Turbo Wealth Building Tips

     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”.