Cash For Clunkers #1

For the past two years I've been driving a 1996 Ford E250 cargo van, so a couple of months ago when I heard about the possibility of the U.S. government authorizing a "Cash for Clunkers" program, I've been eager to learn more.

Cash for Clunkers is a controversial government program that would give new car buyers vouchers ranging from $3,500 to $4,500 towards the purchase of a new vehicle when they trade in their older, less fuel efficient automobile. Basically, if you are driving a gas-guzzling piece of crap, have had registered for the past year, and can afford a car note, the government will give the dealer - from which you are purchasing - a credit towards the new vehicle. No, they will not give you the money directly.

(1994 Ford E250 = 13 mpg)

To find out if your current car qualifies for the program, you can check its fuel efficiency by visiting: www.fueleconomy.gov

Although the European version of the program has been successful in increasing the number of new car purchases by about 450,000, the U.S. plan could increase car sales between 250,000 and one million units between July 1, 2009 (the scheduled start date) and the end of the year.

The program, which was a stand alone legislation, has been rolled into the $106 Billion emergency war funding bill that the senate passed last Thursday, and now awaits the President's signature. The original legislation called for $4B in funds which were to have come from the $787 billion economic stimulus package, but has been reduced to $1B as part of its inclusion in the war funding bill.

So if you are like me and have been contemplating how to replace and existing vehicle, this program might serve you some benefit. Of course you are going to have to be able to qualify for a loan, and have a car to trade in, but with the proposed voucher you might not have to come up with that much of a down payment.

Right now the bill remains unsigned, but chances are your local dealership is probably readying their ads for the upcoming July 4th weekend. It is still unclear how foreign car makers are going to take advantage of this offer, but Ford, GM, and Chrysler, are poised to lift themselves out of record sales declines if and when this goes into effect.

(2009 Ford E250 = 17 mpg)

Stay tuned for more info.

-whatdabusinessis.com

Death of Autotunes

"I WANT PEOPLE TO FEEL THREATENED"

"THIS IS FOR HOT 97"

"THIS IS THE DEATH OF AUTOTUNES.....MOMENT OF SILENCE"

-JAY-Z

It's 9:28pm Friday night in New York City and Hot 97.1's Funkmaster Flex and Mister Cee have been dropping bombs to Jay-Z's new record "Death of Autotunes," for the past half and hour.

ENORMOUS!!!!!

This is the funniest show I've heard in a minute. Flex and Cee are murdering everybody out there in radio-land, similar to how Jay bodied this track.

Never mind the fact that the record is nothing short of brilliant. There are enough one liners in here make it an instant classic.

Did I mention that the track pays homage to that song for loosers....."na na na na, hey hey hey, goodbye." Don't quote me on that.

Jay-Z did a superb job of summing up the ills of the music industry to.

Shout out to No I.D. for that monstrous track.

So after all of that, you still have to go find the track elsewhere. Don't worry Hot97 will put up the video in a couple of hours.

-whatdabusinessis.com

P.S. - I know this isn't our primary area of coverage, but I couldn't resist. Back to Businsess

Whose Ally Are You?

After spending the better part of the past three days trying to help a friend of mine decide whether to lease or purchase a new car, it was welcomed relief when another friend calls me up to suggest that I write a blog about the reemergence of boutique banks, notably Ally.

He mentioned seeing an ad for Ally Bank which is offering some very attractive cd and savings rates. It instantly dawned on me that I had seen the funniest commercial this morning of some guy in a suit taking away a toy truck from a kid, and replacing it with a cardboard cut-out of a truck after a few seconds of play.

LOOK AT THE KID'S FACE........

The tagline of the Ally bank revolves around 'nothing being buried in the fine print and honesty.' However, what both ads fail to indicate is that Ally Bank is nothing more than a renamed GMAC Bank. GMAC Bank was formally the financing unit of General Motors, which has received more than $12Billion from the U.S. government. From what I gather, Ally Bank is the rebranding attempt of General Motors, to distance itself from dismal auto sales and poor lending practices in its overall financial services unit. That seems like a pig in lipstick to me. Perhaps a pony might paint a better picture.

I am not a banking expert, but it is troubling to know that a failing bank, can rename itself, with the governments permission and our money, then advertise itself as a boutique bank, without mentioning their affiliations. Maybe we're using the boutique bank moniker too freely here, because boutique banks generally service a certain market, group, or industry. However the term boutique was mentioned by my friend, but built upon by myself to indicate how Ally Bank, was created for the distinct purpose of masking the failures of GMAC.

It is no different from when Valujet, remember them?, renamed themselves as AirTran Airways, not long after flight 592 crashed in the Florida everglades killing 105 passengers along with the crew. I fly AirTran regularly and airline accidents are far and in-between, but slapping a new face on someone who is ugly inside insults my intelligence and doesn't do anything to solve the underlying problems.

However, 2.25%APY on an online savings account is pretty attractive. That 2.80%APY on a 1-Year cd is not a bad looker either.

In all fairness, Ally mentions GMAC twice on it's website: www.ally.com, once under, "the ally story" and once under the FAQs.

So the question remains, whose ally are you Ally Bank?

For more information on GMAC's rebranding as Ally Bank, check out:

Thanks A.C.

-whatdabusinessis.com

Passive Interest or Aggressive R.O.I.?

So the other day I get an email from E*Trade bank announcing the reduced rate of interest my money (and yours, if you have an account with them) will be earning if I continue to let it sit in their coffers.

According to the email, my money will now earn .95%APY. When I first joined E*Trade the rate was about 4.5%. Well before this recession and prior to the collapse of the housing market E*Trade offered as much as 5.05%APY.


Now mind you, any money that is earned for doing zero work is good money, so I'm not complaining. However as a business owner, I make much with the return on investing in my company than putting it in the hands of others. Problem is, I have to do all the work.

The question is whether to continue getting a sucker rate with E*Trade and earn the passive interest or to go hard with my business to make the aggressive R.O.I.?

On the one hand, E*Trade says their rate is 5 times (5x) the national average, but there's a big difference between .95%APY and 5.05%APY. My account with ING Direct, still earns 1.5%APY, but that too is down from the original 3.5%APY I started with. To make things worst, my credit union only offers .25%APY on savings accounts and 1%APY on money market accounts. On the other hand, my business has a quarterly return of roughly 30%. But, I gotta constantly reinvest and do the work.

Never mind the fact that I'm not working with a lot of money, it's the principal of the matter. Should I just be content to earn a little while they use my money to make a lot or should I use my money to invest in me with the potential to earn more? How are you investing, passively or aggressively?

Is it better to earn passive interest or seek aggressive returns on investments? How does one differentiate earnings on saving from interest earned from investing? Could someone please help me figure this out?

In the meantime, I'm gonna continue to do both. I'm gonna put aside some in the "max-rate" (HA) savings accounts at E&Trade and ING, but invest more time and money in my ventures to truly maximize my returns.

I would suggest you do the same.

Here's a video that helps put this into perspective.

-whatdabusinessis.com

Self Made.....The Most Rewarding Success

When 2Pac rapped, "I'm a self-made millionaire" on 1996's Hit'em Up, he said it with a certain conviction, so it is no surprise that all of the African American's on Forbes' inaugural list of "The Wealthiest Black Americans" are self made millionaires, except for one, Oprah Winfrey, a self made billionaire.

Never mind the controversy surrounding 2Pac's lyrics, the fact is that his story and many of those on this list is that of African Americans who took their God-given talents and parlayed them into stratospheric success. So pardon him and them, for speaking with certainty.

The list, compiled by the people over at Forbes, highlights the names of the normal crop of African Americans that come to mind when we speak of wealth, Oprah, Tiger, Cosby, Magic, Jordan, Bob Johnson, and Jay-Z but also includes a number of lesser known names, including Don Peebles, Ulysses Bridgeman, Jr., and Quintin Primo III.

However, what they all have in common is that entrepreneurial spirit and internal drive that allowed them to be self-made.

It's is one thing to be a Hilton, a Morgan, a Carnegie, a Walton, an Astor, or a Ford, where you are essentially born into wealth, but it is a completely different ballgame when you come from the bottom, like Madam C.J. Walker, A.G. Gaston, or John H. Johnson. Your only armament is that of skill and persistence.

Almost every culture and rung of the socioeconomic scale respects the hustler. We are drawn to those who chart their own course, make their own rules, and attain success, within and outside the boundaries of the law. Be them the mobsters who built Las Vegas or the hustlers who lit up Harlem.

Aside from paying homage to those that came before you and those that helped open doors for you, being self made is what the American dream is all about. It is the redefinition of rugged individualism. That belief not only in self, but in the ability of the self to achieve on behalf of a group. What many people fail to remember is that as one person becomes a millionaire, he/she enables many others to earn alongside them.

Wealth is not created in a vacuum! It creates wealth and encourages success around it.

Just think of all the people they employ directly or indirectly through their companies. Warren Buffet has been minting millionaires since before many of us were born, like wise for Bill Gates, and many others. In theory, it is: I succeed, so we succeed.

So as you go about your daily grind, trying to figure out how to create your own
stratospheric wealth, strive to be self made. Strive to stand on your own two. Strive to make those around you wealthy in the process. Strive to create generational wealth, so that your children's children will come out the gate ahead of the pack.

You too could have "money like Cosby," if you strive to be self made.

-whatdabusinessis.com

Smoke and Mirrors

"It was all good just a week ago." - Jay-Z

Seven days ago, I woke up in Las Vegas.
Yesterday the Federal Reserve reported that the economy is still contracting, but at a slower pace.

Nine days ago, the wait for a taxi at McCarran International Airport was 20 minutes long on Monday morning.
According to our driver, cabbies used to make upto $400/day driving in Vegas, today it's is half that.

Eight days ago, I fell asleep in a suite at the MGM Grand.
Today, MGM Mirage's stock closed at $6.18. Within the past year it's been as high as $53.67.

A week ago, I had an in-room breakfast at The Four Seasons hotel Las Vegas. Those were some very expensive eggs.
Before it was taken private, by none other than Bill Gates and a Saudi Price, shares in the Four Seasons traded at $60.66.

A week ago, the strip was packed with visitors trying to see the water show in front on the Belagio.
Never mind that Las Vegas is in the middle of the desert.

This past weekend I had dinner at Maggiano's in Hackensack, N.J. with a dozen friends to celebrate a birthday. The bill came to $750. Finding a place to park took 4 loops around the lot.
One friend at dinner has been unemployed for over a year.

This morning, I saw the sweetest Maserati Quatroporte on the Long Island Expressway.
Yesterday, GM announced another round of layoffs.



It is no secret that we are in the middle of a recession, but like Vegas, the world in which we live is full of smoke and mirrors.

Regardless of what's going on, the number one objective is to not lose all your chips.

-whatdabusinessis.com

The Right Business Model

Is there such a thing as the right business model? Or, the perfect business model, or the best business model?

I posed this question to a friend of mine last night, but I can't honestly say we figured anything out.

The conclusion that we came to is that there are many different business models, each with its own pros and cons.

Without getting too theoretical this is what we came up with.

1) There is the retail business model, where you buy a product, and sell it either directly or through a distribution channel. This is probably the most common.

2) There is the subscription business model, where an individual or group pays a flat fee with minor fluctuations in costs for a service or product for a fixed amount of time. Your utility, phone, or cable company fits into this group.

3) There is the insurance business model, where again, an individual or group pays a premium for access to service or product for a longer amount of time, but doesn't always use or need the product. Medical, auto, and homeowners insurance are the usual suspects in this group.

4) There is the Multi-Level marketing business model, where a product or service is sold through a defined network of distributors who benefit from the sale of a product across various levels of involvement in that sale. Franchising is similar to a MLM, but is generally more rigid and capital intensive to get involved with.

5) There is the consultation business model, where services are rendered on a per-diem or set term basis for a fixed fee. However, consultants have to continually seek out new clients to maintain a steady stream of income.

6) Lastly, we have the contractual business model, where a basic service is provided at a set price for a set time-frame and is expected regardless of outside market forces. This arrangement can be found in just about any field, but is prevalent when dealing with services to large organizations or the government. This model is great if your budgeting an management skills are excellent.

We figured that for any business, there might more than one business model that might apply. However, as it relates to your business, you have to define what kind of structure you are most comfortable working within. It should also be noted that even though a business might have one business model, it is possible to have more than one revenue stream.

For example a publisher might make a little money from selling subscriptions, but makes substantially more from selling advertising. In addition they might take in revenue from the sale of branded products, or from consulting for other publications.

Your job as a business owner, entrepreneur, or investor is to seek out business models that feel right to you.

It's only right if it works for you.

-whatdabusinessis.com