Sahel Rafael Tamayo - A Cuban American Entrepreneur

July 15, 2019

Top Reasons Why Business Owners Should Evaluate Employee Productivity by Using the Law of Diminishing Returns

For the past several years, it has become customary for most companies to expect their employees to work longer hours, check emails and answer calls on end, and devote their lives to their job. Sadly, these things all border on being unhealthy. Good thing that times have changed as business owners rediscovered a fact Henry Ford knew all along – too much work can lead to decreased productivity, increased absenteeism, and reduced employee morale that can affect the bottom line in the end. This is where the Law of Diminishing Returns comes in.

What is the Law of Diminishing Returns?

Law of Diminishing Returns, in Economics, is also called Diminishing Marginal Returns, Principle of Diminishing Marginal Productivity, or Law of Variable Proportions. This states that the marginal or incremental output of the process of production reduces as the amount of one production factor is significantly increased while the rest of the production factors are held constant.

Based on research, this law seems to be applicable to the relationship between the hours worked and employee productivity. Experts claim that working several hours per week or for several consecutive days can lead to reduced productivity in time. Time is needed for workers to recover from their work.

Plunging into the Productivity Cliff

Output of employees appears to fall incrementally after 50 hours before dropping more severely after 55 hours. Also employees who work 70 hours don’t produce much more than those who work 55 hours.

It can be disheartening news for those driven workers wearing their long working hours as a badge of honor. However, experts warn about long hours and its health effects that are also associated with employee turnover and absenteeism.

The stark reality is that physical and mental work alike can result in fatigue that can limit the bodily and cognitive resources people spend on their work. If they don’t think clearly or move as precisely or quickly, they need to work slower to maintain safety and quality requirements.

Employees Lose Sleep

More and more employees today trade sleep for their jobs. People who were able to sleep for 6 hours or less every night worked 1 and ½ hours more than those who got longer sleeping hours.

There is overwhelming evidence that the time employees spend on their job has become the most common sleep thief these days.

However, the idea of executing healthy working limits could be good news for today’s workforce. If companies set boundaries in work, they can enjoy the benefits of higher employee output every hour. Businesses can then lower costs provided that employees stopped working before they fall off the productivity cliff.

Changes in the Company Culture

An increasing number of small business owners are now trying to tweak company culture as far as long working hours are concerned. Company leaders claim that their 40-hour weekly work policy improves the efficiency of their employees for them to focus better while at work. This policy can also free up workers to completely unplug the moment they step outside the office.

July 15, 2019

Should You Rent to Own?

If you are renting, most people would say that you are just throwing your money away. That is the reason why others are forced to consider rent to own homes. Several people say rent to own deals are a happy medium. Once you rent to own, part of the rent will go to buying the home you are renting. This means that your rent is basically laying a good foundation for your future. However, is it really a good financial decision?

Before you make any decision, it would be wise to know how rent to own works, its benefits, and other basics of this deal.

How Rent to Own Works?

The process basically starts with a contract. Actually, it starts with 2 contracts, which include a rental agreement as well as an option to buy the property.

Rental Agreement

Your rental agreement would look much like the standard lease. It’ll specify your rent and term. In some cases, it’ll be 2 or 3 years. There would be some standard terms and conditions you should meet. Once you violate such terms, you can be kicked out. But, you also risk of losing money you have paid toward the eventual purchase of the home.

Lease Option

This provides you dibs to buy the house you are getting, usually valid for term equal to lease term set forth in rental agreements. Therefore, if rental agreements specified a 3-year lease term, lease option would provide you 3 years to purchase the house without worrying about anybody else snatching and swooping in under you. To keep the first dibs, you have to pay the option fee, which may differ widely and credited to the purchase of the home at the end of the term. See to it that you sign a lease option and not lease purchase.

Benefits of Rent to Own

Locked-in Price

Rent to own contracts include agreed-upon purchase price for homes. The owners can’t raise the cost of the house in the future, so you do not need to worry about facing higher prices once market improves.

Trial Run

You’ll be able to experience the house before you commit to buy it. This only means that once you change your mind when rental term ended, you can just walk away and you are not tied down by a mortgage.

Breathing Room

Generally, you will need a good credit history to qualify for mortgage loan. If you have thin credit record or poor credit, rent to own house will buy you more time to straighten your finances.

The Bottom Line

Rent to own isn’t always a wise deal. If tenants decide not to buy the house in the long run, no extra money they paid to the seller will come back. When compared to traditional rental scenarios, tenants are responsible for maintenance and repairs during lease term and any sweat or money equity you put to the property won’t be reimbursed.

There are also other rent to own agreements that are worded so you’re obligated to buy the house at the end of the lease. It is crucial that you know what you’re signing once you enter such agreements so you won’t get stuck with a contract you can’t fulfill.

July 15, 2019

How to Maximize Gas Mileage

With the continuous increase of gas prices, learning how to maximize gas mileage has become a crucial necessity. Through stretching a task of gas a bit further, you will be able to lower the number of times you fill up your vehicle per month. This then lets you save your budget, especially if you have a non-efficient car.

However, no matter what type of vehicle you drive, having some extra money each month is always a good thing. Cutting back on your gas expenses is also the perfect way to fatten up your bank account.

Below are some basic tips on how to maximize gas mileage for you to save a few bucks every chance you get:

Inflate Your Tires Properly

You can have your tires inflated if they look low. However, even if they are just a bit low and almost unnoticeable to the eye, inflating them can lower your mileage. Under-inflated tires only make your engine use up more gas for moving the car.

See to it that your tires have been inflated according to the pressure stated in the owner’s manual to achieve the perfect balance between traction and gas mileage. It translates to more savings since being under-inflated by 10 PSI for each tire easily costs you 5 MPG or even more.

Cut Down on Excess Weight

You will be surprised to know the weight of all the junk you’ve got stored and discarded in the trunk of your car. If your vehicle got front-wheel drive, having additional weight on the rear axle only means that the front wheels don’t get a good grip as expected of them. This can reduce your mileage. Any extra weight also means that your car’s engine need to work a bit harder just to move it, and again, this can reduce gas mileage. If there are lots of weights in your car, it is best to lighten it up for you to get an additional one to two miles more per gallon.

Stick with the Suggested Motor Oil

Never assume that you can just use any kind of motor oil for your vehicle. Remember that its engine has been specifically designed to work at its best with a particular type of motor oil. If the oil you are using is heavier than recommended, it will only create excessive friction, causing your engine to burn more fuel and work much harder. Check the owner’s manual to know the recommended motor oil for your car and stick to it.

Replace Spark Plugs and Air Filter

Replacing the spark plugs and air filter during routine checkup will not just make your car last much longer as this helps your engine efficiently burn gas. For majority of cars, it is simple task that will just cost you less than $50 if you prefer to go for the DIY route.

Learning how to maximize gas mileage can go a long way in helping you enjoy great savings. This also helps your car run better while increasing its overall life span.

July 15, 2019

Can a Landlord Ruin Your Credit If I Fall Behind on My Payment?

You must always pay your rent on time even if you’re having a disagreement with the landlord. If you do not pay your rent, he or she can evict you that could make renting more difficult. You can also ask for a lawyer’s help if you need to pay the rent and want to settle a dispute with your landlord.

But, can landlords ruin your credit if you fall behind on your payment? Well, landlords may affect your credit scores and reports in particular situations. Below are some of the ways landlords may affect your credit scorers and reports:

Owed Damages

Once you move out, the landlord has the right to charge you for the damages that they feel you caused to the property. Once you owe them money for the damages and you do not pay in a certain period of time, landlords may send your account to the collection agency that may report your debts to credit bureaus.

Broken Lease Contract

Once you have decided to get out of the property early and you have a lease agreement with your landlord, you will be responsible to pay for the entire lease unless you and the landlord have agreed on something already. See to it that the said agreement is in writing so your landlord will not sue you later for the remaining amount of money. Once they sue you, the judgment may end up on the credit report of yours.

Eviction

Another way that landlords may affect the credit score is an eviction. If you’re served an eviction notice, there is nothing you should worry about because you are not yet in trouble. If the landlord takes you to the small claims court or the civil court over eviction and judge rules in favor of your landlord, that judgment would end up in the credit report that may damage your credit severely.

Rent Default

If you do not pay your rent, the same thing applies. If you cannot pay the rent and get behind, the landlord may report you to the collection agency that would end up on credit report. Once a collection reports to credit bureaus, it will go to your report as delinquency that can hurt the credit more than the late payments or some minor credit infractions.

You should take note that any derogatory record on your credit report will stay on your report for a total of 7 years, which is quite a long time to wait for that details to disappear. See to it that you’re avoiding any particular derogatory records on your report or you might be digging out of the hole for some years. If you like to check your credit score to ensure that they’re in good standing, consider getting a free credit score.

If you want to know more information on how landlords can ruin your credit once you fall behind on your payment, always ask for professional assistance or ask somebody who experienced it before.

June 8, 2019

When to Sell Your Stock

Various sources have numerous recommendations for buying stocks, with the most prevalent ones coming from stockbrokers, analysts, investment managers, and investment newsletters. But, there is very limited advice on when to sell your stock. If you need a quick guide on the best time for selling your stock, here are a few tips you can keep in mind.

Deterioration in Fundamentals

Together with tracking the stock price of a firm after a price target is established, it is important to monitor how the underlying business performs. One good reason for selling is once you notice a decline in business fundamentals. In a perfect word, the investor will realize deterioration in profit margins, sales, cash flow or other primary operating fundamentals prior to the decline of the stock price. Analysts who have more experience may read deeper into financial statements, including filing footnotes other investors might overlook.

Fraud is among the more serious flaws in fundamentals. Investors who managed to spot financial fraud early on from the likes of Tyco, Enron, and WorldCom saved significant sums as these firms’ share prices went downhill.

Your Price Target is Hit

During the initial purchase of a stock, more astute investors often establish their price target or they have a range as to when they will consider selling their stock. Every purchase of stock must include the analysis of the stock’s worth, with the current price at substantial discount to the estimated value. For example, it would be worthy goal to sell out of the stock once its price is doubled and it is an implication that the investor assumes that it has been undervalued by 50 percent.

Even seasoned investors might find it hard to reach one price target. A range is much more realistic instead just like option to sell the position off while it rises to help lock in the gains.

A Better Opportunity Arrives

Opportunity cost is one advantage that you can obtain through going with a good alternative. Prior to owning any stock, you need to compare this with potential gains you can obtain when you own another stock. When the alternative is much better, it will make sense to sell the existing position and purchase the other.

It is can be very hard to accurately identify opportunity cost but it can include putting an investment in a competitor when its growth prospects is equally compelling and trades at much lower valuation.

After a Merger

In general, the average takeover premium or the price for buying out a company ranges from 20% to 40%. If luck is with the investor enough for owning a stock that gets acquired for a substantial premium, selling it would be the most ideal course of action. Choosing to continue to own the stick even following a merger could have some merits, like when the combined companies’ competitive position has significantly improved.

But, mergers have somewhat lousy success track records. In addition, the deal may take several months before it gets completed. Thus, from the perspective of opportunity cost, it makes sense to look for an alternative opportunity for investment with a better upside potential.

June 8, 2019

How to Buy Your First Stock

The stock market is one interesting place. If you have plans to enter it, chances are you are excited at the mere thought of earning some money on the side. Well, this is an actual possibility provided that you are playing all your cards the right way. However, taking the plunge into the world of stocks is not an easy feat, so you need to come fully equipped in every sense of the world.

Keep in mind the following tips on how to buy your first stock to ensure a successful venture.

Do Your Research

Prior to buying any stock, doing your research is the first step that can never be stressed enough. While there are a lot of experts and professionals out there who can give you sound advice, don’t forget that there are those who just claim to be experts whose advice might not really be as reliable. So, if some of your friends give you tip and encourage you to buy simply because this or that company is popular, make sure that you don’t just follow their advice blindly.

Start with Stable Stock from a Reliable Company

Beginners are recommended to start first with stable stock. It is best that you go for a company that has been in the industry for some time then read more about them. You can get some help from financial magazines and even websites. You need to look into the status and performance of the company you are considering as well as the market’s state as a whole. This can come in handy when making your final decision.

It is crucial to choose a stock and company that has been around for some time as it will give you better opportunity for making predictions of how the future will be like. While it may be great to invest in new companies, especially if you consider how people claimed to make lots of profits out of them, there is a considerable risk of ending up losing your money.

This means that although you might not get lots of excitement from a more solid stock, this will give you better peace of mind as you get to learn this and that and make yourself more familiar with the stock trade and finance world. There is so much for you to learn here and the process will take some time.

The process of learning itself is also quite an interesting one. Numerous outside influences affect the stock market, and these include legal affairs. In the past, the market has been affected by the tort system, with large verdicts almost commonplace. It is reason why market analysts always keep an eye out on what happens in courtrooms.

Start Small

Finally, make sure that you start small while learning. Yes, joining the stock market may seem like a gamble as some risks are always involved. There are a lot of uncertainties but you could reduce your financial loss if you do your research and watch out for influences that could affect your stock.

June 8, 2019

How Often Should You Be Investing

One of the biggest fears of most people when they first start investing is that they will make a dumb choice that will prevent them from enjoying the best returns on their investment. They feel anxious and worried about this and that fund, buying bonds, or buying real estate. Their anxieties and worries and indecisions continue to pile up that keeps them from making any investments in the first place.

Well, this is actually a big mistake and for a good reason. A poor choice in investment can take a really long time before it makes any substantial negative impact on your finances. However, it wouldn’t take that long before you notice a negative effect if you choose not to invest at all.

For instance, let’s say that you set aside $100 monthly for retirement. You can choose to put money aside in a randomly chosen investment earning 6% every year or the average or you could study it for 6 months and opt for a better investment with 7% returns per year.

All in all, the main point here is that when you first start to invest, it is much more important for you to start now and try putting away as much as possible as compared to finding that perfect investment.

However, what if you want to invest yet you got several debts piled before you. What should you do then?

It is critical that you always opt for the choice which can offer your dollar with the best long term return.

Thus, the first step you should take is to stop accumulating any new debt. It is important that you avoid incurring any personal debts if you wish to get ahead with your investment.

The second step is for you to set aside some money for retirement that matches that of your employer, assuming that your employer is offering a match. Why is that? This will be an instant return of 50% to 100% on your money. If the employer will match your savings for every dollar, this would instantly double your money. Make sure you grab this first.

After this, you can start paying down those debts with high interest. Usually, it means that you need to pay off things such as credit cards although you need to wait on other things such as house loans or car loans.

Following this, you can now invest in your retirement of a minimum of 10% of your current income or even a minimum of 15% if you feel like you are a bit behind.

Again, investing should be done as early as now. Always go for the best investment that you can find right away then start from there. If you wish to make changes later on, it is easy to do so but making up for the lost time will not be possible.

The secret for investing is to always start now and try contributing as much as you could and use frugality to your own advantage. If you don’t use these two tactics, you might end up finding yourself several years behind where you could have been.

June 8, 2019

How Much Cash Do You Need To Buy Your First Home

Mortgages may cause lots of headaches, but for some people they’re the only route to a new house. However, for some who will buy a house with cash, it can be possible. Having an on hand cash to close deal is frequently a must. Down payment is the hardest to cover since these are around twenty percent of the value of a home. Therefore, if you are gearing up to purchase a home anytime soon, it is a great idea to determine what types of cash reserves are needed and what they will be used for.

Consider the Down Payment

You might be one of those who want to take the mortgage route to purchasing a house. The most essential and biggest expense to worry about is the down payment. If you are applying for conventional mortgage, the golden rule is making a down payment of twenty percent of purchase price. For instance, for a house with a price tag of $250,000, you would need to make at least $50,000 down payment.

The requirements for down payment are a bit different if you are applying for a different kind of loan through FHA, USDA or VA loan. You might not have to put money down at all with USDA and VA. FHA loans require a down payment equal to 3.5 percent of purchase price. It’s a good choice for anybody who’s short on cash.

You will require your down payment in separate checking account or savings account. If your family member will give you the money as a gift, it is a great idea to let that sit in your account for several months. It is also essential to have a detailed documentation to show where money came from in case lenders ask for proof that down payment is considered a gift.

Pay for the Closing Costs

The closing costs basically refer to all expenses, which are due when the time you sign final mortgage paperwork. It includes things such as loan origination costs, attorney’s fees, and credit check fees. It isn’t unusual for the closing costs to run anywhere from two percent to five percent of purchase price.

Some Costs You Should Know

Prepaid expenses are basically the costs that might need to be paid out of your pockets prior to the closing. For instance, an appraisal is frequently paid upfront. Your lenders might also need you to pay for your home inspections before loans come to fruition. If you are rolling the property taxes and insurance of homeowner to your mortgage payment, you will also require to have enough money for covering the costs.

No matter what method you use for paying your new home, it is a personal decision. So, ensure you do ample research about which decisions should work best for you. For you to do this accurately, you might like to do deep dive to your finances monthly. This can help you see what type of cash you would require to make mortgage feasible. Never forget to include the outside costs including origination charges, paperwork fees, closing costs, and so on.

May 7, 2019

What is a Private Equity Fund?

A private equity fund is a pool of capital that will be invested in a company that represents a chance for high rate of return. Private equity funds come with fixed investment horizon that typically ranges from 4 to 7 years. At this point, the private equity firm hopes to exit the investment in a profitable manner. These exit strategies include selling the business to a strategic buyer or a different private equity firm and IPOs.

Accredited investors and institutional funds often compose the primary sources of a private equity fund since they can offer significant capital for a longer period of time. There is also a team of experts in investment from a certain private equity firm that raises and manages the funds.

What is Equity?

Equity is further subdivided to four primary components namely ordinary shares, CCPPO shares, preferred shares, and shareholder loans.

The equity proportion typically accounts for 30 to 40 percent of funding in the buyout. A private equity firm tends to invest in equity stake with 4 to 7 years of exit plan. Equity funding sources include private equity funds, management, investment banks, and subordinated debt holders. Most of the time, the equity fraction is composed of a combination of these different sources.

Two Types of Private Equity Funds

In general, a private equity fund falls into two primary categories: leveraged buyout or venture capital and buyout.

Leveraged Buyout (LBO) or Buyout

Leverage buyout funds invest in businesses that are already more mature, often taking the controlling interest. Leveraged buyout funds use large leverage amounts of increase the rate of return. These buyout funds have the tendency to be substantially bigger in size compared to venture capital funds.

Venture Capital (VC)

Venture capital funds refer to pools of capital that often invest in emerging, early stage, and small businesses expected to have high potential of growth but with limited access to some other capital forms. In the viewpoint of small startups that have ambitious innovations and value propositions, venture capital funds are an integral source for raising capital since they don’t have access to bigger amounts of debt. As for the investor’s point of view, even though venture capital funds have some risks from putting investments in an unconfirmed emerging business, they still have the ability to generate some really extraordinary returns.

Common Exit Routes for Private Equity Funds

Once they decide to exit, private equity firms can take any of two paths: partial exit or total exit. In wholesale exit, there could be a trade sale to a different buyer, a share repurchase, or leveraged buyout by a different private equity firm.

In partial exit, a private placement can happen where a different investor buys a part of the business. Corporate restructuring is another possibility in which the external investors can get involved to raise the position they have in the business through partially acquiring the stake of the private equity firm. Corporate venturing may also happen where the management increases business ownership.

May 7, 2019

How to Stop Procrastinating

Do you always find yourself wondering where you day went at the end of every day? If this sounds just like you, you are like millions of people on this planet. Boy, you are a procrastinator!

Procrastination is the number one reason why you remain to be in the exact same place you were last year. Procrastination is also why you constantly find yourself lingering in your past. Procrastination is the one that steals your dreams!

But, worry not because it doesn’t mean that you can just stick with your habit of procrastinating. Below are a few tips on how to stop procrastination so you can start chasing and achieving your goals in no time!

Focus, Focus, and Focus

Focus on a single task one at a time. Avoid thinking or worrying about the next task if you haven’t completed the current task yet. Also, don’t think about your previous task the moment you moved on to your next one. If the specific task you work on at the moment is a part of a bigger project, try to define a certain goal for that specific period of time.

Start with the Hardest Task

The task you find the hardest to do should be the first task you work on. Why? This is because doing this will give you that much needed gusto and shot of enthusiasms once you have completed it. That feeling of success that you generate from completing the hardest task will boost your productivity to dramatic levels.

Clear Your Mind by Clearing Your Desktop

Keeping your desktop clear and clean will let you focus one task at a time. You surely heard of the saying that a clean environment means a clean mind. So, ditch those mountains of paper and make sure that your desk and mind stay free from clutter.

Take Short Breaks Every Now and Then and Stay Hydrated

There are times when you feel as if your focus is going elsewhere. If this happens, drinking water might all that you need. Scientists have proven without a doubt that regular intake of fluid is important for creativity so see to it that you take regular breaks of 5 to 10 minutes to get a drink away from your desktop. You can also do a few exercises such as a short walk.

Develop a Reward System

This sounds great but many of you probably fail to do this consistently enough. This is a great incentive for you to push forward with a certain project. Come up with a reward system you can give yourself and you will be surprised how motivated you will feel in putting one foot before the other even when things get tough.

Be Enthusiastic

Finally, whatever you might be doing, whether taking out the trash or counting pennies, always do this with enthusiasm. Give it your best shot and bring your positive energy to the specific task at hand. Talk to yourself positively and convince yourself that the task you are doing is crucial for a bigger vision.