Livin’ the dream
For anyone working these days, retirement can seem like a far off island, accessible only by a boat crafted from your hard-earned savings, but also a boat that you may be too old and tired to row once you get the chance to.
Sometimes it is hard to think of retirement when you are just going through the motions day in and day out. Luckily for all of us stuck in our routine, Four Pillars Freedom has created an “Early Retirement Grid” to estimate how long it will take you to reach financial independence based on annual income and spending.
A closer look at the grid
The grid was made to be simple. Therefore, a few things such as savings and debt are not accounted for. In addition, the grid assumes an annual withdrawal rate of 4% and investment return of 5%. Lastly, your annual income is after taxes.
So, let’s take a look.
Let’s say in this dream world you made an annual after-tax income of $80,000 – go you! However, you like the finer things in life so you end up spending $60,000 a year. The grid estimates it will take you a little over 31 years to reach retirement island. However, if you rake in your spending to $40,000 annually, perhaps pass on updating all of your Apple products the moment they are released, then you could reach financial independence in less than 17 years!
What’s the key?
According to the grid, the key to early retirement is to spend less money each year, or as they put it “widen the gap between income and spending as much as possible.”
What counts year after year is how much you are able to save and profit from investments.
No matter your annual income, if you aim to spend only half of it, then you could retire in an equal amount of time as everyone else doing the same, about 16.6 years. Of course, this will vary with your choices and things that come up along the way, (i.e. paying for college tuition, having children, finding that you went a little overboard on Treat Yo’self Day), but your income could increase as well.
Overall, this grid shows that the path to financial independence is not unattainable, and that retirement island could be closer than you think.
How business owners should handle the trend of COVID-19 surcharges
(BUSINESS FINANCE) COVID-19 has caused a lot of money problems, but some places have decided to counter this with new surcharges, and hopefully they told customers about them.
Hidden surcharges have long been a subject of discussion among consumers. Banks, car dealers, hotels, and credit card companies are much more transparent than they once were. According to a 2019 survey by Consumer Reports, 85% percent of adult consumers were hit by an unexpected fee when paying for a service, so the practice is not completely gone. With COVID-19, some businesses are turning to surcharges to balance out their profit margins.
Can businesses add a COVID surcharge legally?
The impact of COVID-19 is continuing to unravel. FOX8 reports that a Missouri steakhouse and sushi restaurant included a surcharge related to the rising costs of food under the pandemic. A CBS affiliate in Midland, TX reminds consumers to check their bills, because restaurants and salons are adding surcharges. Some businesses are saying that state restrictions are increasing operational costs, while others relate it to the cost of goods. Even UPS has added surcharges to peak delivery slots. According to a librarian at the State Law Library, a private business in Texas has a lot of leeway in deciding what to charge.
A surcharge isn’t necessarily price gouging
In Texas, price gouging following a natural disaster is illegal. The surcharges that we’re discussing aren’t price gouging, just a way for businesses to temporarily raise prices without changing their menu or listing new prices. The Houston BBB recommends that if your business does add a surcharge, it should notify consumers about the charge before the bill arrives. Consumers who believe that they’ve been a victim of price gouging should file a complaint with the Texas Attorney General.
Transparency is part of good customer service
According to Consumer Reports, 96% of the consumers surveyed were annoyed with a hidden fee. I want to talk to the 4%, and find out why they weren’t. A surcharge under COVID-19 conditions can make sense. Cleaning and sanitizing takes time and money. Prices have increased. What’s bad business is trying to hide those surcharges until after the customer checks out. That’s not fair. Be transparent.
Tool simplifies vendor payments, saves small businesses tons of time
(BUSINESS FINANCE) Melio is a B2B payment platform that simplifies bill payment for small businesses while freeing up their cash flow. Quick and easy, even from your phone.
The way this payment workflow tool works is that it lets you pay any vendor –including those who do not accept credit cards- using a bank transfer, or check mailed on your behalf for B2B payments.
Specializing in small business payments, accounts payable, accounts receivable, online payments, and business to business payments; it is free to send and receive payments using bank transfers/ ACH but credit card payments incur a 2.9% fee.
The onboarding is straightforward, including integration and automatic sync with QuickBooks, which is essential for many small businesses. Lots of online customer reviews via Trustpilot and other sites claim that Melio is user friendly with responsive, human customer service. Melio fills the gap between the bill payer who wants to use a credit card to pay a bill, and the biller, who wants to receive their money as simply as possible, and without credit card fees. Many small businesses have to manage the challenge of payments to purveyors such as utilities and landlords that do not accept credit cards, or want to deal with the associated merchant fees.
Melio and bill payment services allow businesses who prefer to use a credit card for payment to do so. For a small business who could really use the float and cash flow of a 21-day billing grace period of a credit card, or using a card with a sweet rewards program, this could be a valuable option.
Melio does not have a mobile app to download, but it is described on the meliopayments.com website as having a mobile-friendly, responsive web app easily-managed across devices. Most of the reviews seem to confirm the user-friendliness of this tool, and the few poor reviews I have seen involved requests from Melio for compliance documents that were not satisfied by businesses, and resulted in undelivered payments. With more than 2 years since its founding, Melio is continuing to grow and cater to the needs of small businesses in the United States who want to streamline their accounts payable process.
Politicians reconsider PPP rules too cumbersome for small businesses
(BUSINESS FINANCE) The PPP loans may have some changes coming soon, to help small businesses even more by extending the time they have to spend the money.
Congress has reported talks over fixing parts of the Paycheck Protection Program (PPP), a key program designed to help businesses during the coronavirus pandemic. Changes could range between small tweaks to an overhaul of program requirements. Congress remains divided over a phase four relief bill (passed in the House last week) which includes several of those PPP changes.
The PPP was created to provide forgivable loans to businesses with fewer than 500 employees. Although the Treasury is continuing to offer updated guidance, any significant changes will require approval from Congress.
One of the major potential changes is an extension to the eight-week time frame for businesses to spend their loan money. Senator Marco Rubio (R.-Fla.) is advocating the change. He told reporters “I think the more important thing to change is the time frame in which they can use it for,” Rubio told reporters. “We do need to give them more time to spend those monies.” The hope is to pass those changes before the first PPP loan recipients reach their deadline in early June.
Other changes proposed in the House bill include extending the spending time period to 24-weeks and eliminating the requirement for 75 percent of loan spending on payroll in order to qualify for full forgiveness. The flexibility could allow recipients to allocate money towards rent, another challenge facing small business owners. While Senate Republicans haven’t shot down that option, they’ve voiced concern on the spending rule which was originally designed to keep workers employed. Meanwhile, Democrats argue for flexibility which could support businesses with fixed costs. Both sides are open to discussing a 50 percent payroll and 50 percent additional cost breakdown in a new PPP changes.
The Small Business Administration has reported $195 billion from the $310 billion of the second tranche of PPP has been approved. With no defined plan to reopen the country, small businesses are counting on relief programs. Senior White House advisor Kevin Hassett has said the government can’t continue to lend money to businesses indefinitely. “It is something we can do through Jun, I would, guess if there’s enough cash for that.”
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