“LILO’s” Other Kinds Of Answers…

As I hinted at very plainly in my last post, Inflationary Other Kinds Of Answers… It's time to stop crying over the spilled milk, kick the people out of the sandbox who did not play nice with others, Bury the Unions, for at last they have kicked in the cash bucket and let’s all watch Uncle Sammy’s Tea giving party even closer. A whole lot of folks getting my taxes as hand-outs that I do not think should. If I wanted to invest in them, I would have myself.

My OKOA Readers, our dear economy might seemed to be melting down like a pat of pure butter on a hot used car roof, but for some OKOA people — even you, maybe? — This is a very very good thing indeed. It is time to dust off every OKOA that ever woke you up in the middle of the night. I have six good ideas that I’m pretty sure that have not been tried yet. I’m currently pushing them thru the starting phase, background checking and research… Stay tuned.

First, as always, this is just my opinion and these are actions I am currently doing, as you that read on will find out about! I have been watching and paying close attention for the last number of years, always looking for my other kinds of answers. Not all the answers are of only the Knowledge and wisdom kind that I am looking for. Financial and business OKOA’s are worth looking for also.

What is a “LILO’s”…?

Here is the skinny why and how. At no other time in recent history has it been easier or cheaper to start a new company, maybe even a very profitable company over night, so to speak. We’ll call this type of start-ups “LILO’s”, for “little in, lot out." These are Web-based businesses that cost almost nothing to get off the ground yet can turn into great moneymakers. This only if you work hard, mind your own business and are uncomplaining but know when & how to Twit out about your idea and about the .biz there from.

How do you get started? All that's required is a great idea for a product that will fill a need in today’s 21st century. These days you'd do best if your idea either makes people money safely or saves them money surely. It really needs to work at a level that anyone can understand and use, if you really want it to rocket. Do check that any idea and name there of are clear every way that you can. In other words make sure that they are yours, and make them yours legally.

I first pushed my ideas past a group of “25ish” old friends that are open to this kind of thinking, and do even read this blog. I really can get them all going when the old guy looks over their code-du-jour, and points out errors. Yea, this old guy can read code, and has even come up with a few OKOA things that the friends have liked. That and he shows up with good bagels and Jolt for everybody now and then.

Why these friends as a sounding block, well, they are all of the right age and are code-eaters, and they have one or two LILO sites just starting to get off the ground themselves. Learn from the do-ers and share what you have picked too! That keeps all the costs down and folks living life.

As for their revenue incoming, they just have sold the first site based ad, for the low three figures a month. But it's a foundation: "We've already reached ramen profitability." The main math here: they spend about $100 a month on server space fees and other minor expenses. And they have a start-up company that is up and going! And more important, true cash inflow other kinds of answers…!

True Noodleconomics

The term ramen profitable is coined by Paul Graham, a Silicon Valley start-up investor, essayist and muse to LILO entrepreneurs. It means that your start-up is self-sustaining and can eke out enough profit to keep you alive on instant noodles while your business idea gains traction.

"At this point, it would be hard for companies to get any cheaper," he is quoted. Since everyone already has an Internet-connected device somewhere in their lives, "it's gotten to the point that you can't detect the cost of a company when added to a person's living expenses. A real world company is no more expensive than a semi-full time hobby these days."

Will your idea be the next Facebook? The next Blogger, Digg or Twitter? Who knows? It almost goes without saying that many more start-ups fail than succeed. "The biggest problem facing any website biz is words of mouth distribution." In a world where it's so easy to start a company, how can anyone find yours? Only if a friend shares it with you, out of love, heed or need.

But here again, a bad economy is the LILO's friend. It is easy to say, "The cost of failure is cheap. It's even so low, you can afford to swing the bat way more times." In our bad economy, no one really notices or cares about more failure. Everyone fails at something or somehow, and those that keep trying will make it. That creates a safer and better environment for risk-taking, which is the only way true innovation can occur.

And while not many folks could get hurt from a total failure that you can walk away from. At the same time, launching in a bad economy imposes it own kind of disciplines, forcing entrepreneurs to keep costs low and be smart about marketing and distribution. You can even say it should keep them always looking for other kinds of answers…

 

Inflationary Other Kinds Of Answers…

If you watch the news daily, you’d think that our economy was in un-recoverable shambles, that our financial worlds are ending and all investors should stay away from windows in tall buildings. Even to the point that we all should be buying only food, fuel, ammo and toilet paper preparing for the hostility at the end times. 

I do not think it is that bad quite yet… As Seasoned Human that has seen times like this before, I think that saving all of your money is a BIG mistake right now.

First, this is just my opinion and these are actions I am currently doing, as the deals right now are better then they have been in years! I have been watching and paying close attention for the last number of years, always looking for my other kinds of answers. Not all the answers are of only the Knowledge and wisdom kind that I am looking for. Financial other kinds of answers are worth looking for also.

I now believe our situation, as a whole, seems dire enough now and First, Yes, an emergency fund is a requirement for any sound financial planning effort and I do have mine in place. But saving every last penny is the last thing you should be doing right now! It is the time to buy the things that you’ve been putting off because every signal out there is telling you to save everything.

The laws of supply and demand are in our favor because very few folks are buying, which means the people who are, will be getting incredible deals, if they are willing to negotiate and put in the time for research, exploring and planning. This goes for minor cost items like simple tools and supplies of life or business, all the way to major capitol Items, such as second homes, rentals and whole businesses.

With no one spending their money, because they’re saving or holding… this means banks won’t be giving you great interest rates because they don’t have to, and they have too much money, or even too much bad debt! That’s only the beginning of this very large financial story…

Apparition of Inflation

The government seems pretty savvy; they know you’ll get upset if they raise the taxes without giving you a very very good reason. Fortunately they have another weapon, printing presses. When the government pumps more money into the money supply, the value of your dollars can decrease. The government has made trillions of dollars in promises to financial institutions, automakers, and many other smaller profile parties through its actions the last few months and it will have to fund them somehow.

Part of it will be funded by borrowing, but some of it will come through increasing the supply of money. Inflation won’t be an issue while we’re in a recession, but it’ll be a beast of a problem whenever we’re no longer scared of the recession. Be warned now and be thinking ahead for Other Kinds of Answers…

Negotiate Deals

The time to buy is when others are panicking. When you have the benefit of timing, you control all the power in periods of economic uncertainty. I’m not talking about just the stock markets, I’m talking about everything! If you wanted a house, now is the time to buy because interest rates are low and home prices are even lower. Heck, even the Government, Federal and State maybe willing to give tax breaks and grants, if you will move now.

If you wanted to make improvements to your house, start talking to contractors because their business is slow and they will be willing to cut deals just to stay in business. If you wanted a car, dealerships will offer great incentives because they need to boost their sales numbers. Even if it’s something as simple as an appliance, you can negotiate the price down and get an energy savings tax credit to boot!

And don’t buy things you don’t need just because they’re a deal, that’s reckless, buy only things you need and negotiate it down to the bare bone pricing. Watch out for hooks in the deal also, things that you have to do to get the GREAT Deal, or are added at the sale’s close…Required Install labor, shipping charges or more fees can eat up any great deal in a hurry

Bank like Banks Do

Ever received one of those offers in the mail that seems like the solution to all your problems? It may have said, "Your home is an untapped resource. Refinance your loan with us and you'll get quick cash to buy something, fund college, add to savings or pay off your debt." You may have been tempted by the idea, but hopefully you didn't bite. There are much better ways to solve problems with debt. Refinance your loan; in the long run could actually cost you much more money. Keep reading…

There is a newer option in the USA and Canada you may not have heard about. You should really consider a look at what can be found at www.aboutu1st.com and I know that everyone has to look at what is best for their own requirements, and this will not be a good fit for everyone. In full disclosure, my own family has been using this idea, and it is working very well, even enough for me to take the time to become an agent sharing the idea with others. And NO, it not a MLM!

Lower Interest Rate Doesn’t Always Equal Saving

First, make sure that you are really saving money if you do refinance. It’s not enough to compare 6% to 4.5%. What you need to do is determine how much interest you’ll be paying if you keep the original loan versus the total cost of the refinanced loan (i.e., interest plus closing cost). To do this correctly, you’ll need a good mortgage calculator. There are many worthy FREE ones on the web. For example, let’s assume your original $300,000 loan is a 30-year fixed rate loan at 6% and you’re refinancing to a 15-year fixed rate loan at 4.5%

Age of the original loan (years)	Interest remaining on old loan	Principal balance to refinance	Interest cost of new loan	Savings before closing costs and other fees
10	$180,620.08	$251,057.36	$94,645.79	$85,974
15	$110,611.51	$213,146.93	$80,353.74	$30,258
20	$53,828.02	$162,011.42	$61,076.08	($7,248)

As you can see from the scenarios above, you could lose money by refinancing to a lower interest rate. In general, it’s more advantageous to refinance newer loans than older ones, because most of your money goes toward paying interest at the beginning of most loans.

Interest Rates Are Low NOW

The federal funds target rate “range” is 0.00% to 0.25%, which means the government doesn’t want you to save, they want you to spend! The federal funds target rate is the target rate the Fed wants banks to lend to other banks on an overnight basis (to meet capital requirements). They achieve this rate by expanding or restricting the amount of money available. If a bank can borrow money from another bank for 0% - 0.25%, what incentive do they have to pay you anything for your savings? Almost none. The end result is that you get almost no interest from your savings, or bank investing, as another way to look at it.

Another quick point, you may even be able to get 18 to 36 month 0.0% financing right now on many items, so you do not have to spend your cash savings right now. Yes, in some cases, you do have to spend at least a certain minimum amount to get those deals, but in many cases, you can reach the minimum by buying two, three, or four items together. Just be sure that you understand all the details of the deal and all the fine print.

In other words, the government doesn’t want you to save your money; they want you to spend it and help boost the economy! And let’s be honest, unless you start spending, the government will only get worse in how it pumps more money into the system, or even has to manage everything by taking over everything.

Reward the Entrepreneurs

The United States was built on the shoulders of entrepreneurs; reward them by giving them your business. Don’t overpay for things because you feel badly about their financial situation, that’s not necessary, but spend your money at the places you like and the businesses you enjoy dealing with. They won’t close a sale unless it makes financial sense to them but they do need the sales. Giving them business will give them additional capital to work with and, if they’re doing well in the downturn, expand and add more available jobs to the system, thus more people out spending.

I firmly believe that the way out of this whole big mess is through business growth spurred on by something, whether its consumer confidence and increased spending or whatever that improves our infrastructure, it will be led by small businesses and entrepreneurs, with other kinds of answers.

Think carefully before you borrow money to do anything. When you borrow, you are guaranteed to lose the amount you pay toward interest. However, you are not always guaranteed a better return on investment on borrowed money. I know this article is heavy on mathematics, but I hope you will enjoy learning about the process and it is pretty clearly about Other Kinds Of Answers...