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need some advice
Old 12-04-2004, 08:01 PM   #1
 
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need some advice

We just received a gift of 8k from my wife's mom. I would like some advice on where to put it. My wife wants to put it towards our mortgage.

Let me tell you a little about us. We are both 50 have no debt except for home (13 years left on a 15 yr. loan interest rate 4.875 amount still owed 145k). We have 200k in equity in home, 330k in retirement accounts and my wife has a company pension that will be worth another 350k in 5 years. She also currently maxes out on a 401k plan including the 50 and over amount. I on the other hand own a small printing company with my dad. Our company has fallen on hard times along with other printers due to new technology. My salary has dropped drastically in the past 2 years. I still manage to put about 5k in a simple IRA and 3.5k in a roth IRA.

I know the 8k will not be a life changing sum, but could anybody give me advice on what they would do with it based on my situation?

Thanks, Jeff
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Re: need some advice
Old 12-04-2004, 10:06 PM   #2
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Re: need some advice

Take what I say with a grain of salt since i'm young and don't know much... since your wife has a maxed out 401k, and you're using the 3500 in the ROTH... there don't appear to be many obvious places to stash the cash. Your two options seem to be to pay down the mortgage, or to put the money into a taxable account.

Would the $8k allow your company to re-tool a bit and better compete with this new technology (off topic, but what exactly is this new tech?)
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Re: need some advice
Old 12-05-2004, 03:01 AM   #3
 
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Re: need some advice

It sounds like your wife is the major contributor to your family's finances and this money came from her family - it seems prudent to me to let her make the call...
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Re: need some advice
Old 12-05-2004, 03:22 AM   #4
 
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Re: need some advice

I agree with cc. BTW, I am quite familar with the "small
printing" business. Jeff can tell you more, but I expect most to follow the path of the buggy whip. Actually,
I am frequently surprised there are so many still
functioning.

John Galt
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Re: need some advice
Old 12-05-2004, 03:43 AM   #5
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Re: need some advice

Being me PAY the Mortgage. Unless you are in an area where you can compete for many luctative goverment printing jobs the printing business is not one I would want to put money in now.

Burce
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Re: need some advice
Old 12-05-2004, 05:40 AM   #6
 
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Re: need some advice

Bruce is right. I forgot about those "lucrative government printing jobs". Now if you were an
illegal hispanic female (preferably disabled), you
could make a fortune

JG
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Re: need some advice
Old 12-05-2004, 06:36 AM   #7
 
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Re: need some advice

No we are not one of the privileged minorities, but we do have a loyal customer base. The main problem is lack of pricing power. Competion has led to ridiculous prices in a shrinking market.
I guess we will try to hang on to the end. After that I want a less stress filled job. Lower pay is not so much a problem as is the stress level. I now do the pricing, the billing, the bill paying, the payroll, the printing, the delivery, the sales and various other smaller functions. My son is 17 and I have one year left on child support. We live fairly simply and as I said do not have any credit debt other then the house.
I will take the money and put it into the mortgage
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Re: need some advice
Old 12-05-2004, 09:58 AM   #8
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Re: need some advice

Going on the idea of "Minority-owned businesses"....have you looked into the possibility of selling your wife the printing company, having her register as a woman-owned business, and then marketing the company as WBE-owned?

I know it may not sound like a big deal...but being in construction, I can't tell you how many projects have the 5% WBE 'goal' (read: requirement, or you'll get hell and look like you're a close-minded bigot), and making copies of plans or being the printer for construction projects can be an easy way to beef up business...not to mention all of those various levels of government (not just federal, but state and city as well) that have mandates of minimum levels of MBE/WBE business participation.
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Re: need some advice
Old 12-05-2004, 12:48 PM   #9
 
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Re: need some advice

The last company I owned/ran was mostly
a government contractor/subcontractor. The guy I
bought the company from owned it for 10 years.
When he bought it, he put it 100% in his wife's name
(ownership only) hoping to snag some more gov. business. He told me that he did not think it led to
him getting even one contract. BTW, you better be real
sure your relationship with your spouse is super solid
before you even attempt this

JG
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Re: need some advice
Old 12-05-2004, 04:06 PM   #10
 
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Re: need some advice

John, I do not intend on making my wife a corporate officer. For one, if we do go out of business I do not want the bank coming after her assets. I have a question looking at our financial picture, do you think we can make it with me working at a less stressful less income producing job? I hate what I am doing now. Corporate debt is not large about 40k plus a press loan with 2 years left. I lease my car through the corporation. My medical insurance is paid through my spouse's company.
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Re: need some advice
Old 12-05-2004, 06:21 PM   #11
 
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Re: need some advice

Hi Jeff! I don't see any problem. I think you could "make it" by not working at all. I did it
and I never had as much as you have going for you right now. Many on this board would not agree,
but I am living proof it can be done and without
any real deprivation. We have a very good life
but I have to watch the spending closely. When I retired completely in 1998 (age 54) my TOTAL
net worth was well under yours (still is).

JG
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Re: need some advice
Old 12-06-2004, 01:09 PM   #12
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Re: need some advice

I have a relative that just left the printing business. She said NAFTA killed them because everything not needed within a few days is cheaper to have done south of the border and trucked up. What's left of the business lives on urgent printing needs.

Anyway, the mortgage sounds like a reasonable option. Another place would be a Vanguard money market mutual fund or a savings account. Both are very liquid and offer a little interest to give you time to consider other asset types (stocks, bonds, REITs, etc.). The money market fund is slightly riskier than an FDIC-backed savings account but should provide better returns at what most consider negligible risk.

Banks offer "money market" accounts but they aren't the same as a low-fee no load money market mutual fund in a taxable investment accout.
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Re: need some advice
Old 12-06-2004, 03:17 PM   #13
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Re: need some advice

BMJ, Vanguard's Prime MM fund is yielding 1.76% now. You can get an FDIC insured savings account yielding 2.25% at ING Direct.
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Re: need some advice
Old 12-06-2004, 04:04 PM   #14
 
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Re: need some advice

I get 2.5% FDIC insured at a local bank. Not too
happy with it either.

JG
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Re: need some advice
Old 12-06-2004, 05:01 PM   #15
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Re: need some advice

i'd put it on the house, being debt-free gives one great peace of mind
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Re: need some advice
Old 12-06-2004, 05:55 PM   #16
 
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Re: need some advice

Hi well I put the money on the mortgage today. Thanks for all your imput. I do not think NFTA is the problem with the printing industry. I find companies and organizations do not need newsletter or manuals, they publish them on the internet and can make updates as needed. Churches now print their own weekly newsletters with desktop publishing software and a copier. Letterheads are sometimes printed on color copiers.
Today we sat in the office and got about 5 phone calls, and three small new orders.
I don't think we could retire, unless we downsize considerably. We would have to sell our house and move somewhere smaller less expensive, further out from the city with the equity. We currently live in a condo gated community. Our unit is about 2000 square feet. Most nights we stay home. We also enjoy our HD large screen LCD TV with supporting digital HD cable. We also have a cable modem internet conection. We have gotten used to this obvious luxury, but pay a heafty cable bill $165 per month.
I know if we have to we can live without it, but I don't know what we would do for day to day enjoyment.
Any thoughts?
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Re: need some advice
Old 12-06-2004, 06:27 PM   #17
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Re: need some advice

[quote Today we sat in the office and got about 5 phone calls, and three small new orders.
quote]
Jeffery,
I had a quick print franchise for about two years. *Got out when I realized too many franchises were being sold to people who did not understand profits and margin were being sold printshops.
Your quote above does suggest that perhaps you can help deal with the change by getting out to see your customers and finding out what makes you different and why they do business with you. *While you are at it, ask what it would take to get more business. Possibly consider doing more direct selling to companies like those who are still coming to you. Leverage your success
Your challenge is very similar IMHO with the retailer who has WalMart move into town. *You need to find how to make yourself valued and different. *Price is not the only game--show your customers how you can save them time and help them make money. *It will probably require changes in your levels of service and doing things you are not use to doing. *Which things? The ones your customers want help in taking care.
Good Luck
nwsteve.
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Re: need some advice
Old 12-06-2004, 10:38 PM   #18
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Re: need some advice

Hi Jeffrey,

With all due respect to JG, I think your financial
resources are a little marginal to consider retiring
now. Have you considered selling out now while
the business still has value and getting into something
else? Or, perhaps the proceeds would be enough
to tide you over until SS kicks in.

I almost bought a printing franchise back in the late
60's but got into the laundromat business instead
on a part time basis while still employed full time.
It is a relatively recession resistant cash business
with stable cash flow.

What ever you do ..... best of luck!

Charlie l



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Re: need some advice
Old 12-06-2004, 11:50 PM   #19
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Re: need some advice

FWIW, I know some guys making a fortune from "unprinting" documents. Converting from paper to digitial is a booming business.
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I was always impressed with the shred franchises.
Old 12-07-2004, 10:41 AM   #20
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I was always impressed with the shred franchises.

An ugly little sideline of the military bureaucracy is the time spent destroying all that classified & sensitive paperwork.

We had plenty of shredders but it was hard to keep up with the incoming avalanche of new paperwork. In our little training command we maintained 22 sets of reactor plant manuals, each set a 10-foot stack, and each page made not of paper but of Tyvek (yes, the stuff that houses are wrapped in). Tyvek manuals can be submerged in day-old coffee, dropped in the bilge from two decks up, wiped clean of hydraulic oil and various other nasty substances, and put right back to work. But they're darn hard to shred!

After a couple years (and about $40K) on shredder purchase & repairs, we went with a truck-mounted franchise. It was about half the cost, they did the majority of the work, and you could witness the destruction. We cleared a two-year backlog of shred in about two days. I figured that the guys with the truck-mounted shredders just took the stuff back home to their Franklin stoves.

Running a printer shop with a shredder franchise sounds like cradle-to-grave integration.
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