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.
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!
Subscribe to:
Posts (Atom)
Posts
