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Generally when you think something is too good to be true it generally is. Today I had a guy come up to me and hand me a check drawn off a Canadian bank (TD Canada) for USD $150,000 made out to him. It seemed a bit fishy from the start, but I figured I would just go along with it and see where it went. So I asked the guy for his account number. I punched it in and the name matched up. After looking into his account I notice that he has less than $10 on deposit with us.

Since we are a credit union, we cannot process checks drawn off of foreign banks. When we get a foreign check, we bring it to Wells Fargo where they process it and then credit our account. So I decided to take the check from him, since there wouldn’t be any way that he would have access to the right away anyways.

Next, I ask the guy how he happened to become the recipient of this large foreign check. He tells me that he had won the Canadian lottery! Wow, seems like a lucky guy to me. I was always under the assumption that you had to be a Canadian citizen to win the Canadian lottery, but maybe I am wrong. He then goes on to tell me that this check is a lump installment that they sent him so that he will have the funds to pay a “luxury tax.” I have never heard of this “luxury tax” scenario ever happening. Typically they take the “luxury tax” straight out of your winnings. I just went along with it and told him to call us up tomorrow to check on the status of the check.

After he left, I took the check over to my manager to see if he felt the same way about it. Turns out the Canadian lottery hoax has been around the block many a time and is nothing new. What happens is that you get mailed a valid looking check in the mail along with an official letter. The letter will tell you that you have won the Canadian lottery. It will then go on to say that the check is to be deposited into your bank account so that you can pay for the luxury taxes and other fees and what not. So you deposit the check in your account, and right after you do this you send the “Canadian lottery” a check for xxx amount of dollars. They get your check and cash it off your account, and you end up with a bounced lottery check and out a bunch of money.

So please, if anyone comes across a letter about winning the Canadian lottery, please don’t fall for it. Remember, if you didn’t enter the lottery there is no way you could have won.

Here is a link to a news release from the District Attorney of Jefferson and Gilpin counties in Colorado that talks a bit more about the Canadian lottery scam.

After being in the toilet for the past six months or so, the banking sector is starting to show a little promise again. After months of watching banks write off bad debts, investors are starting to show some hope for our financial institutions. This newfound hope and optimism can’t be attributed to the vision of bank CEO’s. Bank executives just received a temporary bailout from their new best friend Ben Bernanke at the Federal Reserve. Although it is not the job of the Fed to bail out banks from their poor decisions, it is their responsibility to ensure that the economy keeps running smoothly. When thousands of banks around the country all follow each other’s lead like a bunch of lemmings and made poor loans we suddenly have a large problem on our hands. When banks start to do bad people worry. Just the other day an older gentleman came into our credit union and asked to liquidate his entire account into cash. It came out to about $64,000. He also insisted that each bill be marked with a counterfeit pen to ensure that he was getting real currency. Obviously these actions come from someone who has lived through the depression, but if you get enough people acting irrationally like this because they feel their money is in jeopardy, then suddenly the banks will start to face some real problems.

So what exactly are the responsibilities of the Federal Reserve you may ask?

Taken straight from the Federal Reserve’s Web Site:

“Today, the Federal Reserve’s responsibilities fall into four general areas:

• conducting the nation’s monetary policy by influencing money and credit conditions in the economy in pursuit of full employment and stable prices
• supervising and regulating banking institutions to ensure the safety and soundness of the nation’s banking and financial system and to protect the credit rights of consumers
• maintaining the stability of the financial system and containing systemic risk that may arise in financial markets
• providing certain financial services to the U.S. government, to the public, to financial institutions, and to foreign official institutions, including playing a major role in operating the nation’s payments systems.”

If they don’t take care of the majority of the banks, then they are not taking care of their responsibilities. So what have they done exactly to take care of the banks? On January 22nd, 2008 they came out with a surprise announcement that they would be cutting the federal funds rate by 75 basis points (1% =100 basis points) from 4.25% to 3.5%. The federal funds rate is the rate that banks make overnight loans to each other. The market for loans and savings products typically follows the movement of the federal funds rate. Since they lowered the rates, this means that mortgage rates will drop and savings products like money market accounts and CDs will drop as well.

The Federal Reserve states that “while strains in short-term funding markets have eased somewhat, broader financial market conditions have continued to deteriorate and credit has tightened further for some businesses and households. Moreover, incoming information indicates a deepening of the housing contraction as well as some softening in labor markets.”

Let’s examine what effects this rate cut will have.

Lower rates decrease the cost of borrowing funds. A borrower can save a ton of money by borrowing at 5% instead of 7%. This means that many businesses will take advantage of the lower rates to borrow money to expand their operations. With expanded operations, they will likely need more employees to run this new operation. This satisfies the Fed’s first responsibility of “pursuing full employment.”

Mortgage rate will drop and with that comes a wave of refinancing. Many people got in on the real estate boom with loans they didn’t fully understand and weren’t fully qualified for. You can blame both parties for this problem. Lenders should have fully explained the drawbacks of the loans they were putting people into. When borrowers low introductory payments reset to higher levels, many homeowners were shocked to find that their monthly mortgage payment had almost doubled. According to an article in the Boston Globe “a record $375 billion of subprime loans reset to higher payments in 2007 and another $340 billion will reset this year.” The lower rates could be able help qualified credit borrowers refinance their loans to a lower fixed payment that they might have a higher probability of affording. Another option that troubled borrowers may have is selling their home to pay off the mortgage and either move into a cheaper home or rent. According to the National Association of Realtors, “the median price of an existing single-family home dropped 1.8 percent in 2007.”  In many markets this figure is much lower, meaning that the sale of the home is not enough to cover the outstanding balance on the mortgage. This sad reality is what has led to the 75% increase in foreclosures in 2007.

Savings rates will drop. According to Bankrate.com, the national average for 1 year CDs is a measly 3.66%, down from last week’s 4.12% average. This has a very negative effect on those using CDs and other safe investment products for income. If inflation is at 3% you are hardly making any real gains in your net worth. You are just maintaining your purchasing power. When rates are low, savers tend to take their money out of CDs and money market accounts and put them into the stock market or mutual funds where they can make a better return. This could explain why the Dow Jones Industrial Average has increased from a low of 11,508.74 on January 22nd to a closing price of 12,480.30 on January 29th. That is an 8.4% return for one week. That sure beats 3.66% for an entire year!

The Fed also stated in their January 22nd announcement that “appreciable downside risks to growth remain.  The Committee will continue to assess the effects of financial and other developments on economic prospects and will act in a timely manner as needed to address those risks.” This statement is referring to the January 29th and 30th meetings that the Fed in having. In this meeting they will be deciding whether or not their 75 basis point rate cut was sufficient. We should be expecting an announcement sometime on the 30th. Bank stocks and the stock market in general should react inversely to the decision made by the Fed.

In conclusion, I think that the Fed will go ahead and cut rates another 25 basis points. If this cut is made it will probably be the last for a long time and should help to restore some faith and stability to the financial sector. I think a 25 basis point rate cut is necessary for the psychology and mindset of investors. It should be interesting to see how this all plays out over the coming months.

There is a company out there in the United States that I really wish would go public. This company provides a convenient solution for millions of Americans. Yes, I am talking about the official moving and storage company of the PGA…PODS!!! PODS stands for Portable On Demand Storage. I have started to see these things pop up all over the place. If you think you don’t need one…think again because you might once you see how convenient they are.

For those people who have never heard of PODS, the company essentially provides a portable storage unit. Gone are the days of driving to the local storage unit (which conveniently is open only during normal work hours), wheeling your dolly through tight hallways and elevators to get that barbecue you need for the picnic. Now you have the convenience of a storage unit in your yard.

Ever notice how everyone parks their cars in their driveways? That is because there is no room for them in the garage. A two car garage in America is a garage that you can fit two car’s worth of junk! Now imagine that you have just purchased a brand new shiny car. Lexus, Mazda, Ford, whatever. Either way, this new vehicle is your pride and joy and there is not a chance you are going to park this beauty beneath the dripping pine tree. But wait! There is a reason you bought that two car garage…so you can park your car in it! The only bad thing is that your garage is filled with bicycles, lawnmowers, powertools and all sorts of other randomness that is necessary for your household. You can’t imagine driving to the storage unit every time you want to mow the lawn or go for a ride, so you are forced to park the new car under the dripping pine.

Never fear my friend, because there is hope. By utilizing PODS, you can clear the tools and sports equipment out of the garage and still have them close at hand in a protected environment. You will also be able to park your car in the garage now too. A win-win situation for all.

Pricing: For a 16 foot container, you would be looking at about $147 a month if you live in the Seattle area. Pricing is probably similar throughout the country. A 12 footer will run you around $115 a month. Their smallest option, the 7 footer costs around $89 per month. Not sure if there is a PODS near you? They currently have operations in all states except for Montana and North Dakota.

Finally, if my argument didn’t convince you that PODS is the company of the future and if they offered stock, the investors would become filthy rich, then check out this nice little link. It is a very thought provoking comparison between PODS and your typical mini-storage company.

Keep your eyes on this company. They are going to be big someday and I am going to be first in line to buy their stock if they ever offer it.

Overview: Generex Biotechnology (GNBT) is a pharmaceutical company based out of Toronto, Canada. This biotech upstart is in the process of creating a glucose spray/inhaler for those with diabetes. Presently, people with diabetes have to inject themselves with insulin daily in order to keep their body functioning properly. They are currently in the process of beginning Phase III trials for the FDA. Their product has already been approved for use in Ecuador. According to Generex, they can potentially use the inhalation delivery method to disburse monoclonal antibodies, human growth hormone, fertility hormone, estrogen, heparin, and a number of vaccines. The company has decided that it would be more cost effective if they focused on the insulin product until they develop a steady and reliable revenue stream.

Review:

The Good: This company has a very novel idea that could potentially change the lives of people with diabetes. Currently, diabetics have to inject themselves with insulin to keep their bodies healthy. Injecting oneself with needles on a daily basis would not be a very enjoyable experience. With the creation of this product a diabetic can get their daily dose of insulin by using a delivery method similar to what people with asthma use. The delivery method that is used is called Rapid Mist. With the Rapid Mist system, the patient sprays the formulation into their mouths. “Absorption of the pharmaceutical agent occurs in the buccal cavity, principally through the inner cheek walls.” The flagship product for the Rapid Mist delivery system is Generex Oral-lyn. According to the company, “Generex Oral-lyn™ is a liquid formulation of regular human insulin that is delivered to the buccal mucosa by way of the RapidMist™ device,where absorption is limited to the mouth with no entry into the lungs. The rich vascularity of the buccal mucosa allows for much faster absorption of insulin and a shorter total duration of activity which makes Generex Oral-lyn™ an ideal prandial insulin as it can be conveniently administered immediately prior to meals with little prospect of hypoglycemia.”

Generex believes that the injection method is not highly accepted by a large amount of patients. Because of this, they feel that patients may not be as likely to comply with the prescribed treatment plan. This could lead to more medical complications and increase costs over the long run as well. The elderly may also have problems injecting themselves properly as they age. Having an inhaler devise like Rapid Mist would likely eliminate many of the above mentioned problems.

Another plus for Generex is that there is unfortunately no cure for diabetes. People with diabetes will remain dependent on insulin products for their entire lives. If Generex can bring this product to market they will have customers for life. If their condition is not treated with daily insulin, “diabetes can lead to blindness, nerve disease, amputations, heart disease and stroke.”

According to the World Health Organization, there are over 180 million people with diabetes world wide. There are approximately 18 million people with diabetes in North America. This gives any company dealing with diabetes medicine a very large and permanent subscriber base.

Institutional investment is currently at 2%. An increase in institutional investment could cause dramatic increases in the company’s stock price. Also, because this figure is so low, and institutional sell off would not likely affect the stock price by much. As of 11/26/2007, Ghi, Inc was the largest institutional investor, holding 1.91 million shares of the company.

The Bad: The company is still a ways away from being able to market this product in the United States. They are just entering the Phase III trials that are vital to the future of this company. If they cannot make it through these trials, then the company will most likely cease to exist. If they can manage to make it through the Phase III trials though, one could profit handsomely.

Generex is burning money like it grows on trees. According to their 2007 annual report, they spent $11.983 million on Research and Development and an additional $12.317 million on General and Administrative expenses. Combine this with $.182 million in revenues and you have an operating loss of $24.994 million. Since 11/2/1995 when the company began operations, they have a total operating loss of $162.466 million.

The company has financed almost all of their operations through the sale of stock. At their current cash burn rates, they will continue to have to issue more and more shares to keep themselves afloat. The issuance of more shares will dilute the share value. At the current stock price of $1.31 per share, the company will have to issue 5,553,073 additional shares to satisfy their current liabilities.

The largest negative facing this company is that they may not be approved by the FDA. If this happens the company will be worthless to investors.

Opinion: I think that Generex is a very speculative company that has a great product. If approved it could change the lives of millions of people around the world. Bringing a pharmaceutical product to market is a very costly venture, and it could be a long time before Generex Biotechnology sees a profit. I see a lot of potential in this company and if they make the right moves they can become very profitable.

I like the fact that Generex is seeking approval in companies outside of the United States as well. Having a product for sale in Ecuador shows that their product has been accepted and leads me to believe that their product can be accepted elsewhere as well. Even if they don’t get approved in the United States they could still have potential access to over 90% of the world’s diabetics. One drawback of this is that people in other countries may not have the funds to purchase Generex’s product.

Rating:

Market Sector: The Biotechnology sector is generally very speculative and volatile. This stock is not exception. This company has little revenue to speak of, so literally all price movements are a reflection of current speculation on the viability of this company. There are many Biotech companies out there, and it is possible that one invents a product superior to what Generex is attempting to produce.

Potential: Generex has an awesome potential. If they can get their product to the market I would imagine that many diabetics would want to switch to it to avoid having to inject themselves. There is really an unlimited potential for this company. At $1.31 it is priced very low which would allow an investor to make significant returns quite easily.

Risk: This is a very risky company and the price definitely reflects that. If you believe in the product that Generex Biotechnology (GNBT) is selling, now would be the time to get in on the stock before a press release pushes the price higher. Alternatively, there is a high potential that the Phase III trials could fail and the product will never reach the market. If you have a little extra cash sitting around, this company could make for an entertaining speculation.

Conclusion: 2.5 Generex Biotechnology (GNBT) is a very promising company with a unique product. I can’t quite rate them a hold (3) because they have been experiencing a steady decline for the past month and a half. On 12/14/2007 the stock closed at $1.90. It has dropped over 31% since. It could have a ways to go until it hits a bottom. I would keep my eye on this stock over the next year or so. If things go right for Generex it could see a nice price appreciation.

Note: As of 1/28/2008 I do not have any sort of financial investment in this company. For a current look at the stocks and options I own, .

Here is another very important word for investors: Dividends.

Dividends are a large reason why people invest in companies. We invest in hopes of receiving future dividends from the company. When a company makes a profit there are a few things they can do with it. They can save it up as a cash buffer so that they have access to liquid funds. They could also reinvest the money back into the company by expanding operations or increasing research and development. Finally, they could declare a dividend to the shareholders. Since shareholders are the owners of the company they are entitled to a portion of the earnings. Dividends are usually paid out on a per share basis. An increase in the quarterly dividend is generally seen as positive news for the company, while a decrease in the quarterly dividend tends to be viewed negatively by investors.

There are two different types of dividends that can be paid out. The first one is a cash dividend. For example, a company may declare a $.10 per share cash dividend. In this case a shareholder would get $.10 for every share that they owned. If you owned 1,000 shares, you would receive (1,000 shares x $.10/share = $100). Typically the per share price of a stock will drop by the amount of the dividend. This will keep the overall market capitalization of the company consistent.

The other type of dividend that a company might declare is a stock dividend. They might announce that they are giving out one share of the company for every 10 shares that someone owns. This type of dividend is not as common as the cash dividend. One possible advantage of the stock dividend is that you are not taxed on these shares until you sell them. Depending on your tax situation this might be an important thing to consider.

Just the other day the Federal Reserve decided to drop interest rates by 75 basis points. This surprise rate cut came as a response to the large dip in world markets while the US markets were closed for Martin Luther King Day. The rate cut also comes at a convenient time for banks trying to sort out their subprime situation. Many subprime borrowers were enticed into taking out loans with low initial monthly payments. When their rates adjusted their loan payments doubled in some cases. This has caused many financial institutions to write off millions and billions of dollars of bad debts. The rate cut was intended to help out many of those institutions that are in dire need of assistance.

There has been such a big deal made of this rate cut because it was unexpected. Typically rate changes are announced during one of the Fed’s planned meetings. This one occurred out of the blue. The Fed will be meeting again on January 29th and 30th. Many analysts expect that the Fed will cut rates once again to help out our struggling economy.

These rate cuts should help to stimulate our economy because they appear to help out more people than they hurt. With lower rates, subprime borrowers should see the monthly payments on their adjustable loans drop. This should help to slow down the number of foreclosures. With these rate cuts loan refinancing should become big again. Lower rates will also make the cost of owning a home less for buyers, so the housing market should start to turn around as well.

Rate cuts do have a negative impact on some people. Many retired people rely mainly on fixed income securities like CDs to provide them money to live off of. As rates decrease, their interest earned on these CDs decreases as well.

Overview: Under Armour (UA) began as a one man operation in 1996 by a former University of Maryland football player. The company specializes in high performance sportswear. They use synthetic materials to create tight fitting athletic clothing that company has designed to “wick perspiration away from the skin, help regulate body temperature, enhance comfort and mobility and improve performance regardless of weather condition.” Initially the company started out making mens shirts, but has since expanded to shorts, cleats, and womens clothing. As of 2006, Under Armour has placed their product in over 12,000 different retail outlets.

Review:

The Good: Since the company’s inception in 1996, they have continued to grow at a very steady pace. Net revenues have climbed from $49.55 million in 2002 to $430.689 million in 2006. The company is also trying to capitalize off this growth and expand into the Japanese and European markets. Under Armour has also increased their women’s apparel business by 60%. Another significant venture is that they have created a line of cleats. Their primary cleat business is for football, but they have also created cleats for baseball and softball.

Under Armour has tried to make their product more visible by sponsoring different teams. Currently they are the official outfitter of the University of Maryland, University of South Carolina, and Texas Tech football programs. They are also the official outfitter of the entire Auburn University athletic program. To top this off, they are also in the midst of a 6 year deal with the NFL to be their official footwear supplier.

According to financial statements, Under Armour’s operations seem to be getting a bit more efficient. In 2004, costs of goods sold accounted for 53.5% of net revenues. In 2006, this figure had dropped to 49.9%, making them 6.7% more efficient than before. It can also be seen throughout their financial statements that they have increased numbers across the board. Not bad considering the fierce competition of the retail world.

The Bad: Looking at the numeric financials alone, it would appear that Under Armour has very limited downside. One thing that concerns me is their $81.031 million in inventories. This figure represents 18.8% of their revenue for 2006. For comparison, Nike’s inventories in 2006 accounted for 13.9% of their revenue. These figures could explain that Under Armour has yet to be able to accurately forecast the demand for their products, causing them to overproduce and be stuck with leftover inventories.

Another possible negative is the fact that the average age of their executive officers is 40.9 years old as of the 2006 financial statement. The oldest member of this group (48) is the Vice President of Human Resources. This throws up some red flags because of the lack of experience that these major decision makers have. On the other hand, having a younger executive core in a retail company could help it be more progressive and attentive to a younger audience.

Over the past few quarters the economy has been in the dumps and this always tends to affect the retail sector. With many consumers saving now instead of spending, the retail sector has been taking a hit. Since 8/10/2007, we have seen the stock drop from $66.44/share to a current price of $34.94/share (1/23/2008). Depending on the state of the economy over the next few months, this stock could continue to drop, or it could start to rebound as it has started to over the past few days.

Another negative for the company is that Dick’s Sporting Goods and the Sports Authority account for 37% of their net revenues. If one or both of these stores were to drop their agreement to sell the Under Armour product, the company could see a large drop in revenues.

Finally, the synthetic materials used in the creation of the Under Armour products are fairly dependent on petroleum to be produced. If the cost of oil continues to rise, it would cost more to create the product. This in turn would either reduce the gross margin, or it would cause the company to increase their prices and possibly discourage customers.

Opinion: I think that Under Armour is a great company that is headed in the right direction. They are a small company and are subject to a lot of competition from companies like Nike, Adidas & Reebok. They have managed to create a niche product, although they do not have any exclusive rights to the creation of it. I think that Under Armour is headed in the right direction by selling cleats. I think if they are going to succeed in the European markets they will need to sell a Soccer cleat.

I also like the direction they are headed in with their sponsorship deals, especially those with college football. It will help give the company the exposure they need. I anticipate seeing the company inking more sponsorship deals with different colleges over the next few years.

If the company can continue to expand its’ womens and youth brand it should help out their bottom line if they market it properly. Women and youth tend to make the majority of household purchase decisions, so it is important that they attract this market.

I am also happy to see that the company has started to create more looser fitting clothing. Although the skin tight shirts that they sell look really good on someone with some muscle definition, the fact is that the majority of Americans are out of shape. By creating more looser fitting clothing, they can appeal to a wider audience.

Rating:

Market Sector: Because this is a retail company, how the retail sector performs will have a fairly strong correlation on the price movements of this stock. Since the retail sector has been a bit sluggish as of late, and since Under Armour does about 2/3 of its sales in the fall and winter months, I don’t anticipate seeing stellar numbers for this upcoming quarter. Over the past few days it seems as though this stock and the market in general have bottomed out and could be facing a rebound.

Potential: The potential of this company seems to be ever increasing. They have been increasing revenues and profits at a very fast pace over the past few years and does not show any signs of slowing down. I would expect to see profits and revenues increase by less than they typically do because of the way the economy has been lately. In the long term I see this company as having a great potential.

Risk: Even though this company is 12 years old, it is still a relatively young company and probably has a few bumps along the road to hit. I would not consider this to be an ultra-risky company to invest in. Over the long term it should be a safe bet. For short-term traders the volatility of this stock as of late would make it very risky in the short term.

Conclusion: 3.8 This stock has a very large upside to it. I can’t quite rate it a 4 because it is hard to say if the stock has truly hit its’ bottom. If I had some extra cash to invest, I would definitely take a hard look at investing in this company over the next 3-5 years.

Note: As of 1/23/2008 I do not have any sort of financial investment in this company. For a current look at the stocks and options I own, click here.

From time to time I will write a review of a company and in the end conclude whether or not it is a buy, sell or hold opportunity. I hope to do these reviews increasingly more and more so that they will make up the bulk of this site. I intend to give a brief overview of what the company does, review some of their financials, predict how the stock will fare over the short and long term, and finally make a recommendation for the stock. I plan on using a 1-5 scale to rate these stocks.

1: Strong Sell. Sell your holdings in this stock, or better yet short it.

2: Sell. This stock isn’t yet a disaster, but the future is not looking bright for it.

3: Hold. It is hard to say which direction the company is headed in. Be careful and watch for sudden changes in the stock price.

4: Accumulate. The company seems to be headed up, but not at full steam. Buy on dips in the price.

5: Strong Buy. Buy this stock before it is too late!

I will also try to revisit companies and edit my ratings of them accordingly. You can find my reviews in the Stock Recommendations category.

Sometimes you may be wondering as you read these articles what stocks/securities I own. I have stated earlier in my posts that I want to be as transparent as possible so that the reader does not think that I am trying to lead them astray with any subliminal opinions. In order to accomplish this, I am going to create a fixed page that is easily accessible by the side menu bar that lists the current securities that I own. I am not going to list a chronological list of my buys and sells so that I can gloat about my gains and sulk over my losses. I intend to make this page be purely informative in nature. I can write post after post talking about what I think would be a good investment, but in the real world you have to put up your money to back up your words. I am creating this page to show what I think or in some cases thought were good stocks. Use this page to learn from my successes and losses. I am only going to list dates and prices that the securities were bought on. I am not going to list the number of shares owned for obvious reasons.

So without further ado, here is a link to my current stocks.

Many people these days are trying to scrape by from paycheck to paycheck and have no idea of how they can start to save for the future. Well I am here to tell you the best way to accomplish this. This is not a new groundbreaking idea. In fact, you have most likely already heard this strategy mentioned time and time again by many different financial advisors. The crazy thing though is that people are still not practicing this foolproof financial strategy.

So you want to know what this foolproof strategy is huh? Well I kind of ruined the surprise by the title of this post, but here it is anyway…PAY YOURSELF FIRST!!! For those of you who have never heard of this strategy, this is how it works. It is very simple, and anyone who can do it NEEDS to do it. What you need to do is designate a certain amount of money each week, month or paycheck to go into a designated account that you have agreed not to touch unless it is an absolute emergency. Whatever money you have left over you can use for bills, rent, food or whatever else you would like to spend your money on. When you have less money to spend, you will be forced to find ways to spend your money more wisely. You will start to think twice about whether or not you need that $4 cup of coffee each day, and for those keeping score at home that adds up to ($4 x 5 days/week x 52 weeks/year) = $1,040 per year. Imagine what you could do with an extra $1,040 per year. That is the equivalent of giving yourself a 50 cent per hour raise without having to beg your boss!

Now you are probably wondering how it is that I manage my money. The way I am about to describe to you is the way that I have been doing it for the past 3 years. First of all, I have my paycheck direct deposited to my bank account. This removes the temptation to exchange my paycheck for straight cash like so many people love to do. Secondly, I have set up a bank account at an Internet-only bank. For those of you who are untrusting of Internet-only banks, choose a bank that doesn’t have many branches, which will make it difficult to access your money for impulse purchases. I currently bank at Virtualbank.com. I have been using them for over three years now, and I have never had a problem with them. This bank is a division of Lydian Private Bank, which caters to high net worth individuals in the Florida area. Knowing this should remove any doubts of the legitimacy of this bank. Every Thursday I have Virtualbank.com transfer $50 out of the checking account that I have my direct deposit go to. If I keep this up for an entire year I will have saved ($50 x 52 weeks/year = $2600). Since Virtualbank.com is online only, I can’t access my money immediately either. If I want to transfer money from Virtualbank.com to my main checking account, it will take about 3-4 business days for the transfer to be complete. Therefore, if I have any impulse purchases that may cost a decent chunk of change, I will have 3-4 business days to think it over and decide if it is really worth the money. Anything that I have left over after I transfer my money to this savings account I can use as spending money for bills.

So you don’t think that you can do this huh? Well I am doing this while making $12/hour and working a regular 40 hour week. Here’s another little tidbit just to top it off to inspire you a little bit more to save…I am also making my maximum IRA contributions ($5000/year) each year. This comes out to ($5000/12 mos = $416.67/month). So there you have it…I am saving $2600 + $5000 = $7600 per year on a $12/hour paycheck.

If I can do it, so can you!

For those of you who need a little more convincing, if you sign up for an account at Virtualbank.com right now, you will get $20 for free. If you decide after a few months that you don’t like them you can close out your account and keep the $20. To get this offer, you need to access the site through this link. As another added bonus, their money market account is paying 3.95% as of the writing of this article. Although this is not extremely high, it it a lot higher than the national average for a money market account.