Turbo Wealth Building Tips

     Congratulations to the newly elected President-Barack Obama who ran on the platform of change. With the mortgage crisis, the housing crisis, the credit crisis, the Federal Bailout, possible bailouts for GM and Chrysler, rising cost of College and the Iraq War, if there was ever a time for change, now is the time! I believe the American people have spoken. This was a mandate of the people. We cannot continue to stay on the present course. We as taxpayers are not going to tolerate special interest over the taxpayer. We are no longer going to tolerate pork barrel spending and higher taxes. Change we must.

     The handwriting is on the wall, business will not longer be tolerated for “business as usual”.  You are going to see much more needed business regulation and hopefully, greater transparency. Big business, if it expects to receive bailouts from the Federal Government will face more regulation and much needed accountability. It is your tax dollar at work. As they say, money talks. If you are not satisfied with the bailout and other questionable moves by the Federal Government, remember this, come the next election. Vote for new membership. Hold your Senators and Representatives accountable. If there is a hint of corruption, vote change. If your representative is looking for pork, vote change. If your representative is spending money that only special interest is going to receive the benefit, vote for change. Yes Change we must.  Things have gotten way out of hand. The sad fact, we as taxpayers are left holding the bag. It does not have to be this way.  Let’s begin to turn things around today. Begin to be more observant of your elected officials and representatives. Remember, they are here to serve us, not the other way around. Let your representative know in writing, email or phone call, if they are voting against your interest. Change we must. We as taxpayers are no longer going to accept”Business as usual”.

      As citizens of this great country, we also have a responsibility, a responsibility to do the best for ourselves and our families. If you are spending more then you earn, then it is time for change. Time to cut your spending and balance your budget. If you are not contributing to your retirement plan, do not expect me as a taxpayer 20-30 years from now to bail you out. You have the responsibility to plan your future. You have the responsibility to begin saving today. You have the responsibility to begin to contribute to your future today. Change you must! Everyday you delay putting money in a retirement plan you are sacrificing your future lifestyle. If you do not like your present lifestyle, and you are not contributing to a pension plan, imagine how much worse it will get when you are retired. Change we must. Time for change….before it is too late!

     Maybe it’s because I always try to look at the glass as half-full. At heart, I have always been an optimist. I do believe there is a silver lining in the financial crisis. For all the doom and gloom let us see how we can turn this into a positive occurrence.

     For starters, either by design or by intent most Americans are cutting back on their expenses. Why is this good thing? Well many of you have been living beyond your means. If you cannot not afford it, do not buy it. Now with credit measures tightening up, many cannot buy because they do not have enough credit. What I would say to you, if you fall into this category, begin to pay down your debts and start saving.  Turn a crisis into an opportunity.

     The other thing to take into account, no matter how many people are screaming the sky is falling, we are still here. You are a survivor.  Life may be tough, but it’s a lot tougher in most of the world. If you have your health, a roof over your head, and surrounded by the love of your family and friends, I would say you are blessed beyond measure.

     Begin to look at the lessons of the stock market. For most of us, with the exception of your 401 or your pension, we do not dabble in the market.  Most of us are more concerned about paying our daily bills then to worry about discretionary income invested in the market.  If you do not like what happened to your 401 or your pension and you are worried what happens if the market goes through another “correction”, it is time to put your money, into safer investments.

     Finally, most experts are saying it is going to get worse before it gets better. Economic experts are saying more banks will close, more people will lose their jobs and more people are unemployed. Nothing in this world is safe. We live in interesting times. What I would strongly recommend is to start your own business. That business can be on the internet, MLM, a side job (electrical, painting, etc.) Ask what can you contribute, what can you do to add value to your community? By earning a second income if you lose your job down the road, at least you will have something to fall back on. If you keep your job, you now have an extra income to pay off your debts or to add to your retirement. A wise man once said, “Dig the well before you get thirsty”. As a Boy Scout, I was taught “Be Prepared”. In these wild economic times, sounds like great advice.

     We are all aware of President Bush  speaking on television the other day and all the doom and gloom that we had to act now.  The country was on the brink of economic collapse, if we failed to act, we would all suffer dire consequences.  Sound familiar? This was the same tactic that got us into the Iraq war.  Like the war, we need an exit strategy, not a rush to judgement. Thank goodness some cooler heads have prevailed in congress and the package has not passed as of yet.  I am amazed that the bill before congress was less then three pages. You can’t even buy a car that has a loan under 3 pages.  Yet we are supposed to act quickly and spend $700 billion dollars without knowing who is going to receive the money? Is there an oversight committee, are there any regulatory limitations? What about the CEO’s who have the “golden parachutes” and put us in this mess? The bottom line, as I stated in my last post, the financial crisis was created on greed.

     If you entered a mortgage without the benefit of an attorney, shame on you. If you purchased a home with the notion that you were making a quick investment, you made a poor choice. If you purchased a home with a gut feeling that maybe it was to much, to bad.  You see, many of us are  financially responsible Americans.  I have always payed my debts and never expected a handout. When things go bad, I was not expecting the government to bail me out.

     Interestingly I have made some poor financial choices.  I have lost money. However, I drew a line in the sand. I never put my family at risk, and never invested more then what I was prepared to lose.  When I did make poor choices I layed the blame on myself.   I was at fault, I was not the victim. I have learned and grew from my mistakes. This is what makes us  better Americans and a stronger country.

     Many of you have lost your jobs and can no longer afford your homes. To you, my heart goes out. You are truly a victim in this financial mess. It is you  that I hope you get some type of relief. However for the rest of you, because you were either misinformed, greedy, or did not possess the financial intellect, I do not feel sorry for you. Grow up, learn from your mistakes and move on. Is it really fair, that as a financially responsible taxpayer for many years I should bail you out? I do not think so!

     Lets put this in perspective. Who is making the loudest noise- Wall street and the Politicians! Who got us in to this mess-Wall Street and the Politicians? Who is most likely to benefit-Wall Street and the Politicians! Everybody, exhale. We did not get into this mess overnight- do not expect short term solutions. Now is the time to hold your local politicians feet to the fire. Contact your local representatives, let them know you are not going to give Congress and the President a blank check. Let them know they you want and demand regulatory oversight.  Let them know the current and greedy CEO’s are not to remain in their current position nor are they to profit from this mess. Finally let your local representative know if they are not willing to listen to you, perhaps come November, election time, you will look for someone who does have your interest at heart.  Lets begin today to take back our country and put it on the right financial track.

     There are many valuable lessons to be learned by the current banking crisis. Unlike the character in the Michael Douglas movie “Wall Street- who’s mantra is “Greed is good”. Many banks and businesses are learning the hard way that “Greed is not good”. Growth may be good, but not greed.

     As nice as it is to point the finger at these businesses for being so greedy, many of you are just as guilty. Say what?? I can hear some of you now, I am barely making ends meet, and I am not greedy.  My mother used to say,” never bite off more then you can chew.” Makes sense, doesn’t it? Well if you are spending more then you earn, you fall into this category. I am not talking about the person who due to inflation, (gas, electric, oil, rent, food) is living paycheck to paycheck. My prayers are with you.  I am talking too many of those sub-prime buyers buying a home, knowing they could not afford it. Or at least should have known that they could not afford such a purchase-no matter who says you can. For example, if I make $50,000 a year, and someone tells me, I can buy a house (even If you have great credit-which many of you do not have) for $500,000. Somebody is delusional, the realtor, the banker, or the buyer, possibly all three.

    Which brings me to my next point; about what is wrong with this country? No one is at fault any more. We are all victims and everyone refuses to take responsibility. I am sorry, if you enter into a contract with the slightest doubt about whether you can afford it, you cannot! Now you expect me to help you out of this mess, by raising my taxes because you did not have the foresight or intelligence to make a sound financial decision and “just say no”. I do not think so! Begin by taking responsibility and first owning up to the fact that you made a wrong financial decision. Next, the right thing to do is to downsize to a smaller or more affordable house, or go back to renting.  So, if we have learned anything today, we now know, “Greed is not good and we must be responsible for our actions.
 

As we discussed previously, major mistakes when it comes to life insurance include not having any life insurance or not having enough.

The next major error is only having life insurance through your employer. This is a problem for several reasons. Number one, it is not enough coverage. Most companies will let their employees purchase anywhere from two to five times their salary.  The average American worker will change jobs every five to seven years. In today’s depressed economy, between outsourcing and downsizing, the average American worker may change jobs even more. What the average employee fails to take in account, coverage through their employer is a benefit. They do not own the insurance. If they elect to maintain life insurance through their employer, that coverage will increase drastically when they leave their current employment. This is because the employer is no longer paying part of the premium.

 A healthy employee purchasing life insurance at age 25 will pay more for coverage when he leaves the job, say at age 32.  The rule of thumb when it comes to life insurance is to purchase as much as possible, as early as possible. Every year delayed will increase the cost, even for the healthiest employees. Insurance companies know that as one ages, the greater the risk in paying out a claim. Employees also take for granted their health status. They believe they will always be healthy. Even a simple problem like high blood pressure and or diabetes may increase premiums. If they were to purchase their own life insurance when they leave the company, if there are any major health changes they may not receive coverage or pay additional for it. We all know someone who is the poster child for health, then a short time later is diagnosed with cancer or other life threatening disease. Once that happens it’s too late.  

Life insurance is about proper planning. We all need to be prepared for ill health, or even death. We have a responsibility to make sure our families are adequately covered. By taking adequate precautions today, you will save your family financially a great deal later on.

 I remember reviewing insurance needs with a client and the client “could not afford it”. We both agreed he needed the coverage, we both agreed it would be best for him and his family. We both agreed that some coverage would be better then no coverage. However, the client could not get over the hurdle of paying for life insurance in his current situation. I ran into his wife six months later, upon seeing me she burst into tears. The first words out of her mouth were “Why didn’t my husband listen to you?” She then went on to tell me her husband died in a horrific car accident; luckily he did have some coverage through his employer.  She complained that even though she received coverage though her husbands employer, and was receiving social security for her children, she was having difficulty making ends meet. She then advised me, no matter what, she was not going to make the same mistake twice. She wanted to make sure she was covered for her family.  The lessons learned hear should be as stated in the French proverb, do not be “Penny wise and pound foolish”.

     First and major mistake when it comes to life insurance is not having any! It is hard to believe that you are required by law to have your home and car insured. Yet, many people do not take the next step and insure themselves. It is estimated that there are over 40 million people who have no life insurance. Many of those who are uninsured, can afford it, but for whatever reason have not purchased any.

     This goes hand in hand with the second major mistake, I will never die! I am making light of the situation, however there is more then a grain of truth here. Everybody knows they are going to die sometime, just not today or tomorrow.  The sad fact is, pick up any newspaper and scan the obituarities and you will see all ages. In my local newspaper here is what happened in the last three weeks. A woman was sitting on her front lawn and got killed by her neighbor, a drunk driver. Another woman was with her young child in broad daylight and was killed in a drive-by shooting. Finally, another man was taking his family in a canoe ride down a river, when in broad day light a tree fell, striking him and killing him instantly. I am sure every one of them got up that morning and death was the last thing on their mind. The sad fact, we just do not know when our number is up. Like a good Boy Scout, Be prepared! That is what life insurance is all about, “just in case” today your number came up, at least your family would have some compensation.

     The third major mistake when it comes to Life Insurance is not having enough. Some financial planers and insurance agents will tell you need to have ten times your salary. For example, Lets say you are married, have young children, whom you plan for them to attend college, and you earn $50,000 a year. If you had $500,000 worth of insurance, and want your wife and children to maintain your current lifestyle, $500,000 in an investment vehicle earning 5% would be only $25,000 a year. Your family might have social security; however we are still short of our current lifestyle. If we took the money and used it to maintain our current lifestyle, it would last less then 10 years. Of course we have to balance needs versus affordability and something is better then nothing. However the closer we can get to our needs the better our off our family will be financially.

Look for more mistakes coming next week, meanwhile feel free to drop me a line and tell me what you think. Do you know anyone who has been affected good or bad by life insurance or the lack thereof?

Financial Gold

     The Olympics start this week. Who doesn’t like the Olympics? The Olympics is all about the human drama.  The speed of a sprinter, the grace and strength of a swimmer, the agony of the marathoner, makes great television. To make it even more interesting, this event happens only once every four years, and all the participants are world class athletes. Many athletes have trained a lifetime for a single event!

     So what does this have in common with turbo wealth building! More importantly, what does the Olympics have to do with your financial success? At the heart of the Olympics is the athlete. For an athlete to grab the gold, first and foremost, he or she has to be disciplined. They are considered to be the top 1% in their competitive field. The Olympic athlete does not follow the masses. Many athletes practice several times a day, often before sunrise, when the rest of us are still sleeping! They have a dream, a goal a vision. They do not worry about failing, they focus on winning! In their athletic lifetimes, they have stumbled and failed many times. Many have faced injuries and a few are attempting difficult comebacks. You do not hear about Olympians complaining. You do not hear, “I am too tired, I think I will pass on today’s workout. I do not need a coach, I hope I don’t lose”….and a thousand other whining complaints.

      If you use those same strengths and characteristics financial success is yours. What is your dream, you goal, your vision? Do you have the financial fortitude to go after it? You will fail, and stumble, will you have the strength, the tenacity to pull yourself up and take the necessary action? Are you focusing on the goal, or is fear getting you sidetracked? Do you have a thousand excuses why it will not work, when you only need one-to make it work! For that small band, that does not follow the masses, that beats their own drum, that faces risk and adversity, we salute you. The road may not be easy, but when you win, you only remember winning! Make this day, your day, be an Olympian, and go for the financial Gold! Good Luck!

     When talking about wealth building, the first place you should start is your corporate organization.  Your career or job is your first place that we begin to accumulate wealth. Without your job, you have lost your main source of revenue.  Your job provides not only all the benefits at your disposal, but also an opportunity to increase your current wealth and finances.   Developing and finding a mentor at the workplace has numberous advantages to you as an employee. A mentor can be defined as a developmental relationship between two people.  The relationship usually is non-monetary, based on an older experienced person assisting the younger or less skilled neophyte.

Mentoring is a win-win situation for everyone involved.  The organization has several benefits. The mentor refines their teaching and coaching skills, imparting knowledge on the less experienced. The person being mentored is learning skills, and values of the corporate culture. The organization will run smoother and should maintain  or increase its efficiency.  A mentor relationship is the beginning, usually unoffically, of a chain of command. By strengthing the weakest link in the chain, the organization will grow stronger. By developing a mentor relationship at your organization, you are indirectly advising management that you are serious in your current position, and are developing skills to move up the corporate ladder. In these perilous times, the more valuable you become to the organization, the better chance you have of keeping your job.

You may be saying, thats great,  but I do not know how to find a mentor. Our company has no formal mentoring process, and I am unsure where to start. The best place to find a mentor, is to look around your current surroundings. Who at your company is the most knowledgeable, has strong leadership and people skills?  What person would you like to learn and work with? This would be a great start. 

 Now that you have found a mentor, how do you start the mentor relationship? The best way would be to Ask! Let your potential mentor  politely know that you have observed them, you admire them for their skills and knowledge. Ask them to assist you in the areas where you are weak. Most mentors will be flattered that you asked. A word of caution, a good mentor can be the beginning of a strong relationship built on trust and friendship. Do not jeopardize this relationship. Respect that person’s time. Never drop in without first setting up a time when you can meet or discuss your issues. Do not monopolize the realationship. Think how you can contribute to the mentor relationship.  When in doubt, ask your mentor. Maybe in the near future you can begin to develop a mentor relationship with someone who is less skilled and knowledgeable then you. It wil pay big dividends for all involved.

we are just skimming the surface when it comes to having a financial journal. Lets talk about the obvious. I would recommend writing in your journal your thoughts and ideas. How many times have we seen an advertisement on TV or in a magazine that is selling a product that is something similiar to an idea we had thought  (an excerise idea, a better cooking utensil, etc ). We have million dollars ideas all the time. The difference, those that are successful take the next step-action. Action towards achieving that goal. They do not just think the idea, they do everything in their power to bring their ideas to fruition.

When writing down ideas, it does not necessarily mean new products. How about our current position, ever have positive thoughts that can improve your current performance? Those of you in sales, know this to well. How many times have you mentally reviewed a sale and said, I should have said this, or Why didn’t I say that? Writing that rewiew down, will help you in the future. You are less likely to make the same mistake twice.

 Let’s keep expanding the use of our financial journal.  You also can use your financial journal to jot down some thoughts on a recent book  you read. It is no secret that we forget most of what we read in a matter of days. When you write down ideas from a book you can go back again for future refence.  My wife calls me a pack rat. I have many books, and CD’s and DVD’s on self improvement, financial wealth, success ect. I am constantly going back to “relearn” these life changing lessons. Even after reading a book several times, it is amazing what you can learn  reading the same book. Many times, depending on our current circumstances, when reading a book we have read before, you have a new perspective. When reading something from a new or different perspective, we learn new ideas.  Write them down!

You can use your financial journal to write your thoughts on achieving your goals-or not achieving them. It is just as important to find out what when wrong, as to what went right. For example, you might write, I have finally achieved the goal of paying off my credit cards, I am now out of credit card debt. I was able to acomplish this goal by taking these steps. Which you might list in your journal. Such as, I reviewed my budget, and observed where I was spending money frivolously and how I could save more. Later on, if you begn to slip and creep back into debt, you can review your past solution.  By writing things down, we cement those ideas in our mind. You are making yourself accountable. By writing things down, you are less likely to procrastinate or shrug things off. By writing things down, we take the first step towards commitment. We have taken the first step towards action, and therefore positive results.      

To summarize, we can use or financial journal to write down or goals, our spending habits, a budget, our ideas, our successes and failures. Review thought provoking books, articles, etc.  If you are currently using a financial journal and have different topics, I would love to hear from you. Isn’t is amazing that you can alter your life financially, and make positive and profound changes in your life just from a simple notebook that cost less than $5.00.

We know we can use our financial journal to write down our goals. How else can we best utilize our journal to reap positive benefits?

If you are in debt, I would recommend writting down exactly what you spend during the day. Do this for one week, you will be amazed at how much money you spend frivolously.  For example, if you start your day off with a cup of coffee, newspaper and a muffin, and it cost you $5.25 write it down. Later on you decide to visit the snack machine, buy a soda and a bag of chips, thats another $2.25.  You brought a pack lunch to work today, you are happy you are saving money. However, you did buy a soda to go down with that sandwich. Thats another $1.25. You return home from work, congratulaing youself that you were frugal and did not spend much money today.  Total cost for the day $8.25.  Lets say you are being really frugal, and spend that same amount for the rest of the week.  $41.25.  The weekend comes and you need to go out. You and your spouse go out for dinner, and again in the spirit of saving money, you rent a video instead of going to the movies. Dinner $42.75 including tip. Video for the evening, $3.25. Total cost for Saturday, $46.00. Let’s say Sunday, you go over to your in-laws. Good news, did not spend any money for dinner. However, you had to gas up for all the driving during the week. Cost for a fill up $67.00. Total amount of moeny spend during the week, $154.25. Since we are creatures of habit, we maintain the same routine for one month. You just spent $617.00. We did not count any purchases for clothing, maintaining the house (electric, phone bill, computer, Cable ) or the unplanned evenings with friends or parties for your children. We wonder where the money went? As I said, this can be a real eye-opener.

This excerise will show you exactly how much money you spend, and where you spend it. The good news, now that you know exactly where you spend your money, you can now make the necessary changes to correct your spending habits and improve your financial picture.