They say cut your coat according to your cloth. This is very true as far as your personal expenses are concerned. Apart from increasing your income (which is not so easy), saving is one way by which you can easily cut down your financial setbacks in a big way.
By being a little thrifty in your spending, on simple things like food, shelter, clothing and transportation, you can save a lot of money.
Cook at home
Are you fast becoming a fast food nut? Well, did you know that eating out contributes to your mounting expenses more than anything else does? More so it causes health problems. Even if you are a busy professional, you can cook at home. The trick is - take out some time, cook at once and eat it over a period of time. Go ahead and invest in a crock pot (or a slow cooker). It costs anywhere between $20 and $80. You can cook delicious stews, soups and other stuff over the weekend. And what’s more, it’s fun, cheap and healthy too. You can freeze this and use this later. Every time you sit down to eat, all you have to do is to heat it up in the microwave. Now that’s going to be a happy change, for sure.
Dump the car
Save your costs on gas, maintenance and insurance. Travel smooth in carpools and public transportation like bus, light rail or train. It will even save you the mental hassle of being stuck in a messy traffic jam. If your workplace is close, walk down or bike your way to it. You will end up burning those evil calories and keeping your blood pressure in check. What’s more, you will take out more time to have a good look at the world around you.
Save on housing costs
Do your own repairs, changes and overhauling. It is an easy way to cut down your expenses on the maintenance of your house.
Ask your local hardware store for tips to help you, free of cost. Do interior jobs on your own. Get creative and try your hand at painting and home decor. Not only will you save money but also be praised for the good job that you will do.
Cut your coat
Well, clothing is a major area of expenses, more so, if you have a family.
Try to use second hand clothes and learn to do your mending jobs. Use clothes line to dry your clothes rather than a dryer. See the difference.
Get rid of addiction
If you spend $5 daily on cigarettes, you are actually spending $1825 a year. So more than anything, your cigarette is burning a hole in your pocket.
Similarly with spending $10 a week on liquor, you end up with an annual bill of $520.Both put together add up to a whopping $2345! Does that ring a bell? Well, that money could be used to pay back your loans or could simply be saved.
Why Do You Want Financial Freedom?
Almost all of us know that we want financial freedom, but seldom do we know that why do we want it after all? It may seem a little too obvious a question, but nevertheless its true-the fact remains that most of us would be baffled if we are asked to put down why we hanker after financial freedom?
Well, for me, I want financial freedom because it gives me the ability to
-do anything that I love to do
-stop worrying about monetary issues
-get out of the rat race
-spend more time with family
-find time to exercise
-enjoy longer leisure hours
-have a lifestyle of my choice
-go on frequent vacations
-chill out with friends and loved ones
-donate money for social causes
Well, you can make your own list of reasons as to why you want financial freedom, just the way I have done. Your ‘whys’ may not match mine, but that’s only natural.
It’s important to know the ‘whys’ of things. Once you know why you really want to obtain something, it will keep you ticking. You will want to achieve your goals more quickly and more efficiently. I look at my list of reasons whenever I am demotivated and trust me, it really works.
After you get your list of ‘whys’ done, you should set up a personal inventory for yourself. It is a system by which you would know your current position in the course of action that you have decided for yourself.
I am sure it will be great fun doing this exercise. It will let you know whether you are going in the right direction. Even if you realize later that you have gone wrong in some way, you can come back and mend your ways again.
Another thought-provoking exercise would be to make a list of reasons why you think you are not financially free at the moment. This is important because money is an exceptionally powerful force that can easily destroy you if only you allow it to. Learn the art of mastering your money; never let it be the other way round. You can never be debt-free if you cannot do this. So show some brutal honesty – analyze the reasons why you are in debt. And when I say ‘in debt’ I don’t mean the financial crises that are beyond control and inevitable in life, but all those times you allowed money and its power to control you.
Here are some questions to consider:
Do you buy stuff to mask your own insecurities? Are you using money as a drug to comfort yourself? Do you feel you have to compete financially with your friends, coworkers, neighbors, and family members? Are you trying to impress someone? Your parents? Who is telling you that you have to live high on the hog? What is it that compels you to buy that item right now? Why don’t you have enough self-control to buy later or never?
These are serious questions which must be answered before you attempt to control your money with any kind of budget or financial system. Otherwise, it’s like treating cancer with a Band-Aid. You might even consider psychological counseling for your money difficulties.
With the list of reasons, you will form the foundation of your success. Most of us keep busy in pursuing different things, but more often than not we do not know why we are doing it. Once you have your list of reasons ready, you would know what your heart really wants and isn’t that great?
Well, for me, I want financial freedom because it gives me the ability to
-do anything that I love to do
-stop worrying about monetary issues
-get out of the rat race
-spend more time with family
-find time to exercise
-enjoy longer leisure hours
-have a lifestyle of my choice
-go on frequent vacations
-chill out with friends and loved ones
-donate money for social causes
Well, you can make your own list of reasons as to why you want financial freedom, just the way I have done. Your ‘whys’ may not match mine, but that’s only natural.
It’s important to know the ‘whys’ of things. Once you know why you really want to obtain something, it will keep you ticking. You will want to achieve your goals more quickly and more efficiently. I look at my list of reasons whenever I am demotivated and trust me, it really works.
After you get your list of ‘whys’ done, you should set up a personal inventory for yourself. It is a system by which you would know your current position in the course of action that you have decided for yourself.
I am sure it will be great fun doing this exercise. It will let you know whether you are going in the right direction. Even if you realize later that you have gone wrong in some way, you can come back and mend your ways again.
Another thought-provoking exercise would be to make a list of reasons why you think you are not financially free at the moment. This is important because money is an exceptionally powerful force that can easily destroy you if only you allow it to. Learn the art of mastering your money; never let it be the other way round. You can never be debt-free if you cannot do this. So show some brutal honesty – analyze the reasons why you are in debt. And when I say ‘in debt’ I don’t mean the financial crises that are beyond control and inevitable in life, but all those times you allowed money and its power to control you.
Here are some questions to consider:
Do you buy stuff to mask your own insecurities? Are you using money as a drug to comfort yourself? Do you feel you have to compete financially with your friends, coworkers, neighbors, and family members? Are you trying to impress someone? Your parents? Who is telling you that you have to live high on the hog? What is it that compels you to buy that item right now? Why don’t you have enough self-control to buy later or never?
These are serious questions which must be answered before you attempt to control your money with any kind of budget or financial system. Otherwise, it’s like treating cancer with a Band-Aid. You might even consider psychological counseling for your money difficulties.
With the list of reasons, you will form the foundation of your success. Most of us keep busy in pursuing different things, but more often than not we do not know why we are doing it. Once you have your list of reasons ready, you would know what your heart really wants and isn’t that great?
Working Your Way To Financial Freedom
Most of us know that stats show more than 40% workers do not save for retirement at all and more than 30% people will inherit less than $50,000.studies also show that the national rate of savings have fallen to 2% today, from the 10%and above that it was in the 1980’s.
Well, when we know all this, then why are we not saving? Most people retire at some point of time or other, but little do they plan to make life comfortable after. Some of the probable reasons could be -
Social security and pension
Suppose you have worked for Exxon Mobil (NYSE:XOM) or say General Electric (NYSE:GE) or maybe you have served as a teacher or a policeman, then you would end up with a decent pension though it will be lesser than what you earned earlier.
Even if you have worked for 25 years with a company that offers a defined benefit plan, for a salary of $50,000 per annum, you would get a pension of $18750.together with your earnings from social securities(say $75,400 approximately).you would end up with a decent post-retirement income of $34,150.
However the catch here is the number of years you have worked in that company. Say, if you have worked for 15 years, your pension would drop to a meager sum of $11,250 and even after adding your social securities it would be $26,650 a year! Now that will be difficult to live on.
Another fix is that your pension benefit is not subject to inflation. Whatever you got at 65 years of age, is what you will get even when you turn 85.
Most of us ignore the fact that unless we end up with a real high pension, it will be difficult for us to make both ends if we don’t have our own savings.
Whopping inheritances
We all hear that baby boomers are supposed to inherit a huge sum of money, but how far is it true?
Many of the estimates made in the 1990’s have not materialized in the 2000’s. Most of the inherited money is being spent on medical expenses because of the slow death-rates in the country.
Phil Marti, while answering questions on the Rule of Retirement Discussion Panel, had said the following about an inheritance of $300,000 -
“If it happens, it’s found money, but don’t count on it. My parents, who died at 89 and 90, got along pretty well until May 2000. My mother died June 2001 and my father May 2002. In between we spent well over $200,000 on home health care, plus all the other expenses that go along with maintaining a life.”
Tendencies to save later
Always remember, that the earlier you start to save, the more amount of money you save. As far as saving is concerned, time and money are directly proportional to each other. See below how much a person could have saved at each stage of his life, keeping aside $3000 a year (which also happens to be the contribution amount to the IRA).
Age -- Amount saved at 65 years
25 -- $914,031
26 -- $601,623
27 -- $391,932
28 -- $251,184
29 -- $156,713
30 -- $93,303
So now you know that the value of your nest egg can be depreciated by a one-third, for even 5 years of delay. So I hope you have well realized that time is money.
Inability to save
If you have a family or you stay in an expensive area, it is difficult to save money. But with a little thinking and revamping of your expenses, you can definitely cut down certain costs which are not doing any real good to you.
We all have useless expenses and bad investments, like I had my gym membership and cable connection which I did not need that badly anymore. So when my wife was without a job, we decided to do away with both. In the process we saved $120 a month. Now that comes up to $1440 per year.
In 20 years time, if it grows at a yearly rate of 8%,then this $120 can grow up to a whopping sum of $71,275 and more than $100,000 in 25 years. Now, don’t you agree that our gym and cable were too expensive to us?
The idea to work forever
Well, lots of people never want to go without work. It is definitely a commendable idea to be productive all your life. But the ideal situation is to work for personal satisfaction and not only for money. I am sure all of us would agree to that.
Well, when we know all this, then why are we not saving? Most people retire at some point of time or other, but little do they plan to make life comfortable after. Some of the probable reasons could be -
Social security and pension
Suppose you have worked for Exxon Mobil (NYSE:XOM) or say General Electric (NYSE:GE) or maybe you have served as a teacher or a policeman, then you would end up with a decent pension though it will be lesser than what you earned earlier.
Even if you have worked for 25 years with a company that offers a defined benefit plan, for a salary of $50,000 per annum, you would get a pension of $18750.together with your earnings from social securities(say $75,400 approximately).you would end up with a decent post-retirement income of $34,150.
However the catch here is the number of years you have worked in that company. Say, if you have worked for 15 years, your pension would drop to a meager sum of $11,250 and even after adding your social securities it would be $26,650 a year! Now that will be difficult to live on.
Another fix is that your pension benefit is not subject to inflation. Whatever you got at 65 years of age, is what you will get even when you turn 85.
Most of us ignore the fact that unless we end up with a real high pension, it will be difficult for us to make both ends if we don’t have our own savings.
Whopping inheritances
We all hear that baby boomers are supposed to inherit a huge sum of money, but how far is it true?
Many of the estimates made in the 1990’s have not materialized in the 2000’s. Most of the inherited money is being spent on medical expenses because of the slow death-rates in the country.
Phil Marti, while answering questions on the Rule of Retirement Discussion Panel, had said the following about an inheritance of $300,000 -
“If it happens, it’s found money, but don’t count on it. My parents, who died at 89 and 90, got along pretty well until May 2000. My mother died June 2001 and my father May 2002. In between we spent well over $200,000 on home health care, plus all the other expenses that go along with maintaining a life.”
Tendencies to save later
Always remember, that the earlier you start to save, the more amount of money you save. As far as saving is concerned, time and money are directly proportional to each other. See below how much a person could have saved at each stage of his life, keeping aside $3000 a year (which also happens to be the contribution amount to the IRA).
Age -- Amount saved at 65 years
25 -- $914,031
26 -- $601,623
27 -- $391,932
28 -- $251,184
29 -- $156,713
30 -- $93,303
So now you know that the value of your nest egg can be depreciated by a one-third, for even 5 years of delay. So I hope you have well realized that time is money.
Inability to save
If you have a family or you stay in an expensive area, it is difficult to save money. But with a little thinking and revamping of your expenses, you can definitely cut down certain costs which are not doing any real good to you.
We all have useless expenses and bad investments, like I had my gym membership and cable connection which I did not need that badly anymore. So when my wife was without a job, we decided to do away with both. In the process we saved $120 a month. Now that comes up to $1440 per year.
In 20 years time, if it grows at a yearly rate of 8%,then this $120 can grow up to a whopping sum of $71,275 and more than $100,000 in 25 years. Now, don’t you agree that our gym and cable were too expensive to us?
The idea to work forever
Well, lots of people never want to go without work. It is definitely a commendable idea to be productive all your life. But the ideal situation is to work for personal satisfaction and not only for money. I am sure all of us would agree to that.
Be Safe With Online Banking
Protecting your privacy is a major concern for all people that surf the Internet everyday, but when it comes to being safe with online banking extreme precautions should be applied.
The World Wide Web is plagued with criminal activities such as identity thieving, financial scams, phishing, and many other fraudulent activities.
However, the number of banks and financial institutions with an online presence increases every day, because the Internet is a convenient way to offer their products and services, at the time that communication with consumers is easier.
From this approach, consumers have numerous advantages over traditional or telephone banking, managing their accounts from a central location without leaving their homes or offices.
Considering the banking expansion, new tools for safe banking are being developed every day, but there is no better tool that your educated decision and common sense, being aware of possible any fraud activity.
The way to avoid costly mistakes is by asking, if you get a surprising message from your bank urging you to login and update your information, it is more likely that someone is trying to victimize you. Therefore, a quick phone call to your bank can confirm what you already should know: most financial entities will not ask you to do so.
Before enrolling in online banking, make sure of its legitimacy, confirming that your deposit is federally insured. After this basic security routine, learn more about the service and understand your rights and obligations as a consumer.
If there is something that is not clear, get assistance from financial advisors or banking regulators. The "About us" section is the source to find guidance, otherwise contact the Federal Deposit Insurance Corporation (FDIC) for more information about the institution and its offerings.
Privacy should remain your major concern to avoid identity theft so make sure to keep your personal information private and secure. As of July 2001, all banks are required to provide their customers with a copy of their privacy policy.
Sometimes your information will be shared with affiliates of the bank or other parties for helping to drive products and services that you might need. Even though, it is your right to refuse to get your information shared with others and banks must stick to your wish.
Online transactions are made through a public network: the Internet. It is the responsibility of your bank to provide you with guidance about security practices to keep your credit cards and accounts numbers, Social Security number and other personal information safe.
Data encryption, secure passwords, and personal identification numbers (PINs) are the common methods to keep you safe within your online banking service.
The World Wide Web is plagued with criminal activities such as identity thieving, financial scams, phishing, and many other fraudulent activities.
However, the number of banks and financial institutions with an online presence increases every day, because the Internet is a convenient way to offer their products and services, at the time that communication with consumers is easier.
From this approach, consumers have numerous advantages over traditional or telephone banking, managing their accounts from a central location without leaving their homes or offices.
Considering the banking expansion, new tools for safe banking are being developed every day, but there is no better tool that your educated decision and common sense, being aware of possible any fraud activity.
The way to avoid costly mistakes is by asking, if you get a surprising message from your bank urging you to login and update your information, it is more likely that someone is trying to victimize you. Therefore, a quick phone call to your bank can confirm what you already should know: most financial entities will not ask you to do so.
Before enrolling in online banking, make sure of its legitimacy, confirming that your deposit is federally insured. After this basic security routine, learn more about the service and understand your rights and obligations as a consumer.
If there is something that is not clear, get assistance from financial advisors or banking regulators. The "About us" section is the source to find guidance, otherwise contact the Federal Deposit Insurance Corporation (FDIC) for more information about the institution and its offerings.
Privacy should remain your major concern to avoid identity theft so make sure to keep your personal information private and secure. As of July 2001, all banks are required to provide their customers with a copy of their privacy policy.
Sometimes your information will be shared with affiliates of the bank or other parties for helping to drive products and services that you might need. Even though, it is your right to refuse to get your information shared with others and banks must stick to your wish.
Online transactions are made through a public network: the Internet. It is the responsibility of your bank to provide you with guidance about security practices to keep your credit cards and accounts numbers, Social Security number and other personal information safe.
Data encryption, secure passwords, and personal identification numbers (PINs) are the common methods to keep you safe within your online banking service.
What Would You Do With £100,000?
Have you ever thought of those who have money being wise about money? You would be wrong to think so; managing money is troublesome for both the well to do and those who have none.
We were in a coffee shop catching up on life when my friend asked me what I would do if I had £100, 000. I asked him if he had the said amount and wanted advice on what to do with money, but he would not budge until I answered his question.
After telling him what I would do with the money, he then told me what he would and that a friend of his had such an amount sitting in the bank, doing nothing. He also told me the money had been in the bank for a while and his friend didn’t have a clue what to do.
The rest of the afternoon was spent talking about the various things one could do with a hundred grand. We also lamented at how ridiculous it was to have such a large sum of money and not use it wisely. One of the things we agreed was how wasteful it was to have money sitting in the bank doing nothing -- and especially in a basic saving account.
The irony of it all was that his friend was working for a bank. Not only do you expect someone who worked in a bank to know how to manage money, you would also expect his employers to advice him on the best home for his money.
Our friend was busy working and making money for others, forgetting to make money for himself. If only he knew all he had to do was, think of how to manage and grow his money, then he would not have to work long hours.
As we walked home, we concluded that making and managing money was something to be learnt, and the mere having of money did not mean one was financially astute. We also agreed our money should be working as hard as we are. As we made our separate ways, we shook hands to not wasting money.
We were in a coffee shop catching up on life when my friend asked me what I would do if I had £100, 000. I asked him if he had the said amount and wanted advice on what to do with money, but he would not budge until I answered his question.
After telling him what I would do with the money, he then told me what he would and that a friend of his had such an amount sitting in the bank, doing nothing. He also told me the money had been in the bank for a while and his friend didn’t have a clue what to do.
The rest of the afternoon was spent talking about the various things one could do with a hundred grand. We also lamented at how ridiculous it was to have such a large sum of money and not use it wisely. One of the things we agreed was how wasteful it was to have money sitting in the bank doing nothing -- and especially in a basic saving account.
The irony of it all was that his friend was working for a bank. Not only do you expect someone who worked in a bank to know how to manage money, you would also expect his employers to advice him on the best home for his money.
Our friend was busy working and making money for others, forgetting to make money for himself. If only he knew all he had to do was, think of how to manage and grow his money, then he would not have to work long hours.
As we walked home, we concluded that making and managing money was something to be learnt, and the mere having of money did not mean one was financially astute. We also agreed our money should be working as hard as we are. As we made our separate ways, we shook hands to not wasting money.
The Forgotten Art of 'Private Financing' - Being on the Correct Side of Debt
Investing in Debt
I know you “Financial Guru’s” know what I mean when I use the term, Private Financing, but most of us haven’t had your education. And, sadly, our primary and secondary institutions of learning spend little time, if any, on preparing students for the world of credit and debt. Most young people learn about credit, and don’t understand what it means, until they graduate high school and get to college.
The bankers and credit card companies meet freshmen during college orientation and pass out their cards. The first time our students swipe those miraculous pieces of plastic and get what they want, their feeling of financial power is awesome. After all it will be 30 days before they’ll see the billing and interest due for their purchases.
This is, of course, the wrong side of the “debt equation” as I see it. One should want to be on the side of the banker and not be the debtor. But how does one accomplish that?
My, Late in Life, Education
You see, I had no formal education in financing and therefore I was always on the wrong side of the debt. My education in Real Estate Financing started much later in life than it should have. In fact I met Frank, my instructor, about a dozen years ago when I answered an ad about “Investing in Debt”.
Just the ad caption intrigued me enough to call the number and set up an appointment. At first I didn’t understand the idea but after our conversation, the process became more clear. I had never heard the term “Private Mortgage” before that day, at least not by that term.
Private Mortgage Notes
Simply stated, private mortgages are exactly the same as loans you get from the local bank which lends money to buy a real estate. The banker lends the money and the mortgagor (you) pay back the money plus interest over time. You own your house and the bank’s depositors are happy to make interest on their money. Everybody wins!
Private Mortgage “Holders” are little private banks. For instance, your next door neighbor might be a private financier who lends a buyer the money to buy a home. In fact, I found out that my parents bought their first home with a private mortgage, financed by our next door neighbor. They were, by no means financial experts, but they accepted his generosity and bought their first home. What did they know that I didn’t?
A Pleasantly Rude Awakening
My conversation with Frank opened up the extraordinary world of Private Financing and Creative Financing. But before your eyes glaze over and you stop reading, listen to Frank’s story about a farmer, who needed money to buy seed for his fields.
“Having no cash available, he surveyed a piece of his property and offered to sell it for $10,000. A neighbor agreed to buy the property on which to build a house. Between them they created a promissory note or promise to pay $10,000 plus interest over a certain period of time. The purchaser would build his new home on the property. The farmer had just invested in debt by becoming the bank and by receiving payments with interest.” Sound familiar? But there’s more....
Notes Are Negotiable Assets
With no money out of his pocket, the farmer had turned one type of asset, land, into another, a mortgage note, which would provide monthly income (principle and interest) for the life of the loan.
But that was not his plan; he wanted to seed his other fields. So he went to the nearest “Note Broker” and sold his promissory note for about $8,500 and then bought seed and planted a crop which he harvested the next Fall and sold for $20,000, a $10,000 profit over the market price of the land.
Using My New Knowledge
After more conversation with Frank, I caught on and asked a question. “I’m not a farmer, but I own a home which has equity, (market value minus debt) let’s say 50% equity. If I sell my home and create a note for the 50% equity, I can get paid with interest until the loan is paid off?” Let’s say when I want to retire.
All Frank did was smile at my answer. I then realized that I owned a “farmer’s field” right under my own roof. I could become the bank and lend my equity to a potential buyer of my home for principle plus interest or I could “sell the note” and get my cash now.
The Forgotten Art, Revisited
Since that time I have sold two houses using a lease purchase agreements and private mortgages to develop income. One of those was my mother’s home when she moved into a retirement residence. Her earnings over the past 4 years have been over $80,000 which she uses to fund her rent and living expenses, her personally funded retirement fund.
What If They Don’t Pay?
By this time you “Financial Guru’s” and some Attorneys, who are reading this article, are busting to tell my readers that there is a “risk” that the person who borrowed the money won’t pay off. However, government statistics show that about 4%, of the millions of outstanding mortgages, go bad. And that means that, in 96% of the millions of mortgages, the borrowers Do Pay!
Yes,, 96% of mortgagors Do Pay. And you’re rights, to get paid on a “Private Mortgage”, are protected by the law in every State, just like the loans the banks give.
So, what if we actually taught our children about “The Forgotten Art of Private Financing”? And about being on the correct side of the “debt equation”. How much better off would their futures be?
Robert J. Sivori Business Therapy
By way of introduction, I work with start-up as well as established businesses to increase business profits, assist with business planning and expansions using my small business and Corporate America experiences , in other words, I provide “Business Therapy”.
I will help you perform business profit analyses and develop marketing programs and help you obtain business financing. I operate under the premises that as business owners you want to maximize your sales, your profits and achieve your short and long term business goals.
I know you “Financial Guru’s” know what I mean when I use the term, Private Financing, but most of us haven’t had your education. And, sadly, our primary and secondary institutions of learning spend little time, if any, on preparing students for the world of credit and debt. Most young people learn about credit, and don’t understand what it means, until they graduate high school and get to college.
The bankers and credit card companies meet freshmen during college orientation and pass out their cards. The first time our students swipe those miraculous pieces of plastic and get what they want, their feeling of financial power is awesome. After all it will be 30 days before they’ll see the billing and interest due for their purchases.
This is, of course, the wrong side of the “debt equation” as I see it. One should want to be on the side of the banker and not be the debtor. But how does one accomplish that?
My, Late in Life, Education
You see, I had no formal education in financing and therefore I was always on the wrong side of the debt. My education in Real Estate Financing started much later in life than it should have. In fact I met Frank, my instructor, about a dozen years ago when I answered an ad about “Investing in Debt”.
Just the ad caption intrigued me enough to call the number and set up an appointment. At first I didn’t understand the idea but after our conversation, the process became more clear. I had never heard the term “Private Mortgage” before that day, at least not by that term.
Private Mortgage Notes
Simply stated, private mortgages are exactly the same as loans you get from the local bank which lends money to buy a real estate. The banker lends the money and the mortgagor (you) pay back the money plus interest over time. You own your house and the bank’s depositors are happy to make interest on their money. Everybody wins!
Private Mortgage “Holders” are little private banks. For instance, your next door neighbor might be a private financier who lends a buyer the money to buy a home. In fact, I found out that my parents bought their first home with a private mortgage, financed by our next door neighbor. They were, by no means financial experts, but they accepted his generosity and bought their first home. What did they know that I didn’t?
A Pleasantly Rude Awakening
My conversation with Frank opened up the extraordinary world of Private Financing and Creative Financing. But before your eyes glaze over and you stop reading, listen to Frank’s story about a farmer, who needed money to buy seed for his fields.
“Having no cash available, he surveyed a piece of his property and offered to sell it for $10,000. A neighbor agreed to buy the property on which to build a house. Between them they created a promissory note or promise to pay $10,000 plus interest over a certain period of time. The purchaser would build his new home on the property. The farmer had just invested in debt by becoming the bank and by receiving payments with interest.” Sound familiar? But there’s more....
Notes Are Negotiable Assets
With no money out of his pocket, the farmer had turned one type of asset, land, into another, a mortgage note, which would provide monthly income (principle and interest) for the life of the loan.
But that was not his plan; he wanted to seed his other fields. So he went to the nearest “Note Broker” and sold his promissory note for about $8,500 and then bought seed and planted a crop which he harvested the next Fall and sold for $20,000, a $10,000 profit over the market price of the land.
Using My New Knowledge
After more conversation with Frank, I caught on and asked a question. “I’m not a farmer, but I own a home which has equity, (market value minus debt) let’s say 50% equity. If I sell my home and create a note for the 50% equity, I can get paid with interest until the loan is paid off?” Let’s say when I want to retire.
All Frank did was smile at my answer. I then realized that I owned a “farmer’s field” right under my own roof. I could become the bank and lend my equity to a potential buyer of my home for principle plus interest or I could “sell the note” and get my cash now.
The Forgotten Art, Revisited
Since that time I have sold two houses using a lease purchase agreements and private mortgages to develop income. One of those was my mother’s home when she moved into a retirement residence. Her earnings over the past 4 years have been over $80,000 which she uses to fund her rent and living expenses, her personally funded retirement fund.
What If They Don’t Pay?
By this time you “Financial Guru’s” and some Attorneys, who are reading this article, are busting to tell my readers that there is a “risk” that the person who borrowed the money won’t pay off. However, government statistics show that about 4%, of the millions of outstanding mortgages, go bad. And that means that, in 96% of the millions of mortgages, the borrowers Do Pay!
Yes,, 96% of mortgagors Do Pay. And you’re rights, to get paid on a “Private Mortgage”, are protected by the law in every State, just like the loans the banks give.
So, what if we actually taught our children about “The Forgotten Art of Private Financing”? And about being on the correct side of the “debt equation”. How much better off would their futures be?
Robert J. Sivori Business Therapy
By way of introduction, I work with start-up as well as established businesses to increase business profits, assist with business planning and expansions using my small business and Corporate America experiences , in other words, I provide “Business Therapy”.
I will help you perform business profit analyses and develop marketing programs and help you obtain business financing. I operate under the premises that as business owners you want to maximize your sales, your profits and achieve your short and long term business goals.
Get a Jump on Retirement
Everyone works their whole life to pay bills, go on vacation, provide for their kids, and much more. Most people dream of the day when they can retire. It is interesting to me how few people actually work as hard at planning their retirement as they do each and every day they show up for work.
With a few smart decisions everyone can retire early if they want, provided they do not have any unforeseen medical issues, unemployment, or live through a natural disaster like Hurricane Katrina. Those things will obviously put a wrench in anybody’s financial plans for the future but with the proper planning even those events can’t stop you from achieving your goals. Just imagine how bad your future would look if you didn’t plan properly?
The first, and most important, decision you have to make when planning your future is the one to live within your means. Many people in this country feel the need to keep up with the Jones’. Their friend or neighbor gets a nice new car so they go out and do the same. How do you know if that person you are trying to keep up with isn’t buried in a pile of debt?
People max out their credit cards, keep no money in a savings account, let alone the six month emergency fund all financial professionals recommend, and keep on spending. They borrow money against their homes and spend it. I hope to help at least a few people learn the benefits of changing their lifestyle so they can live comfortably when they retire. I hate hearing about elderly people that need to chose between eating and buying medicine. Hopefully I can help prevent that from happening to a few people.
I recently began a business as an independent insurance agent/financial professional, with the goal of making a difference in people’s lives. I worked for too long under the control of a major corporation, allowing them to tell me what I had to do, whether it was good for the customer or not. Deciding I had to sleep at night I finally stood up to the company and voiced my opinion when I didn’t believe in one of their policies. The company was Liberty Mutual Insurance and they wanted to begin turning away “bad” customers for auto insurance in Massachusetts, where it is illegal to turn customers away,. Massachusetts is a “take-all state”. (I’d be happy to share additional details if you want to hear them. Feel free to contact me at the email in my signature below)
Needless to say, I was fired for “poor performance” and I decided I would not let this happen to me again. People work hard for their money and I want to help them get the most bang for their buck as opposed to hurting them. Keep an eye out for a series of articles on the following topics:
With a few smart decisions everyone can retire early if they want, provided they do not have any unforeseen medical issues, unemployment, or live through a natural disaster like Hurricane Katrina. Those things will obviously put a wrench in anybody’s financial plans for the future but with the proper planning even those events can’t stop you from achieving your goals. Just imagine how bad your future would look if you didn’t plan properly?
The first, and most important, decision you have to make when planning your future is the one to live within your means. Many people in this country feel the need to keep up with the Jones’. Their friend or neighbor gets a nice new car so they go out and do the same. How do you know if that person you are trying to keep up with isn’t buried in a pile of debt?
People max out their credit cards, keep no money in a savings account, let alone the six month emergency fund all financial professionals recommend, and keep on spending. They borrow money against their homes and spend it. I hope to help at least a few people learn the benefits of changing their lifestyle so they can live comfortably when they retire. I hate hearing about elderly people that need to chose between eating and buying medicine. Hopefully I can help prevent that from happening to a few people.
I recently began a business as an independent insurance agent/financial professional, with the goal of making a difference in people’s lives. I worked for too long under the control of a major corporation, allowing them to tell me what I had to do, whether it was good for the customer or not. Deciding I had to sleep at night I finally stood up to the company and voiced my opinion when I didn’t believe in one of their policies. The company was Liberty Mutual Insurance and they wanted to begin turning away “bad” customers for auto insurance in Massachusetts, where it is illegal to turn customers away,. Massachusetts is a “take-all state”. (I’d be happy to share additional details if you want to hear them. Feel free to contact me at the email in my signature below)
Needless to say, I was fired for “poor performance” and I decided I would not let this happen to me again. People work hard for their money and I want to help them get the most bang for their buck as opposed to hurting them. Keep an eye out for a series of articles on the following topics:
Where To Find Discount Vouchers Online
I have found a wonderful website that has discount vouchers online.
This site gives discounts at hundreds and hundreds of places, both online and offline. You can save big, too - sometimes up to 75% off, with lots of vouchers and coupons to get 50%.
The list of supported sites, vendors is impressive, too. Places like Apple iTunes, Border's, Shell, Amoco, DKNY, Docker's, Dell, Sony, Sharper Image, Safeway, Fannie May, Walgreens, The Body Shop, and so many more I don't have room to list.
You also get coupons in the mail - over $80 worth of savings each month, along with a discount card that is accepted at over 175,000 stores. Most of these stores are right down the street - both local retailers and the large chain stores.
There's also cash-back shopping at 600 of the biggest websites, so each time you make a purchase, you get cash back at the end of the month in the form of a gift card, which can be used to offset any future purchases at any of the participating retailers.
By using a combination of the discount card, the coupons in the mail, and the cash back rebates online, I have managed to save a little over $140 on my regular purchases.
I even went out with my wife, and at both our favorite restaurant, and our local movie theater, I had coupons which were accepted, and saved us $17.34 on the evening - money that we normally spend.
It costs just under $20 a month to be a member at this club, but with the savings I have made, it is great value.
They also have an option to upgrade to an associate, and if you choose that, you can earn commissions on membership sales, and quickly earn more than your monthly membership fee.
This site gives discounts at hundreds and hundreds of places, both online and offline. You can save big, too - sometimes up to 75% off, with lots of vouchers and coupons to get 50%.
The list of supported sites, vendors is impressive, too. Places like Apple iTunes, Border's, Shell, Amoco, DKNY, Docker's, Dell, Sony, Sharper Image, Safeway, Fannie May, Walgreens, The Body Shop, and so many more I don't have room to list.
You also get coupons in the mail - over $80 worth of savings each month, along with a discount card that is accepted at over 175,000 stores. Most of these stores are right down the street - both local retailers and the large chain stores.
There's also cash-back shopping at 600 of the biggest websites, so each time you make a purchase, you get cash back at the end of the month in the form of a gift card, which can be used to offset any future purchases at any of the participating retailers.
By using a combination of the discount card, the coupons in the mail, and the cash back rebates online, I have managed to save a little over $140 on my regular purchases.
I even went out with my wife, and at both our favorite restaurant, and our local movie theater, I had coupons which were accepted, and saved us $17.34 on the evening - money that we normally spend.
It costs just under $20 a month to be a member at this club, but with the savings I have made, it is great value.
They also have an option to upgrade to an associate, and if you choose that, you can earn commissions on membership sales, and quickly earn more than your monthly membership fee.
My Favorite Places To Get Discount Coupons For Circuit City
I was on a mission to buy some high ticket items the other day when a friend told me about some discount coupons for Circuit City.
I looked at them, and then decided to find all the places where you can get Circuit City rebates and discount coupons.
Here is what I found:
You can go to ebay and look for Circuit City coupons and find a lot of deals. I found the ones that were free were useless, but the ones that are a fraction of the savings are real and a very good deal.
There are also some online sites that have the coupons, but they are attached to conditional offers (you have to sign up for something or other before you get the coupon).
Then there are a few discount clubs that have discounts on Circuit City. I only had time to join a few of them, but the one I really like was called MWP, and it gave savings of 10% on purchases of $199 or more.
There were some very fine print for this discount, so here are the terms:
"Offer excludes gaming consoles, notebook and desktop computers, Xbox 360, Panasonic Plasma TV’s, Verizon, Sharper Image, Infinity, Velodyne, Bose , Polk, HP MP3 players, Apple, Kicker, MTX Thunder, Sony XBR TV’s, LG, Akai, ESA, KEF, firedog, Outlet and Circuit City GC purchases, delivery fees, shipping charges and sales tax not included in total purchase calculation. Coupon code valid online, in-store, or at 1-800-593-4391. Barcode valid in-store only. Not combinable with select Circuit City offers. Not redeemable for cash. Void where prohibited or restricted. Price matching not available on-line. See store for details. This offer is subject to change at anytime and subject to black-out dates."
I looked at them, and then decided to find all the places where you can get Circuit City rebates and discount coupons.
Here is what I found:
You can go to ebay and look for Circuit City coupons and find a lot of deals. I found the ones that were free were useless, but the ones that are a fraction of the savings are real and a very good deal.
There are also some online sites that have the coupons, but they are attached to conditional offers (you have to sign up for something or other before you get the coupon).
Then there are a few discount clubs that have discounts on Circuit City. I only had time to join a few of them, but the one I really like was called MWP, and it gave savings of 10% on purchases of $199 or more.
There were some very fine print for this discount, so here are the terms:
"Offer excludes gaming consoles, notebook and desktop computers, Xbox 360, Panasonic Plasma TV’s, Verizon, Sharper Image, Infinity, Velodyne, Bose , Polk, HP MP3 players, Apple, Kicker, MTX Thunder, Sony XBR TV’s, LG, Akai, ESA, KEF, firedog, Outlet and Circuit City GC purchases, delivery fees, shipping charges and sales tax not included in total purchase calculation. Coupon code valid online, in-store, or at 1-800-593-4391. Barcode valid in-store only. Not combinable with select Circuit City offers. Not redeemable for cash. Void where prohibited or restricted. Price matching not available on-line. See store for details. This offer is subject to change at anytime and subject to black-out dates."
The Most Important Money Principle
The answer might surprise you.
When you understand this concept, all the other concepts work, and until you implement it, none of them will work. When you stick to this concept deep in your soul, it becomes easy to save money and even have money to invest. Getting out of debt happens quickly once you learn how to apply this concept in your life. Budgeting is made easier, and your marriage and relationships regarding money are freed up and made smooth.
Contentment. That's right, contentment.
Contentment brings peace, not apathy. Not the deadhead fog of Prozac or Valium. Only contentment brings peace. We live in the most marketed-to society, and the very essence of marketing is to disturb your peace. We say things to ourselves like, "I'll be happy when I get that house;" or "I'll be happy when I get that job." Or, or, or, or!
NOT TRUE. Happiness is sold to us as an event or a thing, and consequently, our finances have suffered. Fun can be bought, not happiness.
We live among a bunch of people who are deeply in debt and have no money saved because their emotions were tricked. You probably think I'm writing about someone else, but I'm not. I am writing about you. I know because I suffer from the same disease of "stuffitis" - but I am recovering and so are many of you. The human spirit was not created to attain peace, contentment, or fulfillment by gathering more stuff.
When you understand this concept, all the other concepts work, and until you implement it, none of them will work. When you stick to this concept deep in your soul, it becomes easy to save money and even have money to invest. Getting out of debt happens quickly once you learn how to apply this concept in your life. Budgeting is made easier, and your marriage and relationships regarding money are freed up and made smooth.
Contentment. That's right, contentment.
Contentment brings peace, not apathy. Not the deadhead fog of Prozac or Valium. Only contentment brings peace. We live in the most marketed-to society, and the very essence of marketing is to disturb your peace. We say things to ourselves like, "I'll be happy when I get that house;" or "I'll be happy when I get that job." Or, or, or, or!
NOT TRUE. Happiness is sold to us as an event or a thing, and consequently, our finances have suffered. Fun can be bought, not happiness.
We live among a bunch of people who are deeply in debt and have no money saved because their emotions were tricked. You probably think I'm writing about someone else, but I'm not. I am writing about you. I know because I suffer from the same disease of "stuffitis" - but I am recovering and so are many of you. The human spirit was not created to attain peace, contentment, or fulfillment by gathering more stuff.
Financial Freedom: What Does It Really Mean?
Everyone dreams of financial freedom. It doesn’t matter if you are waiting tables at Chillis’, the CEO of a large company, or a stay-at-home Mum, the illusive concept of financial freedom calls to us. We want more time and more money, so that we can spend some of that doing things we want to do as opposed to what we have to do.
But, generally speaking, that is where we stop. At the “Wouldn’t it be nice if…” stage. We never really bother to think about how we could achieve freedom in our life. What this would look like. How things would be different. Let alone the fact that, due to a crumbling social security system, financial freedom is something we need to achieve. Not want. Not dream of. Need to.
But that still doesn’t answer the question of what do people actually mean when they refer to “Financial Freedom”. People have this vague concept of it being about “money in the bank” (as I did), or earning much more than they are spending. In truth, it has nothing to do with either of these things (although the first answer at least moves you in the correct direction). No, the real definition of financial freedom is this:
Having enough passive income to cover all your living expenses indefinitely.
That’s it. Nice and short. That is (or should be) the is the purpose of all financial strategies. Every time you make a financial decision, in the background should be a little voice whispering “Does this increase my passive income?” Now sometimes that answer may be no, and for good reason, but the question needs to be asked none-the-less. Otherwise, just like any other goal, it will be nearly impossible to hit.
So how does one achieve raising one’s passive income over one’s living expenses?
First, for clarification, we need to review passive income briefly. Passive income is money that comes to us whether we work or not. It can (and should) come from a number of sources, but some of the most common ways of earning it are: rental income from real estate you own, dividends from stocks, insurance, network marketing, and interest on loans you make (there are many other ways, of course, but that covers what most people can go out and actually do). The opposite of passive income is active income, and is where you get paid for the work you do, either as an hourly wage or a salary. The problem is, and this applies whether you are making minimum wage or $500 per hour, if you have to work for all your money, then the moment you stop working, you stop getting paid. You want to take a month off? Your yearly income just dropped by 1/12. Three months off? It just dropped by ¼. Not pretty.
Passive income, however, keeps coming in whether you are punching a clock or on a beach in Belize. For those of you who currently rent, do you know where your landlord is every month? Probably not. But you still pay your rent by the 5th of each month, right? It doesn’t matter if he is sweeping the corridors or sipping a cocktail, that money is coming into his bank account every single month. And not just from you, but from the tenants in all the other properties he owns as well.
SO, how do we make this work for you? First, you need to email us at mailto:info@abundancebound.com, with “Chart of Accounts” in the tag line, so that we can send you an excel spreadsheet that will help you work out where your money is going each month, and how much you need to cover your bills. This will give you a current “snapshot” of your financial situation, and will include rent/mortgage, groceries, utilities, artistic expenses etc.
From this you will have a number, let us say $4,000 per month, that you need to earn to keep your head above water. This amount would become your first passive income goal, because the second that you are earning $4,001 per month, you are able to live, indefinitely, at that standard of living, for the rest of your life.
The question then becomes how to reach that goal, and develop that level of passive income. That is where financial education comes in, and to answer that, let us look at the list we started earlier. The first item was rental real estate, and let’s say that this was what you decided to focus on. If you do your research around different rental markets in the country, it becomes entirely possible to find properties for sale at a reasonable price that will generate $200 per month in positive cash-flow (money left after all taxes, mortgage etc has been paid). So you purchase one of these (with money from your wealth account), and now add $200 per month to the acceleration of your “wealth cycle”. Four more properties like this, and you are ¼ of the way there. Then you start to look at dividend paying stocks, and some Oil & Gas, and maybe a business or two…
Does it start to make sense? I hope so, because I remember my own sense of shock and excitement when I realized that the goal of all my financial dreaming was something tangible and obtainable: I just hadn’t realized what it was. Because this really is the financial goal of life: get your passive income above your expenses. Some people wait to do it until they are retired, and pensions and things of that sort kick in. Most never achieve it, and either work some kind of job or rely on somebody’s charity, until they die. But with some education, some planning, and a little courage, we can all have it three to five years from now. Five years time is coming, whether you get into action on any of this or not. The question is, will you still be in the same place, doing the same thing? Or will you greet five years from now on the beach, drinking champagne, knowing that everything is paid for whether you go home next week or next month.
But, generally speaking, that is where we stop. At the “Wouldn’t it be nice if…” stage. We never really bother to think about how we could achieve freedom in our life. What this would look like. How things would be different. Let alone the fact that, due to a crumbling social security system, financial freedom is something we need to achieve. Not want. Not dream of. Need to.
But that still doesn’t answer the question of what do people actually mean when they refer to “Financial Freedom”. People have this vague concept of it being about “money in the bank” (as I did), or earning much more than they are spending. In truth, it has nothing to do with either of these things (although the first answer at least moves you in the correct direction). No, the real definition of financial freedom is this:
Having enough passive income to cover all your living expenses indefinitely.
That’s it. Nice and short. That is (or should be) the is the purpose of all financial strategies. Every time you make a financial decision, in the background should be a little voice whispering “Does this increase my passive income?” Now sometimes that answer may be no, and for good reason, but the question needs to be asked none-the-less. Otherwise, just like any other goal, it will be nearly impossible to hit.
So how does one achieve raising one’s passive income over one’s living expenses?
First, for clarification, we need to review passive income briefly. Passive income is money that comes to us whether we work or not. It can (and should) come from a number of sources, but some of the most common ways of earning it are: rental income from real estate you own, dividends from stocks, insurance, network marketing, and interest on loans you make (there are many other ways, of course, but that covers what most people can go out and actually do). The opposite of passive income is active income, and is where you get paid for the work you do, either as an hourly wage or a salary. The problem is, and this applies whether you are making minimum wage or $500 per hour, if you have to work for all your money, then the moment you stop working, you stop getting paid. You want to take a month off? Your yearly income just dropped by 1/12. Three months off? It just dropped by ¼. Not pretty.
Passive income, however, keeps coming in whether you are punching a clock or on a beach in Belize. For those of you who currently rent, do you know where your landlord is every month? Probably not. But you still pay your rent by the 5th of each month, right? It doesn’t matter if he is sweeping the corridors or sipping a cocktail, that money is coming into his bank account every single month. And not just from you, but from the tenants in all the other properties he owns as well.
SO, how do we make this work for you? First, you need to email us at mailto:info@abundancebound.com, with “Chart of Accounts” in the tag line, so that we can send you an excel spreadsheet that will help you work out where your money is going each month, and how much you need to cover your bills. This will give you a current “snapshot” of your financial situation, and will include rent/mortgage, groceries, utilities, artistic expenses etc.
From this you will have a number, let us say $4,000 per month, that you need to earn to keep your head above water. This amount would become your first passive income goal, because the second that you are earning $4,001 per month, you are able to live, indefinitely, at that standard of living, for the rest of your life.
The question then becomes how to reach that goal, and develop that level of passive income. That is where financial education comes in, and to answer that, let us look at the list we started earlier. The first item was rental real estate, and let’s say that this was what you decided to focus on. If you do your research around different rental markets in the country, it becomes entirely possible to find properties for sale at a reasonable price that will generate $200 per month in positive cash-flow (money left after all taxes, mortgage etc has been paid). So you purchase one of these (with money from your wealth account), and now add $200 per month to the acceleration of your “wealth cycle”. Four more properties like this, and you are ¼ of the way there. Then you start to look at dividend paying stocks, and some Oil & Gas, and maybe a business or two…
Does it start to make sense? I hope so, because I remember my own sense of shock and excitement when I realized that the goal of all my financial dreaming was something tangible and obtainable: I just hadn’t realized what it was. Because this really is the financial goal of life: get your passive income above your expenses. Some people wait to do it until they are retired, and pensions and things of that sort kick in. Most never achieve it, and either work some kind of job or rely on somebody’s charity, until they die. But with some education, some planning, and a little courage, we can all have it three to five years from now. Five years time is coming, whether you get into action on any of this or not. The question is, will you still be in the same place, doing the same thing? Or will you greet five years from now on the beach, drinking champagne, knowing that everything is paid for whether you go home next week or next month.
Identity Theft: How to Protect Yourself
Identity theft encompasses a wide range of deception, from a stolen credit card used to charge purchases to an existing account, to stolen information used to impersonate the victim, open new accounts (even ones for utilities), and rack up thousands of dollars in debt.
With over 500,000 new cases each year (and some say upwards of 900,000), identity theft is one of the fasting growing crimes in America. In many states it isn't even illegal, or hardly punishable if it is. Often the perpetrator goes uncaught and unpunished. Worse still is that it takes on average 12 months for the victim to realize he is a victim and by then it may nearly impossible to climb back out of the black hole of damaged credit, costing hundreds of hours and hundreds of dollars to try to fix it.
Sadly, since much of this goes unpunished, companies often write off the bad debt and then charge you and me higher interest rates and fees to cover their losses. So we all are indirect victims of identity theft. The more vigilant we become, the better off we will all be.
What can you do to protect yourself from becoming a victim of identity theft? There is no absolute guarantee, but the more precautions you put in place, the harder it will be for someone to steal your information and use it illegally. What follow below are some ideas that you can use to start protecting yourself now.
1. Check your credit reports annually.
This is your first and foremost line of defense. Contact the three major credit reporting agencies (www.equifax.com, www.experian.com, www.transunion.com) every year to obtain a copy of your credit report. Some websites also offer a 3-in-1 report. Go through them carefully, looking for any inaccuracies. Report any problems immediately. Consider asking them to require your permission to issue new credit lines.
2. Protect your Social Security number.
Many companies ask for your Social Security number (SSN) to use for recordkeeping. Ask if you can substitute a different number. This is especially true of driver's licenses and health insurance cards. Never give out your SSN to anyone over the phone or internet if you did not initiate the contact. Don't carry your Social Security card with you and don't have your SSN preprinted on your checks (or your phone number either).
3. Protect passwords and PINs.
Always protect your passwords and PINs from being seen by others, especially at ATMs. Don't write them down and carry them with you. Do not store passwords on your computer's hard drive. If you need to write them down, store them somewhere else. Passwords should be hard to discover (bad choices: mother's maiden name, birthdates, last 4 digits of SSN or phone number, or a series of consecutive numbers). When possible use a mix of upper- and lower-case letters, numbers, and symbols.
4. Know your billing cycles.
Know when to expect your bills. If any of them is late, call the company or agency and check on its status. A late/missing bill could mean that someone has stolen your information and changed the billing address, leaving you unaware of the charges that may be racking up.
5. Shred everything with your information on it.
All those credit card applications you receive in the mail and throw away are an open invitation for someone to open an account in your name. Invest in a good cross-cut shredder and shred all documents with any financial information on them, including credit card receipts. Then put the remnants in the yuckiest, ickiest trash you've got to discourage dumpster-divers from stealing them and putting them back together.
6. Make the post office your ally.
Deposit outgoing mail at your local post office or in a locked post office drop box. Thieves actually patrol neighborhoods, stealing mail out of mailboxes. A little acid wash, and voila!, they change the amount and the person being paid. Don't give them the chance! If you're going out of town, have the post office put a hold on your mail. Consider getting a post office box or ask your post office about getting a key-operated community mailbox for your neighborhood.
7. Technology doesn't beat everything.
Don't give out personal information over cellular/mobile/wireless phones, or cordless phones. (This includes telephone banking.) Their radio frequencies can be easily intercepted, overheard, and hacked.
Surfing the internet puts you at risk from hackers breaking into your system; consider purchasing a "firewall" program to protect your computer from outside access. When divulging personal information on the internet (for example, when making a purchase) always look for privacy policies and the little "lock" symbol that indicates your information is secure.
Don't use your email address for user IDs on websites; there are "robots" that specifically search for this on sites like eBay to try and trick you into divulging your personal information. You may receive an official-looking email asking you to "verify" or "update" your information. Remember that anyone who already has your information will not ask you to verify it. Always be suspicious of such tactics. The same goes for people who call you and claim to be somebody like a bill collector, government agent, utility worker, etc. If in doubt, call the company they appear to be representing.
If you use a laptop computer use a strong password (combination of upper/lower-case letters, numbers, symbols); don't use automatic login; always log off when finished; and don't store financial information on it unless absolutely necessary.
When disposing of your personal computer, deleting your personal information usually isn't enough. Use a "wipe" utility program to render files unrecoverable.
8. Be aware of the opportunities to steal your information.
Think of all the places that store your personal information, such as the offices of doctors, dentists, accountants, loan officers, health insurance, schools, courts, etc. Ask them how they protect your information. Request that they shred anything with personal information on it when disposing of it.
Keep your wallet or purse in a safe place at work; not all of your fellow coworkers are trustworthy. Be aware of the "Good Samaritan" scheme where your missing wallet is returned (after one of your several credit cards is removed; you have so many that you probably won't notice!). Only carry a minimum number of cards and identification with you.
9. If desired, subscribe to a credit monitoring service.
If you're really worried about identity theft, consider subscribing to a credit monitoring service. They will regularly notify you of your credit status and anything suspicious that might be going on.
10. Make a list and check it twice.
Make list of all your credit card numbers, banking account numbers, and driver's license number with their customer service numbers and keep them in a safe place. That way you'll have a starting place if something should happen to you.
With over 500,000 new cases each year (and some say upwards of 900,000), identity theft is one of the fasting growing crimes in America. In many states it isn't even illegal, or hardly punishable if it is. Often the perpetrator goes uncaught and unpunished. Worse still is that it takes on average 12 months for the victim to realize he is a victim and by then it may nearly impossible to climb back out of the black hole of damaged credit, costing hundreds of hours and hundreds of dollars to try to fix it.
Sadly, since much of this goes unpunished, companies often write off the bad debt and then charge you and me higher interest rates and fees to cover their losses. So we all are indirect victims of identity theft. The more vigilant we become, the better off we will all be.
What can you do to protect yourself from becoming a victim of identity theft? There is no absolute guarantee, but the more precautions you put in place, the harder it will be for someone to steal your information and use it illegally. What follow below are some ideas that you can use to start protecting yourself now.
1. Check your credit reports annually.
This is your first and foremost line of defense. Contact the three major credit reporting agencies (www.equifax.com, www.experian.com, www.transunion.com) every year to obtain a copy of your credit report. Some websites also offer a 3-in-1 report. Go through them carefully, looking for any inaccuracies. Report any problems immediately. Consider asking them to require your permission to issue new credit lines.
2. Protect your Social Security number.
Many companies ask for your Social Security number (SSN) to use for recordkeeping. Ask if you can substitute a different number. This is especially true of driver's licenses and health insurance cards. Never give out your SSN to anyone over the phone or internet if you did not initiate the contact. Don't carry your Social Security card with you and don't have your SSN preprinted on your checks (or your phone number either).
3. Protect passwords and PINs.
Always protect your passwords and PINs from being seen by others, especially at ATMs. Don't write them down and carry them with you. Do not store passwords on your computer's hard drive. If you need to write them down, store them somewhere else. Passwords should be hard to discover (bad choices: mother's maiden name, birthdates, last 4 digits of SSN or phone number, or a series of consecutive numbers). When possible use a mix of upper- and lower-case letters, numbers, and symbols.
4. Know your billing cycles.
Know when to expect your bills. If any of them is late, call the company or agency and check on its status. A late/missing bill could mean that someone has stolen your information and changed the billing address, leaving you unaware of the charges that may be racking up.
5. Shred everything with your information on it.
All those credit card applications you receive in the mail and throw away are an open invitation for someone to open an account in your name. Invest in a good cross-cut shredder and shred all documents with any financial information on them, including credit card receipts. Then put the remnants in the yuckiest, ickiest trash you've got to discourage dumpster-divers from stealing them and putting them back together.
6. Make the post office your ally.
Deposit outgoing mail at your local post office or in a locked post office drop box. Thieves actually patrol neighborhoods, stealing mail out of mailboxes. A little acid wash, and voila!, they change the amount and the person being paid. Don't give them the chance! If you're going out of town, have the post office put a hold on your mail. Consider getting a post office box or ask your post office about getting a key-operated community mailbox for your neighborhood.
7. Technology doesn't beat everything.
Don't give out personal information over cellular/mobile/wireless phones, or cordless phones. (This includes telephone banking.) Their radio frequencies can be easily intercepted, overheard, and hacked.
Surfing the internet puts you at risk from hackers breaking into your system; consider purchasing a "firewall" program to protect your computer from outside access. When divulging personal information on the internet (for example, when making a purchase) always look for privacy policies and the little "lock" symbol that indicates your information is secure.
Don't use your email address for user IDs on websites; there are "robots" that specifically search for this on sites like eBay to try and trick you into divulging your personal information. You may receive an official-looking email asking you to "verify" or "update" your information. Remember that anyone who already has your information will not ask you to verify it. Always be suspicious of such tactics. The same goes for people who call you and claim to be somebody like a bill collector, government agent, utility worker, etc. If in doubt, call the company they appear to be representing.
If you use a laptop computer use a strong password (combination of upper/lower-case letters, numbers, symbols); don't use automatic login; always log off when finished; and don't store financial information on it unless absolutely necessary.
When disposing of your personal computer, deleting your personal information usually isn't enough. Use a "wipe" utility program to render files unrecoverable.
8. Be aware of the opportunities to steal your information.
Think of all the places that store your personal information, such as the offices of doctors, dentists, accountants, loan officers, health insurance, schools, courts, etc. Ask them how they protect your information. Request that they shred anything with personal information on it when disposing of it.
Keep your wallet or purse in a safe place at work; not all of your fellow coworkers are trustworthy. Be aware of the "Good Samaritan" scheme where your missing wallet is returned (after one of your several credit cards is removed; you have so many that you probably won't notice!). Only carry a minimum number of cards and identification with you.
9. If desired, subscribe to a credit monitoring service.
If you're really worried about identity theft, consider subscribing to a credit monitoring service. They will regularly notify you of your credit status and anything suspicious that might be going on.
10. Make a list and check it twice.
Make list of all your credit card numbers, banking account numbers, and driver's license number with their customer service numbers and keep them in a safe place. That way you'll have a starting place if something should happen to you.
Money - The Ultimate Team Sport
Imagine if you will that you are NASCAR driver. (Now don't overextend this metaphor-just go with the flow!) You start the race and put the pedal to the metal. The crowd is flying by in a whirl of colors. You're exhilarated by the speed. You're starting to pass some of the other drivers. You are feeling pretty confident about this race. "Eat my dust!" you yell to no one in particular. Just when you're at the top of your game, you suddenly realize your fuel is getting low. You pull over to the side, turn off the car, get out, refuel it yourself, get back in and restart the car, and off you go once again, having lost valuable time.
A few laps later and things are looking up. You're starting to cut down some of the lead that the other cars have had on you. Next thing you know you blow a tire, which you had forgotten to check at your refueling pit stop. So once again you exit the race, turn off the car, get out, change the tire, get back in and reenter the race. Now you're only 30 laps behind, but you think, "This baby's got power-no problem!" You hit the gas pedal and try to make up for lost time. After only a few laps, though, you're low in fuel-again! Once more you exit the race and refuel your car yourself. As you watch your competitors flying by, you are beginning to realize that this is a race you cannot win.
You compare yourself to the winner of the race and wonder what the difference is. Is it your car? No, it's the same model as his. Is it his accessories? Wrong again. You've got everything he does. Is it your skills? Who knows? You seem to drive just as well as he does. Then what seems to be lacking? He must have something you don't. You rack your brain and finally conclude that the only thing he has that you don't is a "small" thing called a TEAM. His team takes care of his refueling and tire changing and all those necessary details, allowing him to focus on the task at hand - winning. You, on the other hand, have been trying to do it all yourself.
A team makes all the difference between winning and losing. The losers of this world are those people who take it upon themselves to do everything single-handedly. These are the do-it-yourself-at-all-costs folks. They believe that nobody can do things as well as they can. Winners, however, understand the importance of synergy (1+1 = more than 2). Winners assemble a team.
How do you win the Super Bowl, Stanley Cup, World Series, NBA Championship, World Cup, or any other athletic event for that matter? With a team consisting of coaches, players, staff, and a whole lot of other supporting people. Nobody wins on his own. A great coach is nothing without great players. A great player gets nowhere without a great coach (and probably a great agent, too!). Great coaches and players can do nothing without facilities and the people to take care of them; without doctors and nutritionists, physical therapists and other sports medicine professionals; without team owners and financial backing from advertisers. The list could go on endlessly.
You see, everything you do is inherently connected to a team: eating your food, reading your newspaper, buying a home, driving to work. Think about all the teams involved in each of these situations. In fact, the world is so dependent on connections that we cannot function without teams. And yet when it comes to money that is exactly what many of us try to do. We think we know everything we need to know about handling our finances, and no way are we going to pay someone to help us, even if it nets us more in the long run.
Like the winners of the world, the wealthy of the world assemble teams to help them build their financial futures and keep them. The wealthy see their team as an investment, an investment to protect their investments, so to speak. Their team consists of (but is not limited to): a good honest attorney, a tax consultant, an accountant, and many others whose job it is to keep them [the wealthy] wealthy.
So, how would you go about building a team whose job it is to lead you on to financial victory? The first place to start is a mentor, who is probably the most important part of your team. A mentor is someone or something that guides you along your path to wealth (and presumably he or she has already walked that road). Mentors don't have to be actual people (although this is extremely useful for feedback and one-on-one support). Mentors can also be books and other information. Experiences can also serve as mentors. You may have many mentors at different points in your life; often they show up just when you seem to need them. Mentors can also be key to introducing you to other potential team members, such as attorneys, planners, consultants, investors, accountants, etc.
Using a team to achieve your goals is really much simpler than doing it yourself. Nobody can know everything about everything, which is why there are different jobs for different people. There is no way you could learn in your lifetime everything you need to know to achieve financial success if you try to learn it all by yourself, one piece of information at a time. Using the collective resources of your team will greatly simplify your life and infinitely expand your returns. Truly, a team is the only way to win. GO, TEAM, GO!
A few laps later and things are looking up. You're starting to cut down some of the lead that the other cars have had on you. Next thing you know you blow a tire, which you had forgotten to check at your refueling pit stop. So once again you exit the race, turn off the car, get out, change the tire, get back in and reenter the race. Now you're only 30 laps behind, but you think, "This baby's got power-no problem!" You hit the gas pedal and try to make up for lost time. After only a few laps, though, you're low in fuel-again! Once more you exit the race and refuel your car yourself. As you watch your competitors flying by, you are beginning to realize that this is a race you cannot win.
You compare yourself to the winner of the race and wonder what the difference is. Is it your car? No, it's the same model as his. Is it his accessories? Wrong again. You've got everything he does. Is it your skills? Who knows? You seem to drive just as well as he does. Then what seems to be lacking? He must have something you don't. You rack your brain and finally conclude that the only thing he has that you don't is a "small" thing called a TEAM. His team takes care of his refueling and tire changing and all those necessary details, allowing him to focus on the task at hand - winning. You, on the other hand, have been trying to do it all yourself.
A team makes all the difference between winning and losing. The losers of this world are those people who take it upon themselves to do everything single-handedly. These are the do-it-yourself-at-all-costs folks. They believe that nobody can do things as well as they can. Winners, however, understand the importance of synergy (1+1 = more than 2). Winners assemble a team.
How do you win the Super Bowl, Stanley Cup, World Series, NBA Championship, World Cup, or any other athletic event for that matter? With a team consisting of coaches, players, staff, and a whole lot of other supporting people. Nobody wins on his own. A great coach is nothing without great players. A great player gets nowhere without a great coach (and probably a great agent, too!). Great coaches and players can do nothing without facilities and the people to take care of them; without doctors and nutritionists, physical therapists and other sports medicine professionals; without team owners and financial backing from advertisers. The list could go on endlessly.
You see, everything you do is inherently connected to a team: eating your food, reading your newspaper, buying a home, driving to work. Think about all the teams involved in each of these situations. In fact, the world is so dependent on connections that we cannot function without teams. And yet when it comes to money that is exactly what many of us try to do. We think we know everything we need to know about handling our finances, and no way are we going to pay someone to help us, even if it nets us more in the long run.
Like the winners of the world, the wealthy of the world assemble teams to help them build their financial futures and keep them. The wealthy see their team as an investment, an investment to protect their investments, so to speak. Their team consists of (but is not limited to): a good honest attorney, a tax consultant, an accountant, and many others whose job it is to keep them [the wealthy] wealthy.
So, how would you go about building a team whose job it is to lead you on to financial victory? The first place to start is a mentor, who is probably the most important part of your team. A mentor is someone or something that guides you along your path to wealth (and presumably he or she has already walked that road). Mentors don't have to be actual people (although this is extremely useful for feedback and one-on-one support). Mentors can also be books and other information. Experiences can also serve as mentors. You may have many mentors at different points in your life; often they show up just when you seem to need them. Mentors can also be key to introducing you to other potential team members, such as attorneys, planners, consultants, investors, accountants, etc.
Using a team to achieve your goals is really much simpler than doing it yourself. Nobody can know everything about everything, which is why there are different jobs for different people. There is no way you could learn in your lifetime everything you need to know to achieve financial success if you try to learn it all by yourself, one piece of information at a time. Using the collective resources of your team will greatly simplify your life and infinitely expand your returns. Truly, a team is the only way to win. GO, TEAM, GO!
Benefits of Debit Cards
We all want the convenience that a credit card offers; pay for bills over the phone, shop on the internet, make hotel reservations from the comfort of your room, pay at places where personal checks are not accepted, and all other benefits. However, these conveniences provided have often blinded people from the serious dangers of using credit cards. The worst of these is the illusion that is often created. Most people forget they don't actually own the money they are spending. This realization always comes when people become faced with the realities of paying the huge debts they have accumulated from irresponsible use of credit cards.
This is often the starting point for the numerous benefits of a debit card. Debit cards can instill financial discipline that credit cards, in most cases, destroy. With a debit card, all your purchases and expenses are directly deducted from your checking account. So, your expenditures are always limited to what the money in your checking account can cover. If you don't get it; the primary advantage of this arrangement is that you don't get haunted, by purchases or other financial decisions you made in the past. You might get broke after an uncontrolled spending spree, but you won't be expected to pay the debts and the neck breaking interest months after you make that mistake.
In essence, debit cards bring you all the conveniences that come with a credit card. You can use your debit card anywhere a credit card is accepted, with very reasonable fees - no fees in most cases, and no interest to worry about months later. Although debit cards too have some disadvantages like, you might get really broke after an uncontrolled spending and the fact that debit card cannot rebuild your credit, if you have a damaged credit already. So, in the end you still have to compare the benefits and make the choice most suited to your condition and habits. But if you are really concerned about spending money you don't have, or if you have been very irresponsible with a credit card, debit cards might just be the best way to go.
This is often the starting point for the numerous benefits of a debit card. Debit cards can instill financial discipline that credit cards, in most cases, destroy. With a debit card, all your purchases and expenses are directly deducted from your checking account. So, your expenditures are always limited to what the money in your checking account can cover. If you don't get it; the primary advantage of this arrangement is that you don't get haunted, by purchases or other financial decisions you made in the past. You might get broke after an uncontrolled spending spree, but you won't be expected to pay the debts and the neck breaking interest months after you make that mistake.
In essence, debit cards bring you all the conveniences that come with a credit card. You can use your debit card anywhere a credit card is accepted, with very reasonable fees - no fees in most cases, and no interest to worry about months later. Although debit cards too have some disadvantages like, you might get really broke after an uncontrolled spending and the fact that debit card cannot rebuild your credit, if you have a damaged credit already. So, in the end you still have to compare the benefits and make the choice most suited to your condition and habits. But if you are really concerned about spending money you don't have, or if you have been very irresponsible with a credit card, debit cards might just be the best way to go.
Why Buy A Used Car?
Buying a new car is not something 98% of the people out there need to be doing. It is a luxury item. Only buy a new car if you're filthy rich.
There are alternatives to buying new. Used lots are overflowing, and millions of cars come from expired leases.
The money saved by buying a used car is because of depreciation (the loss of the financial value of an object due to its use). Used cars have already depreciated (60 to 70% in the first 5 years). Buying used allows the person who bought the car when it was new to eat the cost of the depreciation. Then the person who buys the car used can get a great car for much less than the new wholesale prices.
If you want to know what used cars are selling for these days, look online. I recommend the following sites:
* KBB.com
* Edmunds.com
* Carmax.com
Also, call some of the banks in your area and ask them how they dispose of their repossessions. If they have a repo auction in your area, this is a great way to find good deals.
But the best deals you can find are usually from individuals because they are trying to get rid of their vehicles. Look in your area papers and find what's for sale.
But I Really, Really, Really Want That Car!
Before you take the plunge, listen.
When I went broke, my wife and I were sharing a car. My friend let me use a piece-of-junk car for a while. It was horrible! But, I was set in my mind to not borrow money. I ended up saving like crazy, and what I would have put into a car payment, I ended up saving toward a new car. It was the best thing I could have done for myself.
Say you are looking into financing a sports car with payments of $400 per month... The car that you are driving now is worth around $1,500. If you take that $400 and pay yourself instead of paying it to the dealer, you will save $4,000 in 10 months. You will have $1,500 from selling your old car, so you will be able to buy a $5,500 car just 10 months from now. Continue doing that for another 10 months and you will be able to buy yourself a $10,000 car. That is only 20 months away. You can do it!
There are alternatives to buying new. Used lots are overflowing, and millions of cars come from expired leases.
The money saved by buying a used car is because of depreciation (the loss of the financial value of an object due to its use). Used cars have already depreciated (60 to 70% in the first 5 years). Buying used allows the person who bought the car when it was new to eat the cost of the depreciation. Then the person who buys the car used can get a great car for much less than the new wholesale prices.
If you want to know what used cars are selling for these days, look online. I recommend the following sites:
* KBB.com
* Edmunds.com
* Carmax.com
Also, call some of the banks in your area and ask them how they dispose of their repossessions. If they have a repo auction in your area, this is a great way to find good deals.
But the best deals you can find are usually from individuals because they are trying to get rid of their vehicles. Look in your area papers and find what's for sale.
But I Really, Really, Really Want That Car!
Before you take the plunge, listen.
When I went broke, my wife and I were sharing a car. My friend let me use a piece-of-junk car for a while. It was horrible! But, I was set in my mind to not borrow money. I ended up saving like crazy, and what I would have put into a car payment, I ended up saving toward a new car. It was the best thing I could have done for myself.
Say you are looking into financing a sports car with payments of $400 per month... The car that you are driving now is worth around $1,500. If you take that $400 and pay yourself instead of paying it to the dealer, you will save $4,000 in 10 months. You will have $1,500 from selling your old car, so you will be able to buy a $5,500 car just 10 months from now. Continue doing that for another 10 months and you will be able to buy yourself a $10,000 car. That is only 20 months away. You can do it!
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