popular belief, affordable life insurance is a reality.

Did you know life insurance is available today at a third of its cost a decade back?

Yes, a million dollar policy can cost you as little as $30 – $60 a month (since life insurance is cheaper when you are younger and healthier, rates will vary on the basis of your age and current health condition) these days.

As you know, life insurance comes in two main flavors- whole life and term life insurance. Term life insurance, with its low premiums is what you should opt for, if you have budget constraints. Whole life insurance on the other hand is expensive. The only drawback to term insurance is its definitive expiration date, as opposed to lifetime coverage with whole life insurance. This is not really a drawback if you plan your term in such a way that it sees you through life’s major financial obligations.

Ways to get an affordable term life insurance policy

To get the best possible deal on your term life insurance, there are a few things you can do. For one, shop online. Your local agent may mean well when he approaches you with an offer that looks good, but you should know that he probably deals with just a handful of insurance carriers, and won’t really be able to guarantee you the best deal in the market. Online insurance agencies on the other hand can quickly run your statistics through hundreds of carriers on their database, and give you term life quotes that best suit your requirements. Online agencies will also be able to offer you other resources such as free online life insurance needs calculators, FAQs and blogposts that help you make a well-informed decision.

Are you young and in good health? If so, you are in luck, because you qualify for the best premium rates. If you are a smoker and plan to quit soon, you can buy term insurance, and have it reviewed a year after you quit smoking. This is because premiums are higher for smokers, and when you remain smoke-free for a year, you stand to qualify for a cheaper, non-smoker rate.

In most cases a medical exam is required in order to qualify for a term life insurance policy. Read up and learn about ways to prepare for your term life insurance medical exam that can help you to obtain a more affordable term life insurance rate.

For those who already own life insurance policies

In tough times, it is natural to want to cut back on expenses, and even consider stopping your insurance policy. This is never a good option. If you find premiums too costly, review your policy and change over to a policy that offers competitive premiums, yet one that covers you adequately.

Get advice from online experts

Whether you want to buy a new policy, or change an existing one in favor of a policy that is more affordable, speak to an online expert to get your financial situation assessed professionally. This step will ensure that you are insured for the right amount, while you keep your premium amounts small enough to fit into your monthly budgets.

Life insurance is the most important expense in these difficult times, and sometimes you will want to wish even affordable premiums away. However, remember that in exchange you will have peace of mind, knowing that your family will be protected even when you are no longer around.

This is a guest post by Denise Mancini-Blonda who is manager of public relations and marketing communications for AccuQuote.

Investors should carefully consider the charges and fees associated with a new insurance policy as well as any costs associated with surrendering the current policy.

You knew one day it would come.  Retirement planning has been something you have postponed for too long but knew that you would eventually have to face the music.  That time has finally arrived: you need to hire a financial planner/adviser to guide you through the complex maze of investing. It can be an overwhelming process trying to hire the best financial advisor for you–and that’s the key: “For You“.

photo credit: Pawel Niewiadomski

The absolute most important item is making sure you can find someone you can trust.  But is it really that easy?   How do you avoid hiring the next Bernie Madoff? . Given recent headlines about Ponzi schemes and fraud, you may be wondering – how can you avoid getting duped by a shady  financial advisor? The key is being better informed and doing some homework. Here’s some tips on helping you choose the right financial planner.

1. Find out how long they have been in the business

I don’t know about you, but I’m not extremely comfortable letting a newbie handling my retirement dreams. You don’t need a 20 year seasoned veteran, but you want somebody who has some experience in financial planning matters. Somewhere in the 3-5 year range should suffice, but also get an understanding of what they’re upbringing is. If they are a third generation financial advisor, then it might just be in their blood.

2. Make sure they are CERTIFIED

The financial services are laden with alphabet soup after their names. Even I have three certifications, but only one that really matters. If you are looking for a serious financial planner, then make sure you find one that has the CFP® designation. One who has taken the extra effort to become a CERTIFIED FINANCIAL PLANNER™ are held to a higher standard that your typcial financial advisors. A CFP® must adhere to the CFP Board’s Code of Ethics and Professional Responsibility and Financial Planning Practice Standards.

In the summer of 2009, there were more than 60,000 CERTIFIED FINANCIAL PLANNER™ certificants. In an average year, the Certified Financial Planner Board of Standards, Inc. conducts about 80 ethics code investigations. This means 99.9% of CFP® practitioners are abiding by the Board’s ethical and behavioral standards.

3. Do a background check

Remember when you were younger and you could always hide your grades from your parents? That was until the report card was sent home. The U4 is the “report card” of your financial planner’s background. That means if he’s done anything wrong and a complaint has been filed against him, it will be shown here.

By asking the financial planner if there’s anything on his U4, you’re finding out if he’s committed any wrong-doing. The best part is that if you don’t believe the financial planner’s answer, you can always log on to finra.org to find out if the financial planner is telling you the truth.

It’s amazing the percentage of people that don’t do a background check on a financial advisor before they hire them. If you want to check out an investment advisory firm, visit the SEC’s website. That is the website at which the Securities and Exchange Commission keeps Form ADVs – the forms which reveal disciplinary actions taken against that advisory firm and/or its key employees. You can also make sure a firm is properly registered there.

If you want to check up on a specific investment adviser, go to the FINRA BrokerCheck website tool. Here you can learn about the professional backgrounds of advisers and firms through the Financial Industry Regulatory Authority.

Now that we’ve mentioned that, let’s accentuate the positive. Visit the websites of the Financial Planning Association and the National Association of Personal Financial Advisors. Search functions on both sites will allow you to find a respected independent financial adviser near you.

4. Find out there investment philosophies

Do you want an advisor that believes in a buy and hold strategy or someone that has more of tactical approach?   Maybe you have a interest in a socially responsible investing and want someone to keep you abreast of its everyday happenings.  If that’s the case, then you better make sure you find the right person for the job. Ask specific questions on the investment strategies that they have implemented in good times and bad.  They should be able to show you some examples of portfolios that have been used with other clients in a similar situation.   The interview process is all about fact finding, so find out as much as you can.

5. Completely comprehend how they are compensated

photo credit: Photos8.com

You would think that this would be a common question. But many folks feel that it’s impolite to ask how much a financial planner charges. If you were getting your car worked on, wouldn’t you ask the mechanic how much it was going to cost? If you go see a lawyer or CPA, you know how much you are being billed.  Why is hiring a financial planner any different? Don’t be shy in asking this question.

There are many different ways that financial planners make money. They may be commission-based, fee-only, fee-based — or a combination of the three. Asking what the planner charges will help you know exactly what you are paying throughout the working relationship. If she explains but it still doesn’t quite make sense, have her put it on paper so that it’s crystal clear.

Lean Towards Independence

When you search for an independent adviser, you have a better chance of finding someone who gets paid for their advice and/or their fee-based asset management, instead of deriving the bulk of their income from trades or product sales. Many of these independent advisors set flat or hourly fees for specific services. Some earn a fee that corresponds to a small percentage of the invested assets they manage for you. If your portfolio does well, they do well.  Once again, make sure you completely understand how how they get paid.

7. Know how important you are to them

If you have an annual check up from your doctor, would you expect the same from your financial advisor? How about twice a year? Every quarter? One of the biggest breakdowns in any relationship is communication and this is no different. If you expect to hear from them a least once a month, then let them know that. That way your expectations are clear from the onset. If they over promise and under deliver, it’s time to starting looking for another financial advisor.

A good and conscientious financial advisor will meet with you at regular intervals and assist you to adjust your financial strategy in response to life changes and changing objectives. He or she will communicate with you in a forthright, open way – and that includes returning your calls or e-mails within 24 hours.

Securities offered through LPL Financial, Member FINRA/SIPC.

Hello Good Financial Cents Readers! I’m so excited to share a few announcements of some cool happenings in my life.  So much to share, but where to start?

First, let’s start with some blog milestones.  It’s been over a year and a half since I started Good Financial Cents and it’s grown to more than I could have ever imagined.  When I first started my blog I was super excited to have 100 people visit my blog.   The graphic below shows what my current stats are looking like (as about two weeks ago) and right now I’m averaging over 4,000 visitor per day! Pretty soon I’ll pass my one millionth page view which will be pretty neat.

My Blog is Growing!

Guest Post at Wisebread

When I get a little free time (which is never ) I try to contribute a guest post at Wisebread.com. You can check out my recent post on the Backdoor into the Roth IRA. In case you missed my last one, I shared how to save $1,000 on your next backpacking trip.

New Opportunities

I am excited to announce that I have worked out a partnership with the local SIU Credit Union that will allow me to offer financial planning services to all their members.   This is a tremendous opportunity and I’m looking forward to seeing the relationship grow.  You can see the press release here.

New Baby and New House

New House In Progress

I hope you saw my update post about our second son Bentley coming into this world.   The past two weeks have been a fun adjustment as both the Misses and I try to remember how we functioned on such little sleep.  As if we didn’t need any more chaos in our life, we’re gearing up for the big move into our newly built home next weekend.

Bentley and Parker Hangin' on the Couch

Updates to Good Financial Cents

New house, new baby, new opportunities, growing blog….I’m sure you’re wondering how I do it?  Sometimes I wonder myself.  To make sure I still offer quality posts to my Good Financial Cents readers, I’m adding another staff writer.  Miranda Marquit will be joining JoeTaxpayer as an awesome contributor to GFC.  Miranda is a journalistically trained freelance writer and professional blogger working from home. She is a contributor for Mainstreet.com, Personal Dividends and several other sites. You can also find her at The AllBusiness Personal Finance Corner and the Banks.com Mortgage Blog.

Thanks to everyone that subscribes to this blog.  Can’t wait to see what 2010 brings!

Working past normal retirement age is not unusual. According to the Social Security Administration, 28% of individuals between the ages of 70 and 74 reported income from earnings in 2006, the latest year data are available. Among a younger age group, those between 65 and 69, approximately 46% had income from a job.

photo credit: edward_marshall

Some remain employed for personal reasons, such as a desire for stimulation and social contact; others still want a regular paycheck. Whatever the reason, the decision to continue working into your senior years could potentially have a positive impact on your financial future.

Working later in life may permit you to continue adding to your retirement savings and delay making withdrawals. For example, if you earn enough to forgo Social Security benefits until after your full retirement age, your eventual benefit will increase by between 5.5% and 8% per year for each year that you wait, depending on the year of your birth. You can determine your full retirement age at the Social Security Web site or by calling the Social Security Administration at 1-800-772-1213.

Adding to Your Nest Egg

Depending on the circumstances of your career, working could also enable you to continue adding to your retirement nest egg. If you have access to an employer-sponsored retirement plan, you may be able to make contributions and continue building retirement assets. If not, consider whether you can fund an IRA. Just remember that after age 70 1/2, you will be required to make withdrawals, known as required minimum distributions (RMDs), from traditional 401(k)s and traditional IRAs.

For 2009 only, Congress had suspended the RMD requirement. RMDs will have resumed in 2010 according to current rules. Keep in mind: RMDs are not required from Roth IRAs and Roth 401(k)s.

Even if you do not have access to a retirement account, continuing to earn income may help you to delay tapping your personal assets for living expenses, which could help your portfolio last longer in the years to come. Whatever your decision, be sure to apply for Medicare at age 65. In certain circumstances, medical insurance might cost more if you delay your application.

Work doesn’t have to be a chore. You may find opportunities to work part time, on a seasonal basis, or capitalize on a personal interest that you didn’t have time to pursue earlier in life.

Securities offered through LPL Financial, Member FINRA/SIPC

Jeff Rose is a Certified Financial Planner and co-founder of Alliance Investment Planning Group.