FALLING IN TO CASH!

I wrote about my trip to the casino last month and how I lost $50 dollars on penny slots, but this month things are really looking up.  It's only the 4th and I have all my bills paid except my phone bill, which runs around $50 per month.  I'm sitting on about a months worth of cash in my bank account and I get paid from work tomorrow.  Also picked up a contract for a carpet cleaning job that will take me about 2 hours and pays $100.  On top of that, I sold a couple of silver coins on ebay for $70 and the listing only lasted about an hour before someone took the buy it now option, so it was a quick sale with immediate payment. 


As if that weren't enough, I recently took some cash out of my money market account from stocks I'd just sold.  Just wanted to have extra on hand for maintenance work on my car.  As it turned out, I didn't need the money after all so I transferred it from checking to savings to boost my cash reserves.  In the mean time, the stocks in my regular investment account went up and are now worth more than before I took out cash.  Have you ever heard that expression, "They just fall into money?"  I'm beginning to feel like it's happening to me.  It's a nice feeling.  But the truth is, what seems like a run of extremely good fortune is really more the result of taking control of my finances, creating a plan and sticking to it. 

Sure is nice to see some progress for a change.  Especially after the last couple of years.  It's also nice to know that even though I don't feel very secure in my new job and my earned income is well below what I'm used to making, I'm still making progress towards financial freedom by actively managing my finances.  I feel much more confident that no matter what obstacles the future may hold, things will turn out all right in the end.  It really boils down to managing what you do have and not worrying about what you don't have. 

Boosting Returns Through MLP's

I wrote in an earlier post about my plan to boost dividend income in 2010 by increasing my investments in MLP's. I did some research and discovered 3 great prospects for investing:

1. Suburban Propane Partners (SPH) Principally engaged, through its operating partnership and subsidiaries, in the retail and wholesale marketing of propane and related appliances, parts and services. This company pays a dividend of $3.32, which represents a 7.7% yield on their recent price of $43.99 per share. The P/E is 8.7, return on equity is 57.4%, earnings per share are $5.93 (so their dividend should be sustainable) and they have over $4 per share in cash. This will be my first targeted investment.

2. Alliance Resource Partners (ARLP) Master limited partnership engaged in coal mining, principally in the Illinois Basin, with the balance split between Northern Appalachia and Central Appalachia. The company is managed by its general partner, Alliance Holdings G.P., who holds the incentive distribution rights to the partnership, as well as 42.5% of the partnership's limited partner interests. They have a dividend of $3.04 which represents a 7.8% return on their recent price of $38.80. Their return on equity is 67%, P/E of 12.10 and they have $2.50 per share in cash. Earnings per share is $3.23. This will be my second investment for the upcoming year.

3. Amerigas Partners (APU) A publicly traded limited partnership formed under Delaware law on November 2, 1994. The Company is a retail propane distributor in the United States. As of September 30, 2003, they served approximately 1.3 million residential, commercial, industrial, agricultural and motor fuel customers from approximately 650 district locations in 46 states. The Company also sells, installs and services propane appliances, including heating systems. In certain markets, the Company also installs and services propane fuel systems for motor vehicles. Their District locations consist of an office, appliance showroom, warehouse and service facilities, with one or more 18,000 to 30,000 gallon storage tanks on the premises. As part of its overall transportation and distribution infrastructure, the Company operates as an interstate carrier in 48 states throughout the United States. The Company is also licensed as a carrier in Canada. The Company sells propane to five markets: residential, commercial/industrial, motor fuel, agricultural and wholesale. Their Propane Xchange program enables consumers to exchange their empty 20-pound propane grill cylinders for filled cylinders at retail locations such as home centers, mass merchandisers and grocery and convenience stores. During fiscal year 2002, they introduced PPX Plus cylinders that are equipped with a special overfill protection device required by the National Fire Protection Association. They conduct their business through their subsidiary, AmeriGas Propane, L.P. and its subsidiary, AmeriGas Eagle Propane, L.P., both Delaware limited partnerships. The executive offices of the Company are located at Pennsylvania. As of October 1, 2003, AmeriGas OLP acquired all of the retail propane distribution assets and business of Horizon Propane LLC. AmeriGas Propane, Inc. is their general partner. The General Partner provides these services. Dividend of $2.68 which represents a 7.2% yield on their recent price of $3748 per share. Their P/E is 10.40 with a return on equity of 49% and $1.04 per share in cash.

I don't always agree with Jim Cramer over at CNBC, but he happens to like these companies as well. While I plan on investing in all 3 partnerships, I would suggest readers do their own research before making investments for themselves. However, if you're looking to invest in master limited partnerships, this might give you a good start.

Dubai Default Sends Markets Lower

The United Arab Emirates country sent markets lower Friday on news of credit default. While many investors took a negative view and headed for the exits, others are taking a wait and see approach. While bad news for Dubai, it does not necessarily mean we need to reassess the credit quality of the rest of the world. A flight to safety would send the U.S. dollar higher and oil prices lower. Personally I think we should take it for what it is, another warning to investors of credit riskiness involving emerging markets. This is certainly nothing new and definitely not the end of the world or of the stock market. Emerging markets have always been high risk for credit defaults and will likely continue to be so. While the U.S. and world economies might be affected to a certain extent, they can and will go on.

So what does this mean for investors? With some questioning the sustainability of the recovery in the U.S. stock market, this could provide the correction they've been looking for. Although I believe any correction from Dubai's credit default will be temporary and mild. It would take further bad news to create a serious risk to the stock market overall. Personally I'm thinking a drop in U.S. markets could provide buying opportunities for those with enough intestinal fortitude to brave the volatility that's sure to result. It seems that any form of bad news from anywhere in the world seems to send investors into a panic. I think we might all be better off without cable news channels spouting their predictions 24/7, although I have to admit that I like watching them as much as the next person. It's just that I take it all with a grain of salt. I make up my own mind when it comes to investing, as should everyone. It helps to keep in mind that no one is able to predict with any great accuracy where the market is headed. While so called professionals may be spouting their prophecies of doom and gloom, chances are very good that they're entirely wrong.

Personally I'm going to be looking for any dips in the market to add to my portfolio and retirement accounts. If others panic over developments in Dubai, all the better for me.

A 100%+ Return On Investment

With the stock market being so uncertain of late and me being without a job, I've been looking for options in the event that I may not find a job before my unemployment runs out or if I'm forced to take a lower paying job. Since I know it's most likely that I will find a job with less pay than I'm used to, I've been trying to think of some way to supplement my income aside from my usual investments.

I did a little research and found that I could purchase a professional steam carpet cleaning machine for around $500. I have cleaned carpets in the past both on the job and as a favor to friends and family members. So this would not be a new thing for me, however I would own the machine instead of renting it.

Going by the number of carpets I usually clean in the spring of each year, it would be no problem at all for me to average at least 3 jobs per month. My average net per job, after expenses, is usually around $50. If I did 3 jobs per month and cleared $150 total, I would make $1,800 per year. Not a life changing amount, but it would fund my IRA or would pay a couple of my bills per month.

Knowing that I may not always do 3 jobs per month, I re-figured the return on investment if I averaged less than 2 jobs per month. If I only manage to do 20 jobs per year and clear $50 per job, I would still make $1,000 total. With an initial investment of $500, that works out to a 100% return on investment for the first year. If I continued to do 20 jobs per year after the first year, I would make a 200% return on my initial investment each year. If you figure the life of the machine will be at least 10 years, my $500 investment would grow to a whopping $10,000! Still not a life changing amount, but it's nothing to sneeze at either. With just a little extra effort I could easily earn as much as $20 to $30 thousand over the same 10 years.

Week In Review

At this point, it looks like both my stock portfolios will end down for the week. Although I'm still up quite a bit for the year on my IRA, I haven't quite regained all I lost on my taxable stock portfolio. Even though the total dollar value is 40% higher than last year, the increased value represents profits from stock trades since the first of this year, and extra cash added to my stock account.

The biggest change I've made in the past 30 days would be to add a shares of a Canadian Energy trust and a Real Estate investment trust, both of which pay dividends on a monthly instead of quarterly basis. Both appear to be solid companies and I think they'll work well towards reaching my goal of boosting monthly cash flows from dividends. I've noticed a lot of getting ahead in investing is all about cash flow. How quickly you turn over your money. When you pay out your cash to purchase shares of an investment, the quicker you get your money back, the better. That's why I love dividend stocks, because as long as the company is solid, you can look forward to a steady stream of dividend income for years and years to come. I could be perfectly satisfied with holding my stocks till the day I die, as long as the dividends keep rolling in.

Looking ahead, for the next couple of months, I'll be adding to my AT&T and BP stakes in my IRA account and will probably purchase more shares of PGH for my taxable portfolio. Nothing new on the job front, but I have been getting more responses to applications, so that's encouraging. Still working on eliminating my remaining credit card debt. Because of increased interest rates, I have canceled all but 2 of my credit cards and don't intend to take out any new ones. I think the credit card companies have all lost their minds recently and until I see some better offers, I'm avoiding using them all together.

I'm beginning to believe things are picking up with the economy, more in spite of, rather than because of recent government efforts. In the end, I believe legislation passed since the first of this year will ultimately lead to higher taxes than we've ever seen and create a tremendous drag on the economy. Just have to wait and see how it all plays out.

25 Ways To Save More For Investing

1. Start saving something today. It doesn't have to be a large sum. Even on a tight budget, a small amount adds up over time. Get an envelope, cookie jar, coffee can or whatever you like and set aside the same amount every week.

2. Treat saving as a bill. Consider having the amount transferred automatically from your checking account or paycheck. Pay your account every month or every two weeks.

3. Empty your pockets -- or your purse -- at the end of the night. Put all the change into a jar. Not only will you feel lighter, but your spare change adds up a lot faster than you think.

4. Just paid off a big debt such as a car loan or child's tuition? Keep making the payments -- this time to yourself.

5. Trying to lose weight this season? Each time you go without dessert, that midafternoon candy bar break or that fatty mochaccino at the coffee shop, put the cost of your forgone goody into your savings jar.

6. Involve the whole family in saving. Plan a treat for everyone when you reach the savings goal. Make it something everyone will look forward to, but inexpensive, such as a day at the zoo, museum or beach.

7. Some online banks offer high-interest checking accounts. If these accounts meet your needs when it comes to balance requirements, debit card usage and convenience, why not earn interest on your balance?

8. Stay up-to-date on your checking balance, either by balancing your check book or checking your account online frequently. You'll avoid overdraft fees and better track what goes in and out.

9. If you bounce a check, and it's the first time, ask for forgiveness, including waiver of any fees. A bank will sometimes do that for goodwill. Of course, don't become a repeat offender.

10. Make it a habit to use only your bank, thrift or credit union's ATMs. You'll avoid paying surcharge fees to your bank and the other bank. Or consider opening an account with an online bank or brokerage that covers out-of-network ATM fees.

11. To avoid ATM fees, get extra cash at the grocery store -- most of the grocery store point-of-sale terminals are free.

12. Think before you charge. Unless you're in the habit of paying your credit card bill in full each month, don't use the cards for anything you can eat or wear and avoid using credit cards to buy "wants" such as a new stereo or TV. Wait until you have the money to buy it.

13. If you're knee-deep in credit card debt, get rid of all of the credit cards but one. Take that one and make it hard to impulse shop with -- freeze it in a bowl of water in your freezer.

14. Don't take cash out of your credit card. The rate for cash advances is much higher. And there is no grace period -- you start paying interest right away.

15. Read your monthly credit card statements carefully. Look out for hidden charges, such as credit insurance.

16. Don't pay for theft insurance on your credit card. If your credit card is stolen, you're only liable for $50 at most.

17. Avoid credit card fees. Dodge $39-and-growing fees by not exceeding your credit limit. And send your payments in early -- if you're five minutes late it could cost you $29 or more.

18. Pay more than the minimum. It'll take a very long time and cost you a lot in interest to pay off your balance if you only pay the minimum.

19. Don't be late on any loan or credit account payment. Credit card companies check their customers' credit reports frequently, looking for any late payments to justify raising the interest rate -- a phenomenon called "universal default." In some cases, triggering a universal default can double your credit card's interest rate.

20. Negotiate better terms -- lower interest and higher limits -- with your credit card issuer, especially if you've had a year of on-time payments.

21. Consider transferring your balances from high-interest cards to low-interest credit cards. Then, make the same payment as before, or double the minimum.

22. If the opportunity exists, work overtime or an extra shift at least once or twice a month.

23. Participate in a 401(k) or 403(b) plan. Your contributions are made with pretax dollars. You save for the future while reducing today's taxable income.

24. Set up a tax-advantaged IRA or Roth IRA account to build up your retirement savings.

25. Save your raise. The next time you get a raise at work or a tax refund, consider directing half to savings. If you're not used to the money, you won't miss it.

Update on Personal Financial Situation

The stock market took a breather today, both of my accounts are down just a bit. Not really a bad thing as far as I'm concerned, since I'm still in the buying phase. I'd like to see the market level off or even drop back down a bit, so I could add to my holdings at the lower prices.

My IRA is set up for automatic investments each month. On the second Tuesday of every month I purchase more shares of stock for my retirement portfolio. This month I will be adding to my AT&T holdings. I own shares of AT&T in both of my accounts. I think their dividend is stable and I'm with them for the long haul.

Other investments in my IRA include British Petroleum (BP), Universal Insurance (UVE), AFLAC (AFL), Great Plains Energy (GXP), S&P 500 Index SPDR (SPY). Since opening the account in December of 2008, my holdings are up by 23.39%. Not a bad return! Just wish I could say the same for my taxable investment account. Still down some on that account, although the total dollar amount has increased. I've actually surpassed my investment goal for the year, so I've had to set the bar a little higher.

I've also been holding extra cash while continuing my job search, just in case I would need it for some reason. I've been able to accumulate the cash by cutting spending to the bare necessities. It's worked so well, I'm thinking that I may just keep it up when I return to work, just to build my investments more rapidly.

My total credit balances continue to decrease. I cancelled 2 of my credit cards to avoid extreme increases in the interest rates. Will probably cancel at least one more as soon as it's paid off. I've decided I really don't need more than 2 credit cards and plan on using them sparingly when the balances are paid. I really haven't been using my cards at all since being off work, just keep paying down the balances and paying cash for everything.

Given the crazy market and economic situation for the first half of 2009, I very happy with my finances right now. If the market continues to improve during the second half of the year, I should be in pretty good standing by the start of 2010.

Job Search

I'm still looking for a new job. If you've read any of my previous posts regarding the job search, you'd know that I've been concentrating my efforts on a state job in Missouri. I am now on the state register for 13 different jobs. Would love to get a job with probation and parole. My experience with the Sheriff's department in Harrison County Mississippi leads me to believe that I would be very well suited for this type of job. However, I also scored very high on the state test for computer operator trainee, which involves working with mainframe computers. I don't really have any experience with mainframes and all of my computer experience is self taught. I have repaired and upgraded several computers over the past 9 years and seem to have a knack for it, but don't know how well I would do with the big computer systems.

I was reading an article in the waiting room at physical therapy, while waiting for my neighbor to finish with the therapists. It was talking about all the searches on Google for how to become a male porn star or how to get a job as a beer taster. Don't think I could ever get in to the porn business, unless fat hairy middle aged guys suddenly become the rage. As for beer taster, I've never really liked the taste of beer, so that's probably out as well. Although, if you know of anyone hiring for bourbon and coke tasters, please send me an email, lol.

I'm not really suffering too much compared to most of the unemployed. I do have enough money to live on and I am still building my investment portfolio, but everything is kind of in limbo until I have a regular income again. My bills are going down very slowly. That will be my main priority when I do return to work. To finish paying off the $6,000+ in credit card debt that I'm currently carrying. Then all of the money that I've been paying towards debt reduction will go towards building my investments. I definitely want to get in to investing in rental properties, so that will be my next goal after paying off the debt. I'll probably start small with a four plex apartment building and see how that goes before I get more involved with rentals. I'm also interested in owning a self storage facility. We'll see how it goes.

Little Changes Can Make a BIG Difference!

I know a lot of people who say they just can't save or set aside any money to invest. Their budgets are just too tight, there is nothing they can cut back on to start an investment program. What they often overlook, however, are the small changes they can make in their lifestyles that lead to big differences in their future well being.

You've probably heard of the "Latte factor", where you give up the cup of latte a day and put that money into savings. This is a one very good example of a small change that can really add up to a big difference in the amount you save. When I first started saving for my investment program, one of the small changes I made was, literally, small change. By that I mean, I stopped spending my change. Any time I paid cash for purchases the change went in to my pocket and as soon as I got home, I put the change in a jar. It's such a small amount, you don't really miss it from your spending money, but it does add up. On average, I save $250 every 3 months this way. That adds up to $1,000 per year. If you started this habit at age 20 and put the money in a non-interest bearing account, you would still end up with $45,000 by age 65. Not a lot, true, but if you invested that amount in a dividend paying stock or even a money market account, you would have several thousand more by age 65. All from saving spare change!

Once you make one small change and stick with it, you'll find yourself looking for more ways to save and build your investments. You might shop for insurance on your car and find out you can save $200 or $300 per year or more, or you might decide to eat out less, or take your lunch to work. Whatever the case may be, by just saving small amounts, just making small changes, it can make a really BIG difference in your savings and investments.

Should You Be Buying Gold?

I just finished reading an article on one of the major news media sites talking about the recent decline in oil prices and the rise in the value of the dollar. Both of which I predicted back in October of last year. Overall, it was a very good and positive article, but of course they couldn't stop at that. They had guest commentary from an "economic expert" who said that high oil prices should not be the only consideration when addressing inflation. O.K., I agree with that, it should not be the only consideration. However, he then talked about the high food prices around the world and rising unemployment, both valid subjects for consideration in addressing inflation, but he somehow managed to segue that in to a justification for buying gold as an investment and hedge against inflation. What?

I'm no expert, but common sense would tell you that high oil prices and the low value of the dollar drive prices higher in food and gold. If oil and gas prices are dropping so are the costs of producing and transporting food. If the value of the dollar is rising, it makes our agricultural products more expensive to foreign buyers, leading to demand destruction in exports of our food products. Add to that the increasing unemployment in the U.S., which further reduces demand for high priced food items and the simple rule of supply and demand kicks in. Which all adds up to falling or stagnant food prices. All these things should lead to a halt to the inflationary spiral we've been in for the first 7 months of this year.

So, should it make any sense to anyone to be buying gold right now? Not as far as I'm concerned. When inflation begins to ebb, gold prices drop, as they have been doing recently. If you are considering any investment in precious metals, silver is a more likely candidate. Most of the gold that has been mined throughout human history is still in existence to this day. However, silver is being consumed at an ever increasing rate and as a non-renewable resource, this would present a much better investment opportunity than gold. Gold would have been a good investment when it was selling between $300 and $400 per ounce, that is, as long as you were selling when the price was over $900 an ounce. But now, I don't think so.

Buy Property With Little Down And Small Payments!

For those of you who, like myself, are interested in buying property but would like to find deals that require very little money up front and small payments, you might want to check out this website:

http://www.landsalesco.com/

It looks like a promising resource for finding affordable properties. I wasn't able to locate any property in Missouri that I was interested in, but you can sign up for property alerts. So I'm looking forward to seeing the deals they have available in the future.

I'm not interested in buying property just for the sake of owning it, like everything else I put my hard earned money into, I want property investments to provide income. I'm always looking at rental properties, with an eye toward investing. So far I've yet to take advantage of any of these, although I have come across some great deals. I am currently in the process of positioning my other investments to throw off more cash so when the right deal comes along, I'll be in a position to take advantage of it. I don't want to do more and more work, I want my money to work for me so I don't have to work so hard. Like I tell my friends and co-workers, I don't live to work, I work so I can have a nice life.