Category Archives: Personal Finance

Henry Ford And The Model T

Henry Ford was born on July 30, 1863 near Dearborn, Michigan on his family’s farm. At the age of 15, Ford took apart and reassembled the pocket watch his father gave him. This impressed his friend and family so much that they brought Ford all their broken clocks and watches so he could fix them. However Ford was not satisfied with this life so a year later he moved to Detroit. In Detroit at the age of 16, Ford became an apprentice machinist for James F. Flower & Bros. In the following years Ford learned bookkeeping and how to operate and service steam engines. Ford was hired as an engineer for the Edison Illumination Company in 1891. Two years later in 1893 he was promoted to chief engineer because of his natural talents.  While working at Edison Illumination Company, Ford developed plans for a horseless carriage that would run on a gasoline engine. In 1896 Ford built his first model and called it the Ford Quadricycle. At a meeting the same year, Ford presented his automobile plans to Thomas Edison. Edison was so impressed that he encouraged Ford to build a better automobile. After building a few test cars, Henry Ford in 1903 founded the Ford Motor Company. Five years later on October 1st 1908, Ford introduced the Model T.  The company prospered after the release of the Model T and for several years the company made 100% gains on the previous year. Ford in 1914 built the moving assembly line technique so he could build more cars faster and much cheaper. However this presented a problem he had to overcome. His employees were quitting because their job was too monotonous. With the assembly line an employee would do the same repetitious  work for 8-10 hours a day. In one year he had to hire over 53,000 workers because of the huge turnover he experienced. To combat this problem he introduced the $5-per-day wage( $120 dollar in today’s dollars). The wage was double the going rate.  With this wage he could keep his workers loyal to his company. The Model T was such a success that by 1916 the price of a Model T had dropped from $825 dollars ( $17,676 in 2013) to $360 dollars ( $ 7,714 in 2013) and sales reached 472,000. In the late 1910s  and early 1920s over half of the cars in America were Model Ts. People loved the Model T’s because they were simple to drive and cheap to repair. Henry Ford was a real entrepreneur. He brought a product that previously only the rich could buy and enjoy and made it affordable to the masses. He earned his wealth because he brought a product that the people wanted for a much lower price then his competitors. “Service to others is rewarded.” This is why Henry Ford was a successful entrepreneur. In today’s currency Henry Ford would be worth $188 billion dollars.
 Disclaimer: I don’t agree with many of his views, however his entrepreneurial skills are worth noticing. How from a machinist he became a billionaire.

Business Opportunities For High School Students

English: I photographed this wooden box myself...

(Photo credit: Wikipedia)

A small business you coud start is a woodworking business. Some woodwork projects you could make can be small wooden boxes, cutting boards, and the like. You would need to have tools to run a small business. You would need a router, a jigsaw, a sander, a miter saw or a circular saw, and some clamps. This list contains a few of the necessary items needed for starting a small woodworking business. The costs of buying these items are going to be high if you don’t own them. For this venture to succeed there must be commitment. It will take a few months to repay your parents for buying some or all of the tools you needed. It will be a little while before you see any profit. This is why you need to be committed. This is not a summer business, it is a year-long business. Once you have made some products, you will need to sell them. You can sell your products at craft fairs or at some farmers markets that have a craft section. If you plan to sell your products at these places you will most likely need help from your parents. You will need a sellers permit to sell in these places, so ask your parent for help. Selling your products at these place will also cost you some money. For example you will need to pay for your booth. Keep this in mind when you plan to sell your products. You can also sell your products online. There are sites where you can do this or you can just advertise your products online and ask people to email you if they are interested in your products. Don’t forget to sign your products or brand them so your buyers know it was made by you and that it is not a store-bought product. Having a small business like this can teach you commitment, responsibility, and resourcefulness. These traits will be a great advantage in life. Before you start a small business ask your parents for permission.

Debt and More Debt

American credit card debt is a leach on personal finance management. It sucks people dry of money. Sure there are “gifts” or “bonuses” that come with certain credit cards for everyday expense. For example some cards give you “free” nights at hotels or “free” airline mileage, but remember there is no such thing as a free stay at a hotel or free airplane ticket. Everything has a price.

Credit Card

Credit Card (Photo credit: 401(K) 2013)

Some people go into debt to get these points, other go in to debt because they want to have the latest gadget on the market. Some want to live a lifestyle that is not supported by their income. In other words they are spending tomorrow’s money today. This is how people go into debt. They spend more money than they can pay back by the end of the month. Now you have to pay an interest on the unpayed money. On the average the current credit card interest rate is 15% which is really high. In the long run you pay more money then the item really costs.  Today the total credit card debt in America is $843 billion dollars.

On the other hand mortgage debt and student loan debt are sometimes necessary. You do need a place to live. However some people tend to take out a big mortgage on the expensive house they bought. Now they have to pay a high monthly payment that they can’t afford. If you need to buy a house or go to college, buy a house that is in your budget. The same applies to colleges. The result of spending too much on a house or college is massive debt. Today the total student loans is $1.046 trillion dollars and the total mortgage debt is $12.9 trillion dollars.

There are differences between credit card debt and mortgage and college loan debt. A difference between these three is that credit card interest rates are much higher than mortgage or college loans. The average interest on credit card is 15.35% unlike 4.8-6.8% interest for college loans or 4.30% interest for mortgages loans. One other significant difference is the amount borrowed. People borrow more money for a mortgage loan or college loan compared to credit cards. These are just a few differences.

According to the the total American credit card debt is decreasing. More people are learn how to budget and prioritize their money. Try not to go into debt. The take away note is in Proverbs 22:7 b,”the borrower is servant to the lender.” You will never truly be free unless you are debt free.

Getting in Shape for Less

Every one should be in shape. It’s good for your body and health. One cheap and effective way to get in shape is by doing house chores or repairs. The advantage of this is that you are killing two birds with one stone. You are cleaning or repairing the house and also getting in shape. This is one of the best ways to get in shape if you are too busy. Another good way, if you have time, is athletic activities. Whether it is swimming, running, walking, biking, or playing baseball, basketball, football and so on, all these are good. Some of these tend to be more expensive than others. For example walking has little or no expense involved, while biking costs much more. Sports can also have a big price tag.

What about gym memberships as a way of getting in shape? I believe that gym memberships are too expensive. You have enrollment fees, bi-weekly costs, and additional costs. Additional cost can include cost of training lessons and equipment. One other harmful thing about gyms is that at gyms some people tend to over excercise. This can lead to heart, muscle and body damage. This is very unhealthy . These results are the opposite of why most people decide to get in shape.

This leads me to the risk of costly injuries. Heart, spine and bone surgeries tend to be extremely costly. No one wants to pay these hefty prices. If you are getting really tired or if a part of your body starts hurting STOP! You can reduce the risk of injuries by taking it easy. It is better to be safe than sorry. Do not overexert your body! Slow and steady is better. Doing it faster will put you in a hospital. Use common sense when exercising. Remember to be consistent in your exercises and activities for this is the only way you are going to gett shape.

Turning Your Smartphone into a Financial Management Tool

How do you turn a smartphone into a financial management tool? One good way is to download a finance app. All smartphones should have finance apps, weather you have an iPhone, Android, or Windows phone. Having a financial app helps you keep track of what you spent or may spend on a certain category. For example, before buying a coffee or smoothy check your app and see if you still have money allotted to small expenses. Certain apps allow you to login in to your credit card account so you can have up to date information. Another way to turn your smartphone into a financial management tool is by  using the internet. For example if you are planning to go on a camping trip but you don’t have a tent you need to go shopping. You are at your local Big 5 and you notice that the tent you are looking for costs $400.00. You look at your financial app and see you can only spend $300.00. You are at an impasse.  However, you use your smartphone’s cellular connection to check Sports Authorty and/or Sports Chalet for a better price. You discover that Sports Authorty has the tent you want for $349.99 and Sports Chalet has the tent for $300.00. With this information you can go and buy the tent form Sports Chalet and not go into debt. These are two simple ways to turn your smartphone into a financial management tool.

The Morality of Work and Wealth

Looking at the subject of wealth there are three questions we need to answer. Is it immoral to be wealthy? Is it unjust that some people have more wealth than others? What moral limits are there on how a person can gain wealth?

Some people wrongly believe that being wealthy is immoral. Wealth in most cases is the fruits of ones own labor. People work hard to obtain it. People say that money is the root of all evil, but this is wrong. The love of money is the root of all evil. In other words if you are willing to bend the rules to get as much money as you can, then that is wrong. Wealth in and of itself isn’t  bad. The more wealth you have the more you can invest in businesses, donate to charities, help the needy, buy gifts, and necessary items. The Bible says in Genesis 13:2,”Abram was very rich in cattle, in silver, and in gold.” Nowhere in the Bible does God say Abraham was immoral because of his wealth. In fact in James 2:23  It calls Abraham the Friend of God.

People do tend to look with envy on others who are wealthier, however their envy should not make it unjust for others to be wealthier. Some people are lazy and others are hard workers. We should not penalize the hard-working people from making more money. People who believe it is unjust that others have more wealth, usually advocate for a federal welfare state. The purpose of a federal welfare state is to equalize wealth which is socialistic and unjust. This discourages work and leads to poverty. When the pilgrims came to America they were using the welfare state model, in other words all the food gathered was to be equally divided among themselves. After one year half of the pilgrims died. The next year nothing changed and during the winter half of the remaining pilgrims died. The pilgrims wouldn’t survive another year so William Bradford called a meeting to determine what should be done. They turned to the Bible to look for an answer. They found this; 2 Thessalonians 3:10b, that if any would not work, neither should he eat. The next year Governor Bradford gave each family a plot of land to grow food, no more equal redistribution of food. Every one had to work or else they wouldn’t have any food for the winter. That fall they had such a bountiful harvest, that they had a feast to give thanks to the Lord. There is nothing unjust about someone having more wealth than others.

We live in an unjust world and there are people who do gain their wealth through unjust means. Morality comes from the Bible and in Deuteronomy 5:17-20 it states Thou shalt not kill. Neither shalt thou commit adultery. Neither shalt thou steal. Neither shalt thou bear false witness against thy neighbour. If a person gains his wealth by breaking these commandments, this is ill-gotten wealth. These are moral limits a person should never cross. Not all wealthy people gain their riches through unjust means. Most wealthy people are hard-working, entrepreneurial, frugal, and deserving of their wealth.

Cornelius Vanderbilt an American Entrepreneur

Cornelius Vanderbilt was born on May 27, 1794 at Port Richmond, Staten Island, New York . Vanderbilt grew up in poverty. At the age of 11, Cornelius quit school and started working for his father’s ferry business, in New York Harbor. While working for his father, Cornelius’ interest in boats grew. He learned everything he could about the shipping business.

Cornelius Vanderbilt, three-quarter view.

Cornelius Vanderbilt, three-quarter view. (Photo credit: Wikipedia)

Vanderbilt started his own  ferry business by age 16 with only one ferry boat. During the War of 1812, Vanderbilt was awarded a military contract to deliver supplies to the forts along the Hudson River. As time went on Vanderbilt’s sailing boats and ferries started lagging behind the steamboats so he sold his sailboats and went to work for Thomas Gibbons. While an employee for Gibbons, Vanderbilt learned to manage and operate a large business. By the time Vanderbilt was about 35 years old he started his own steamboat company and in ten years it grew to the size of 100 steamboats. Vanderbilt had a great ability to steal customers away from his competitors. His business philosophy was to have the best service for the lowest price. This was the key to his success. Vanderbilt saw the opportunity of the California gold rush and expanded his business to oceangoing steamboats. His business prospered and he became one of the first American millionaires. In the 1860s Vanderbilt expanded his business once again with the advent of the Iron Horse. Vanderbilt seized the opportunity and started to buy up railroad companies. He applied his business philosophy to the railroad industry and in five years he reportedly made 25 Million dollars. His railroad empire soon expanded to 13 railroad companies and covering the northeast United States. Cornelius Vanderbilt died on January 4, 1877 at the age of 82. The majority of his fortune went to his son William. In 2007 dollars his net worth at the time of his death would have been 143 billion U.S dollars. Vanderbilt succeeded because he offered the best for the lowest price. He also lived during a time when the United States government interference into the business sector was limited to its Constitutional boundaries.