Wallet Blog

Medical Tourism: Will you be paying in cash, credit or airline miles?

John Kiernan — Thu, 19 Jan 2012 00:26:44 +0000

Posted by: John Kiernan

While renting the Hangover II is probably the closest most of us have come to visiting Thailand recently, thousands of people from the United States visit the country each year for a variety of reasons, which, interestingly enough, include the increasingly popular trend of medical tourism. The fact that people are willing to travel clear across the world for anything from cosmetic surgery to dental services is surprising enough in its own right, but that’s nothing compared to the fact that one may be able to use airline miles to not only book travel, but also to pay for the procedures themselves. In other words, the right credit card could conceivably be your ticket to free health care.

You see, Thai Airways – the 5th best international airline in the world, according to CNBC – recently offered a promotion that allowed members of its loyalty rewards program, Royal Orchid Plus, to use their miles for a wide array of medical procedures, including, but not limited to, the following:

Breast augmentation
Eyelid surgery
Liposuction
Botox
Hair transplants
Laser hair removal
Teeth whitening
Kidney cleaning
Non-surgical facelifts
Check-ups

All you had to do was go online and book your flight as well as the procedures you planned to undergo at one of Thailand’s hospitals or specialty clinics. While this particular promotion ran from December 2010 to April 30, 2011, it is neither the first of its kind, nor is it likely to be the last.

“We do have a very unique relationship with Thai Airways,” Curt Schroeder, CEO of Bunrungrad International Hospital in Bangkok, told 60 Minutes back in 2005. “So you can buy a ticket. You can use frequent flier mileage to get your checkup.”

The practical question that, of course, arises from all of this is who has enough Thai Airways miles to both pay for a flight to Thailand and a medical procedure once there?

Given that Thai Airways is a Star Alliance member, people can use miles accumulated through any other Star Alliance airline to pay for their flight and their Thai Airways miles to cover their medical costs. In addition, many credit cards tied to Star Alliance airlines offer lucrative initial bonuses, which can further boost the miles at your disposal. These cards include the Lufthansa Credit Card, the United Airlines Credit Card, and the US Airways Credit Card.

Chase’s recent aggressive pursuit of travel rewards partners increases the potential impact of medically-oriented rewards redemption as well. People who have Sapphire Preferred, Ink Plus, and Ink Bold credit cards can instantly transfer their rewards points to the loyalty programs affiliated with companies such as United Airlines, British Airways, Southwest Airlines, Continental Airlines, Korean Air, Hyatt Hotels, and Marriott Hotels.

Finally, the fact that past incidences of miles-for-medicine programs required booking on sites run by the likes of the Tourism Authority of Thailand makes you wonder about the compatibility of products like the Venture Card from Capital One, which allows miles to be used for any travel-related charges. This would likely depend on whether you can bundle flights and medical procedures together and how these charges appear on your statement, but it’s at least something to think about.

Ultimately, medical tourism is a growing industry – worth as much as $100 million by this year, according to global management consulting firm McKinsey & Company – and the extent to which it pervades everyday life will continue to grow right along with it. Today, you may have the ability to use airline miles to pay for procedures. Who knows what tomorrow will hold?

[Disclosure: Some of the links within this article point to Card Hub, which is owned by the same parent company as Wallet Blog.]

5 Reasons To Consider Creditor Insurance

Guest — Thu, 12 Jan 2012 14:13:45 +0000

Posted by: Guest

If you have a mortgage, loan, line of credit, or a credit card, it may be in your best interest to accept the creditor life and disability insurance that goes along with it. Although it will cost you extra money out of pocket, it may just be worth your while.

1. It can give you peace of mind. If something were to happen that drastically changed your ability to earn income, you want to know that you and your family would be protected. Without insurance, you would still be expected to make payments to your credit products. But, with insurance, you would know that it would be paid of in full in the event of your death and that your disability insurance would kick in if you were unable to work due to an accident or injury.

2. It is often very easy to be approved. Depending on your age and your current health condition, you may have difficulty getting insured with a regular insurance company. However, creditor insurance is often automatically approved with no health questions asked at least up to a certain amount. Creditor insurance rules vary depending on the company being used, but for the most part the approval process is a breeze.

3. It is very convenient. Usually your creditor insurance premiums can be paid right along with your card or loan payments so you don’t have to worry about paying a separate bill for your creditor insurance. Also, rather than having to go and increase your existing insurances, you know that with these new credit products, you are taking care of the insurance piece right away. Because we all know you probably wouldn’t remember to increase your existing insurance anyway, and then you wouldn’t be properly covered for the new debt you have acquired.

4. It is affordably priced. If you take the time to compare insurance prices, you will find that creditor insurance is very reasonable and competitively priced. Also, it’s important to note that creditor insurance for lines of credit and credit cards is often only going to cost you money if you actually carry a balance. In other words, if you aren’t using your card or your line of credit, you will not be paying any insurance premiums.

5. There are often other perks, too. Many financial institutions offer really neat perks to their clients along with the creditor insurance such as providing it for free for a certain period of time. You may also be able to keep your premiums the same even as you age. It’s a good idea to find out what perks would be available to you if you were to accept the creditor insurance.

I know that most of us have a one-track mind. If we go into the bank to get a loan or credit card, that’s usually the only thing we expect to get. Most of us overlook our need for creditor insurance, and sometimes we will only have a few seconds to make the decision. So, if you are planning on getting a new credit product in the near future, be prepared for your advisor to ask about insurance. Know what your current coverage is so that you can make an informed decision rather than a rash one.

Pam is passionate about helping people attain financial freedom by providing money saving tips and promoting effective money management. Visit her blog at www.Pennysaverblog.com.

Helpful Tips for Tax Season 2012

John Kiernan — Tue, 03 Jan 2012 14:00:22 +0000

Posted by: John Kiernan

With the holiday season in the rearview mirror, we are all getting back into our normal routines. Unfortunately, that means starting to think about tax season 2012. April is right around the corner, after all, and if you foresee an inability to pay your full tax bill in full, this can be quite disconcerting. To help ease concerns, the California Society of CPAs recently announced some important strategies for dealing with the Internal Revenue Service (IRS) if you cannot cover your total tax toll.

Before we get to them, however, there are a few things that you need to know about the IRS, its practices, and the terminology you can expect to come across when dealing with an inability to pay:

Paying the IRS should be your top financial priority: According to the California Society of CPAs, paying your tax bill should be a higher priority than basically every other financial obligation, aside from subsistence, of course.

You must not underestimate the IRS: You need to realize just how powerful the IRS is. You’re not going to slip through the cracks when it comes to paying your tax bill, so you might as well accept that now. In addition, it’s important to note if you do not pay your taxes on time and in full, the IRS may be able to file a notice of tax lien against you (which could damage your credit standing), garnish your wages, or even prosecute you for willful failure to file.

“Substitute for a Tax Return:” When people don’t file tax returns, the IRS may independently determine their tax liability itself, in what’s known as a substitute for a tax return. This substitute tends to be far higher than what’s actually owed.

“Offer in Compromise:” This is when the IRS agrees to accept payment that is less than what a citizen owes. You certainly shouldn’t count on reaching this type of agreement, as the IRS isn’t known for generosity and understanding, but it’s something you should be aware of.

Now that you’ve got the requisite foundation of knowledge, we can progress to the CalCPA’s 5 strategies for tax season 2012:

1. Always file a return: Much like you should always submit at least a monthly payment to your credit card company in order to avoid the onset or worsening of delinquency, you should always file a tax return. It’s natural for people to try to hide from problems, but if you don’t file, the IRS will assess penalty fees, ranging from 5% of your outstanding balance each month to 25% of the total amount due.

2. Scrape together all available funds: Given the importance of paying your taxes and the negative repercussions associated with not doing so, it’s important to leave no stone unturned when it comes to coming up with the money to pay. That means not only reviewing your bank accounts, but also scouring under couch cushions, seeking help from loved ones, collecting on old IOUs, or even taking out a home equity line of credit.

It also bears mentioning how useful a 0% credit card can be in this regard. The IRS accepts credit card payments through designated third-party processors, and even though you will have to pay a 2.5% service charge, using a 0% credit card can both help you pay your tax bill on time and avoid interest in doing so. Depending on your credit standing and the offers available at the time you apply, this type of credit can give you up to 21 months to pay down your balance interest-free.

3. Consider partial payments or installments: It’s worth a shot to try to broach the idea of an installment plan or partial payment with the IRS. However, as is the case when faced with an inability to pay your credit card bills, you must take the initiative in doing so and only agree to pay what you can afford. If you owe less than $25,000 in taxes, fees, and interest, you can apply for an installment plan online. If your tab is higher, you’ll have to provide substantial documentation, given that the IRS will consider your income, living expenses, transportation costs, and other monthly obligations in evaluating your request and determining the payments you will be required to make.

4. Apply for an Offer in Compromise: If you cannot pay your full tax bill or will experience hardship as a result of doing so, and you can afford to make a substantial lump-sum payment, you can petition the IRS to accept a lesser amount.

5. Don’t try to hide: As alluded to earlier, the IRS’ reach is extensive. Therefore, even if you are classified as “currently not collectible” and years pass by, you still can’t assume you’re off the agency’s radar. In fact, you can expect to receive a bill if your income increases or you otherwise come into some cash.

With these things in mind, you will undoubtedly be much more prepared for tax season and any related dealings with the IRS. Besides, you’ll be hard pressed to find a better New Year’s Resolution than getting the IRS off your back. WH00000018

U.S. Sanctions on Iran Underscore Need for New International Banking Regulations

John Kiernan — Tue, 27 Dec 2011 14:00:07 +0000

Posted by: John Kiernan

In a recent article about the negative effect Swiss banking secrecy and hypocrisy have on the rest of the world, we suggested the creation of a revamped banking community, in which member nations would share information about bank accounts held by foreign nationals with their respective governments and member banks would require that identifiable individuals be behind every account (even corporate accounts). These rules – defiance of which would result in economic ostracism – would help prevent tax evasion, money laundering, drug trafficking, and other criminal activities. In formulating this idea, we did not specifically consider the effect such a system could have in curbing terrorism, but recent sanctions levied by United States against Iran as well as banking institutions doing business with the country have indeed made this utility clear.

The U.S., together with Britain and Canada, announced on Monday Nov. 22, 2011, new sanctions against Iran – targeted to the country’s petrochemical sector and organizations with terrorist ties – that are designed to put increased pressure on the Iranian economy and thereby limit nuclear development as well as funding and training for terrorist groups around the world. The Obama administration hopes that by designating Iran as a “primary money-laundering concern,” companies will break off ties with Iran in order to remain in good standing with countries like the U.S. that are opposed to its practices.

This move comes on the heels of fines imposed over the course of the last three years by the U.S. on international banking powerhouses Barclays ($298 million), Lloyd’s Banking Group ($350 million), Credit Suisse ($536 million), and JPMorgan Chase ($88.3 million) for facilitating payments by nations like Iran, Cuba, Libya, Sudan, and Burma while they were under economic and trade sanctions from the U.S.

These measures speak to the role economic pressure can play in curbing illegal activities and making the world a safer place. Just think: If simply applying a certain label to a country is enough to force companies to sever ties with it, what could the threat of complete economic isolation accomplish? If faced with a choice between lifting the veil of secrecy when it comes to banking practices and receiving what would amount to the economic death penalty, what do you think most countries would do?

At this point, you may note that some members of Congress did recently push for stiffer penalties against Iran, but they were rejected for fear of the effect that more drastic measures would have on the world oil supply and economy. While this is indeed a concern, and the implementation of my proposed economic changes would be difficult, especially for EU nations that depend on Iranian oil, the vicious cycle of giving nations a pass simply because they have something we want must be broken at some point. In other words, it might be better to bite the bullet now instead of waiting for the Irans and North Koreas of the world to multiply, at which point the aforementioned bullet could very well be a few nuclear bombs.

Increased unity from the world’s economic superpowers is therefore needed. If the G8 nations band together in pledging their support for new banking rules and make it clear that there is no bluff to be called, then the subjects of scrutiny, such as Iran, will have no choice but to relent.

So, to reiterate, the system we propose is based on two simple underlying principles: 1) There must be an identifiable individual behind every bank account, no matter where in the world it is held; 2) countries must apprise one another of all bank accounts held by each other’s citizens. No bank would be permitted to transact with banks operating outside this framework, and violators would face stiff monetary repercussions, ultimately progressing to bans and even expulsion from the new, more transparent banking community.

Comments made by President Obama in a statement following the announcement of the most recent sanctions prove quite apt in describing such an international economic environment, even though he was only specifically addressing Iran. “It can fulfill its international obligations and reap the benefits of greater economic and political integration with countries around the world,” Obama said, “or it can continue to defy its responsibilities and face even more pressure and isolation.”

Think Miles & More is Bad? Check Out What British Airways Has to Offer

Odysseas Papadimitriou — Tue, 20 Dec 2011 14:00:22 +0000

Posted by: Odysseas Papadimitriou

A few months back, I wrote an article about how glaring flaws in Lufthansa’s rewards program were causing me to question my long-time relationship with the Star Alliance member. With these doubts in mind, the 100,000 initial bonus miles being offered at the time by the British Airways Credit Card proved too much to resist. What’s the worst that could come of shifting my airline loyalty program allegiances and opening the British Airways Card, I thought? Sure, BA’s network of partner airlines doesn’t even come close to matching Star Alliance’s, but shouldn’t that result in the company compensating via better rewards, customer service, etc.?

Apparently not, as my experience thus far with the British Airways rewards program has made Star Alliance look terrific by comparison. While BA’s problems are numerous, they can be separated into two primary categories: effectively worthless rewards and unprecedentedly bad customer service.

Rewards
While British Airways can offer you the moon in terms of miles (aka Avios points) thanks to a generous credit card offer, the problem comes when trying to use them. Redeeming BA miles is next to impossible, given both the general lack of fares bookable with miles and the fact that BA does not allow you to redeem for merchandise. Ironically, BA is laughably inferior to Star Alliance in both of these regards.

In addition, you can’t use miles to purchase fare upgrades at the airport. This must be done ahead of time, which makes absolutely no sense. What good reason could there be for preventing customers from using their miles on seats that will otherwise go empty? Allowing such a practice would only serve to diminish the number of miles available in the future for the purchase of seats that others might still buy with cash. If anything, the rule should be the other way around (i.e. only allow miles redemption at the airport).

Customer Service
Isn’t customer service designed to help customers deal with problems and thereby keep them happy and retain their business? One would think, but apparently BA is looking for a game-changer, as it seems to be applying a laissez-faire approach to customer service.

During a recent call to the British Airways Executive Club customer service department, instead of being given the usual directions to wait on hold until the next available team member could field my call, I was actually instructed to visit the company’s website. Then I was hung up on! I called back, and the same thing happened (check out the audio below). That just goes to show you how much, or – perhaps more fittingly – how little, British Airways cares about those it asks to be loyal patrons.

Final Thoughts
Though it was hard to imagine just a few months ago, I now appreciate the Star Alliance / Miles & More rewards program. But this really isn’t a credit to Star Alliance or Lufthansa. Rather, it’s a definite knock against the British Airways Executive Club program. I don’t have any problems with BA in general and have had an altogether positive experience flying with the company, but both its co-branded credit card and the Avios points it disseminates basically serve as false advertising as well as a black eye for the company’s customer relations efforts. My only hope is that BA works out the kinks and can be a company consumers can be proud to be associated with moving forward.

Top Six Money Saving Tips for Your Household

Guest — Mon, 19 Dec 2011 14:00:07 +0000

Posted by: Guest

Saving money in your household finances needs to be a top priority, especially when you consider the difficult economy in which we are living. Every dollar and every cent counts and so does every one that you can save. There are many ways that you can stretch the hard earned cash in your household to make it last longer and work harder. Here we zero in on the top six money saving tips for your household that you can start doing not tomorrow, next week, or next month, but today!

1. Pay your credit cards off in full every month. The interest you will pay if you carry a balance from month to month is astronomical and not something you even want to think about! Okay, maybe thinking about it for a minute is essential to driving the point home. Consider the fact that a $1,000 balance that is being charged at 18 % will cost you approximately $200 a year in interest charges. Wouldn’t you rather keep that $200 in your bank account? When you use them pay them off- completely!

2. End your love affair with designer labels (if you have one) and come back down to Earth. When it comes to buying clothing for yourself and the whole family, used clothing stores and second hand shops have much to offer. Whether you have an infant to clothe, a three year old or an eight year old you are sure to find some bargains at shops that sell gently used clothing. Gone are the days when “second hand” or “used” meant old, or out of date, or worn out. Today you can find up-to-date modern looks at these stores for a fraction of what you would pay in the department stores or specialty stores. If you cannot find what you are looking for at these shops then off to the garage sales and flea markets you go!

3. Cable television can be expensive, as can telephone service, Internet and cell phone service. But oh how so many of us do not want to be without these services! To bring down the costs of the services, you want to find out if you can purchase them as a bundle or find out if multiple services are available for a cheaper rate. If the provider you are presently with cannot offer you this, then find out what other companies in your area have to offer you. Bundles and packages can provide a means of keeping the services you love without having to break your bank account to pay for them!

4. It is wonderful to have loved ones and friends over for a meal once in a while and particularly for holiday meals such as Thanksgiving, Christmas, birthday celebrations and anniversaries. It can be very expensive to prepare a feast for visitors, however. To save money and to get everyone involved in the merriment figure out what your meal will be composed of and then get different people to make separate dishes and bring them when they come over. Just make sure that you do not end up with too much of one food and not enough of another! Who says the host or hostess must foot the entire bill and do all of the meal preparation! Share, and share alike.

5. If the high cost of entertainment has got you shaking your head in dismay, then what you need to do is say no to expensive DVD rentals and head for your local public library. The library is not just for avid readers anymore but also avid movie viewers! Rent movies for free at the local library. Whether you are in the mood for fiction or non-fiction the library is sure to have it. Enjoy a cheap night of entertainment at home with the whole family!

6. Clipping coupons and using them faithfully can help you to reduce costs on everything from laundry soap to cereal to shampoo to juice. Check online for coupons and rebates sites and check the websites for your favorite retailers. You should also check your local newspaper and watch for flyers in the mail. Savings maybe close at hand!

Patti Illsley writes about money saving tips that will help any family. She can be found at the Financial Advice Zone.

The Battle of the Black Cards: American Express’ Centurion Card vs. Barclays’ Visa Black Card

John Kiernan — Tue, 13 Dec 2011 14:00:46 +0000

Posted by: John Kiernan

In one corner, we have the Black Card. In the other, we have, uh, the Black Card. Confused? Most likely, and that’s exactly why American Express recently engaged in a legal battle for the right to use the name that has come to signify wealth and status not only in the credit card industry, but throughout society and pop culture as well. Rappers routinely crow about their Black Cards in songs, athletes and movie stars are spotted using them by the paparazzi, and they’re even employed in shows like “The OC” and “Entourage” to signal things like prosperity, greed, or overspending to viewers. While Amex was successful in nullifying the Black Card LLC’s trademark on the term “Blackcard,” several trademark infringement and false advertising claims remain unsettled, as does the ultimate question: Which is the better Black Card?

American Express Centurion Card
Though the American Express Centurion Card has long been shrouded in secrecy – an Amex representative responded to a request for comment by saying, “We actually can’t confirm much about the Centurion Card as we don’t talk about its services or benefits” – a few things are substantiated, including its fee structure and the fact that it is available by invitation only. The rest we can only glean from various sources and first-hand accounts, almost as if the Centurion Card is a Bigfoot-esque mythical creature.

Credit Standing Required: Excellent+
Annual Income Required: Above $250,000
Fees: $5,000 initiation fee; $2,500 annual fee
Rewards: Rumored perks include a 24/7 personal concierge and travel agent, deals on ultra-high-end rental cars, free nights and upgrades at luxury hotels around the world, personal shoppers and private shopping opportunities at upscale retailers, reservations at restaurants that do not accept reservations, free companion tickets on international flights, airport club access, etc.
Interest Rates: N/A since it is a charge card that requires you to pay your balance in full every month
X-Factor: Exclusivity is this card’s biggest draw. Exactly what it takes to get this titanium card is yet unknown, but only the rich and famous have it, so everyone wants it.

Barclays Visa Black Card
Unlike the Amex Centurion Card, there’s quite a bit of official information available about the Barclays Visa Black Card.

Credit Standing Required: Excellent
Annual Income Required: Above $100,000
Fees: $495 annual fee
Rewards: “Luxury gifts,” access to over 600 airport lounges worldwide, 24-hour concierge service, and 1% cash back or points redeemable for airfare on any airline
Interest Rates: 0% on balance transfers for 15 months (3% balance transfer fee); 14.99% regular rate
X-Factor: This card’s official branding actually contains the words “Black Card.”

And the winner is…
The superior Black Card is undoubtedly that which is issued by American Express: the Centurion Card. While, yes, it is more expensive than the Visa Black Card, users by all accounts get a lot more for their money. For example, with the Visa Black Card, you will pay $436 more each year than you would with the Capital One Venture Card, and the only additional perk you get is airport longue access. Everything else is either at par with the Venture Card’s offerings or worse. Millionaires who wouldn’t mind spending a lot on their credit card’s annual fee want something truly remarkable for the money, not a card with basically the same rewards but much higher costs than a number of other rewards credit cards on the market.

Cardholder accounts published on the popular myth-busting website Snopes.com provide the perfect anecdotal evidence for how the Centurion Card fits this bill. For instance, according to Snopes, a Centurion cardholder in Europe requested that the horse from Kevin Costner’s Dances with Wolves be tracked down, purchased and delivered to him, and it was done. Other examples of fulfilled cardholder wishes include: the retrieval of a handful of sand from the Dead Sea for a child’s school project, a fully planned wedding, and an audition for a Soap Opera. Now, how can you beat that?

You can’t. That’s why people like rapper Kanye West will continue to spew lines like: “‘Oh my God, is that a black card?’ / I turned around and replied ‘Why yes, but I prefer the term African American Express.’” Sorry Barclays and Visa, but unless you guys up your game considerable, there seems to only be room for one Black Card in this town.

Calling Customer Service? A New Scam is in Town

Odysseas Papadimitriou — Wed, 07 Dec 2011 11:00:13 +0000

Posted by: Odysseas Papadimitriou

During a recent experience to forget with WalMart.com and its customer (dis)service department, I happened upon something likely to be quite interesting to both American Express and anyone using an American Express small business credit card.

It all started when a WalMart representative informed me that my digital gift card order had not been completed as a result of a problem with my credit card. I, of course, reacted by immediately flipping the card over and calling the number listed on the back for Amex’s 24/7 small business customer service department…or so I thought.

However, instead of hearing the warm greeting, “Thank you for calling American Express Open,” I was met with the following:

The number you have dialed has new information. Please press “star” to receive information on the number you are calling.

Luckily for me, I was driving and could not press the button immediately. Believing that Amex had changed its number or something along those lines, I was about to press the star key when I heard, “If you decide to subscribe to the service, a charge of $9.99 plus standard message fees for 20 look-ups per month will apply.”

This piqued my interest because the notion that an American Express hotline had been hijacked, so to speak, would be a big deal. Though it turned out that I had misdialed the number, this only tempered my concern slightly, given that I was just one digit off. Instead of dialing 1-800-521-6121, I had keyed in 1-800-521-6161.

My fear is that someone will make the same mistake as me but will not be paying close enough attention early on in the call, as we all know is often the case when calling “1-800 numbers.” The preponderance of automated messages has conditioned us to multi-task when making such calls and to expect being required to press a certain button in order to get connected with the party to whom we wish to speak. Combine this with the increasing prevalence of touch-screen smartphones, which lend themselves to dialing errors, and it’s clear how people could easily end up paying nearly $10 a month when all they wanted was a little help with their business credit card account.

Scammers know this, and that is precisely why they buy up phone numbers that are very similar to high-call-volume numbers, such as those for customer service departments of large mainstream companies.

While I did not fall victim to this tactic and my hope is that no one else does either, this is, at the very least, something to be aware of. It’s also something that American Express should take a look at and/or report to the relevant authorities. Having customers experience difficulties when trying to reach customer service or simply being associated with scams is something that no company wants.

For your listening pleasure, here’s the message I received when I misdialed the phone number for American Express’ business credit card customer service department.

How to Write Business Plans For Funding Sources

Guest — Mon, 05 Dec 2011 14:05:30 +0000

Posted by: Guest

When most entrepreneurs need to go to banks or investors to raise funding, they realize they need to develop a business plan. But, unfortunately, most entrepreneurs complete their business plans incorrectly, and thus fail to raise money.

Interestingly, most entrepreneurs do include much of the key information they need in their business plans, such as the executive summary, industry analysis and marketing plan sections. But, since most entrepreneurs have the wrong mindset when creating these plans, they fail to achieve their goals.

Let me explain. The mindset of most entrepreneurs when completing their business plan is to tell the whole story of their business. They think they need to include every detail about their idea, go in-depth about market statistics and studies, and include a financial model that shows every possible expense and revenue source.

While this mindset is helpful in creating a business plan for internal purposes, it generally results in too much information for investors and lenders.

Let’s look at it from the investor and lender standpoint. They don’t need to know every detail about your company. Rather, they simply need to determine whether or not your venture could provide them with an adequate return on investment or ROI.

How do you do that? By realizing that first and foremost, your business plan is a marketing document. That is, your plan must market your company to investors and lenders to get them excited about investing in your company.

In marketing your company, you don’t give every detail about it, just like deodorant companies don’t discuss every ingredient in their product when marketing it. Rather, you focus more on the benefits.

Let me give you some examples. Rather than going on and on about market trends and statistics, show the data and point out how it benefits your company’s potential success. And rather than talk about all the details of your marketing plan, discuss how your marketing plan makes your company “uniquely qualified to succeed.”

This last phrase, “uniquely qualified to succeed,” is worth repeating, since it is the crux of a business plan that successfully raises funding. Your business plan must prove why your company is uniquely qualified to succeed. As mentioned, you could be uniquely qualified based on market trends that support you and not competitors, or because you have an exclusive marketing partner. Other ways you could be uniquely qualified to succeed are that your management team has unparalleled expertise and/or experience, or maybe you have intellectual property and patents that your competitors do not.

So, how do you create a business plan that effectively markets your company and proves why you’re unique? One way is to create it yourself. In order to save time, you should leverage a business plan template that gives you the right structure and shows you the questions you need to answer to more quickly and easily complete your plan.

Another option is to hire a business plan writer to develop your plan for you. While this will cost more money, the writer should be able to save you considerable time in creating your plan. Also, if the writer has experience and a good marketing background, he or she can help position your company to investors and lenders properly in the plan.

The right business plan is often the difference between raising and not raising money, and raising money is often the difference between succeeding and not succeeding with your venture. So take the time and follow my tips towards completing a winning business plan.

This article was written by Dave Lavinsky, president and co-founder of Growthink, a consulting and publishing firm that helps entrepreneurs develop business plans and raise funding.

How Does Europe Solve its Debt Crisis?

Odysseas Papadimitriou — Tue, 29 Nov 2011 11:00:43 +0000

Posted by: Odysseas Papadimitriou

Whether you are well-versed in international economics or not, you’re probably aware that Europe is having substantial problems. You’re also likely familiar with the resulting worldwide ripple effects: uncertainty amongst investors, fears of a global double-dip recession, and widespread political upheaval, just to name a few. Of course, there are a number of prominent theories for how to solve Europe’s debt crisis, but given the depth and complexity of the problem, none is perfect and each requires tough choices to be made. People – not just in Europe, but around the world – need hope, however. We need a plan, a sense that these economic issues are finite and not permanently debilitating. So, with that being said, what say we take a quick look at four different courses of action that Eurozone governments can take, the pros and cons of each, and which will provide the most long-term benefit without causing short-term chaos.

Option 1: Economically sound European countries pay down southern debt
This plan would involve countries like Germany, the Netherlands, and Finland using savings, tax revenue, and export surpluses to help pay down the debts of southern neighbors like Greece, Portugal and Italy until they are at manageable levels. Such an approach is logical in the sense that the economies of European Union (EU) nations are interconnected, and the default of one or more countries would have negative repercussions for others.

However, as you can imagine, it would be very tough for the German, Dutch, and Fin governments to sell this plan to their people, as it is essentially tantamount to rewarding neighbor nations for their mistakes without receiving much tangible benefit in return. Ultimately, while this plan would undoubtedly be effective if implemented, the political hurdles are just too high for it to be realistic. Just think: If you live in Virginia and both you and your state government have been operating within your means for years, would you want to bust open the piggybank to bail out California, for example? Probably not.

Option 2: Problem countries cut deficits
At first glance, this is likely the most logical course of action, but cutting deficits would require significant spending cuts, which would, of course, mean higher unemployment rates, lower tax revenue, and increased social service expenses (e.g. unemployment benefits, health care, etc.). This would foster a vicious cycle in which more and more cuts would be required to offset revenue lost as a result of a shrinking economy, which would lead to social unrest, bringing citizens to a breaking point and causing them to want to leave the Euro. This brings us to Option 3.

Option 3: Certain nations leave the Euro
If problem nations were to leave the Euro, they could just default on their debts. As a result, their currency would be significantly devalued, causing tourism and all export goods to become dirt cheap while making imports prohibitively expensive. However, there are a few problems with such a plan. First of all, speculation over the next country to leave the Euro would run rampant, forcing otherwise stable nations to leave unnecessarily. In addition, banks both in the countries that leave the Euro and those holding large amounts of sovereign debt would become insolvent, triggering a financial crisis multiple times bigger than that caused by the Lehman Brothers collapse. This would wreak havoc on markets around the world. Finally, even under the assumption that an exodus from the Euro could take place in an orderly fashion, the Euro would appreciate significantly without the weaker countries, thereby killing German exports.

Option 4: European Central Bank prints more currency
The European Central Bank (ECB) could also print more Euros in order to pay down all of the continent’s debts and bring them to manageable levels. This approach could work if: 1) future issuance of debt could only be done at the EU level and not at the country level and 2) tax collection became centralized at the EU level as well.

Such measures are necessary because a mechanism is required to prevent countries from simply choosing not to make payments toward their fair share of the European debt. By federalizing the issuance of debt and tying each country’s ability to leverage it to their tax revenue, you ensure that no country puts an unfair debt burden on its neighbors. By federalizing tax collection and only distributing funds to individual countries after their debt payments have been removed from the pot, you don’t run the risk of countries overspending and not making debt payments.

Ultimately, Option 4 is the best course of action because it would ensure a united Europe, make use of the continent’s already interconnected economies, and, perhaps most importantly, provide both immediate results and a logical plan for how to move forward that would engender hope within the citizenry. It would also end the speculation over which nation is next to default and thereby lower market volatility. Sure, it would require that individual nations forgo some autonomy, but all things considered, this is the option with the most upside not only for all of the countries in the Euro, but also for the health of the worldwide economy. It’s time for Europe to realize that the solution to its problems involves coming closer together, rather than moving further apart.