Book Review: That Used to be Us
“America will do the right thing, but only after exhausting all other options.” Thomas Friedman and Michael Mandelbaum echo this comment made by Winston Churchhill. In their book, That Used to be Us, both authors explore the reasons that America is falling behind in the world and the solutions to get us back to the top.
Friedman and Mandelbaum contend that as Americans, we are falling behind in the world we invented. Our spirit, diversity of opinions and talents, flexible economy, work ethic and penchant for innovation have allowed us to make the world a much better place. All these traits are still present in America but we are not living up to our potential.
Friedman and Mandelbaum look towards China for as the country that is most ambitious but contend that even as China is getting 90% of the benefits of its second rate political system we seem satisfied to get only 50% benefits from our first rate system. What’s with that?
The Authors list 4 reason they feel we are falling behind:
First, we don’t get up each day and ask: What world are we living in and what exactly do we need to do to thrive in this world?
Second, over the last 20 years we have failed to address some of our biggest problems – education, deficits and debt, energy and climate change.
Third, we have stopped investing in our country’s traditional formula for success, which includes a healthy balance and cooperation between the government and private enterprise.
Fourth, our political system has become paralyzed and our system of values has suffered serious erosion.
This book is depressing in many areas because of the enormity of the problems but it does lay out the groundwork for what needs to happen for America to get back to the top. The world needs a strong America. The more we, as individuals, can understand the problems the more we will be able to select the best leaders to take us forward as a country. Madalyn
Photo Credit: Flickr via creative commons
Wealth Building 101: Are you listening to God?
Yesterday, in church, my pastor washed the feet of a man who is new to our church. Why did he do this? Because he believed God told him to. Was it easy for my pastor to humble himself in this way? No, I don’t believe it was. But the effect was powerful.
Our church body is usually exuberant in worship but yesterday you could have heard a pin drop as people watched in reverent silence. Pastor said God did not reveal to him why he wanted him to wash the feet of another man but he trusted the message anyway.
For me the message was powerful in that I had read the scripture in John 13 just the day before. Jesus washed the feet of each disciple at the last supper and Simon Peter questioned why he would humble himself in such a way. Jesus patiently explained to Peter than what Peter did not understand then he would later. Jesus went on to say that what he did for his followers by humbling himself they were to do for others.
There are so many powerful lessons in John 13 and the one that speaks most to me is about listening to God and following his guidance without question. What does John 13 have to do with wealth building? Again, I believe it is about listening and trusting God.
We live in such uncertain times right now and human based financial knowledge alone is not as dependable as it once was. We don’t need to be concerned if we listen to God and are obedient. God wants us to prosper even in tough times but first we must seek and trust him.
Ways that God guides us in wealth building:
How to market and attract the best customers
Who to partner with and trust in business
Where and how to invest
How much to tithe or donate to charity
When and how to spend our money
The list is endless and in truth we should be consulting God on every move we make in life. He is our best friend, counselor, partner and lover. As humans, of course, we fall short of this. For me, even when I do listen and hear God’s word, I often question or argue. My hat is off to my pastor who listened to God and obeyed. He blessed us me by so doing. Madalyn
Like this post? Check out – Your first step in your perfect wealth formula
Wealth Building 101: What to do while you wait
Seems like I have been doing lots of waiting lately. Waiting for the recession economy to improve, waiting for the drought to break, waiting for temps to get below 100, waiting for my goats to get pregnant, waiting for my leg to heal after getting kicked by a horse. God is teaching me what to do while I wait.
But to those who wait on the Lord
Shall renew their strength;
They shall mount up with wings like eagles,
They shall run and not be weary,
They shall walk and not faint.
Isaiah 40:31
In the past I tended to decide what I wanted to do and would dive right in without asking for any guidance. The result was many stalled or complicated projects that often cost way more than anticipated. The last few years my budget has been tighter and my energy lower. I have found myself seeking God’s timing and blessing for my projects and the results have been nothing short of amazing.
At the beginning of 2011 I had many projects in mind but I did not expect them to be completed this year. I resigned myself to paying down debt and starting back on projects next year. I focused instead on giving appreciation for all my completed projects and current blessings. I kept going with my business marketing even as sales seemed to slow. The recession economy also slowed my vet practice so I had more free time to reflect and visualize for the future.
Interesting thing happened once I got out of the way. God started working on my projects and arranging one miracle after another for them to be accomplished easily and with minimum expense. It was like I was just along for the ride.
Here is what God has done for me this year:
Patio completed with free flagstones
Fence around 10 acres with half cost and labor from my neighbor
Panels for fence around my yard delivered for a great price
Down cedar stacked at a discounted price
A new shelter for the horses
Hot wire around my front pasture
Other gifts:
Neighbor’s goat to milk since mine did not get pregnant
Perfect healing from my kick injury
Healing of a foundered horse in my care who should not have survived
A fun new pony to enjoy
It was like God had all these gifts saved up and he was just waiting for me to stop pushing to get my way. I had to run out of my own resources before I considered depending on his. How sad but once again God used my struggles to teach me a huge lesson.
Here is what I have learned to do while I wait on God:
Show appreciation and count my blessings
Keep working even when business slows
Journal and reflect on previous actions
Focus on a positive vision for the future.
Trust God for timing and anointing
Now waiting is becoming a peaceful and useful pass time. I may not be soaring like an eagle but I am sure less weary. Madalyn
Photo Credit: Flickr via creative commons
Money Smart Skill: How to pay yourself first
The money smart skill of paying yourself first is a tough one for many. My first years in business I felt like the pay machine for everyone but myself. Across the board every financial advisor I consulted preached the importance of paying myself first, yet I could not feel good about taking money out of my business when I still had bills unpaid at the end of the month. Finally I had to face the fact that if I could not pay myself then I had no business working for myself.
In order to pay myself I had to bring in more income and/or lower my expenses. The money smart skill of paying myself first had to become a priority and I knew I had to change my entire mindset about money. Instead of looking at money itself I started looking at how to use it differently. For instance, I knew I could not work more hours than I was working so I had to look at other sources of income that did not require more hours of work from me. At least not long term.
Network marketing was a Godsend for me. At first I worked a few more hours a week but as I gained more skills I had income coming in each month based on my previous efforts. My network marketing efforts did not bring in huge sums of income but the consistent checks gave me room to breathe and allowed be to work a few less hours a week. By working fewer hours was able to study more and increase my skills which allowed me to raise my prices.
Two ways I increased my income:
Started a network marketing business
Advanced my skills and raised my prices
Next I looked at how I was spending money. At that time I was renting my clinic and it made sense for me to buy my own property. Purchasing my own clinic was a way of paying myself because I was building equity in real estate. Another way of paying myself was to start contributing to a SEP retirement fund which also saved money on taxes. The money smart skill of paying myself first began to shift my bottom line and over the years allowed me to gain financially.
Two ways I paid myself:
Purchased my own clinic and stopped paying rent
Invested in a SEP retirement account
Because the money was automatically invested through mortgage payments and direct withdrawal from my bank account I never had to make a choice of paying myself or paying bills. Interestingly, the bills still got paid. Madalyn
Enjoy our free E book: Journey to Enlightened Wealth
Wealth Building 101: Manage your emotion
When it comes to wealth building, emotion is not your friend! A perfect example of this is the roller coaster ride the stock market has been on the last few weeks. One day the news is good so people buy, the next day the news is bad so people sell. Did the companies being bought and sold really gain or lose value in those few hours? Of course not but people are reacting to emotions rather than logic.
What about your everyday spending habits? Do you spend money when you feel like you want something even if the item is not in your budget? Do you have a budget? Do you save when you are fearful about the recession economy and then start spending freely again when the economic news improves?
How about your work habits? Do you stay focused on your business even when your friends are headed to the lake? Do you set goals and plan out the action steps needed to reach them?
Before I was introduced to the Kiyosaki financial education principles I made all of my wealth building decisions based on emotion. Actually, it has only been in the last few years that I have developed the discipline to manage my emotion when it comes to wealth building. I am a very impulsive person and I love excitement. Believe me when I say I have had to sit on my hands during the recent stock market churning. I have a plan for my investments but it has been so tempting to bail on some holdings to add to others only to watch the fortunes reverse for each in a matter of hours or days.
Same with my everyday spending. On my farm I have so many projects I want to do but I have to stay focused on priorities. In the past I would have simply done the projects and put to cost on credit cards. Now, thanks to my Kiyosaki, richdad education, I avoid credit card debt like the plague. I have to look at the importance of a shelter for the horses first even though my emotion is that I want a round pen more.
Same with business. It is Friday afternoon and I am so tempted to call it a week and quit early but writing this blog is the action step that is needed to achieve my long term business goals. Now that I am writing this blog my emotion has shifted from bored to excited.
Emotions are like that. They are fickle and can shift on a dime. That is why wealth building is about managing emotion.
Here are a few tips that help manage emotion:
Keep a journal so you can see where your emotions go from day to day
Keep a balance sheet for your business so you can see where your money goes
Track business and personal assets and expenses
Understand what your net worth is
Watch your cash flow monthly
Study all you can about wealth building. Hint – all the experts say make a plan and stick to it. Boring but true.
Schedule time for fun and keep a little cash on hand for impulse spending
Celebrate and reward yourself for managing your emotion
Madalyn
Like this post: Check out Hope is not a strategy or
Why you need a coach
Photo credit: Flickr via creative commons
Wealth Building 101: Creating cash flow monthly verses building a fence
I have been building fence the last few weeks in 105 degree weather and hard as that is, it is easier than creating cash flow monthly. You see, with building a fence I see the fruits of my labor right away. The pattern looks like this:
Goal – work – reward
My goal is 1000 feet of new fence so my horses can have more grazing area.
The work involves laying a ground wire so I know where I want the post holes, buying the supplies, digging the holes, driving T posts, stretching wire, tying the fence to the posts and hanging gates. It is hard but straight forward work.
The reward is happy horses and hopefully a lower feed bill when it decides to rain again.
Creating cash flow monthly is not so clean a process. The pattern looks like this:
Goal – work – work – work – work some more – small reward – work – work – work some more – setback like a major recession – keep working – reward – work – reward – work – more reward – ongoing reward of regular cash flow monthly with less to no additional work on your part
Your goal is cash flow monthly so you can have money and time to enjoy it. In other words, to live your dream.
It’s the work part that is so challenging. First, you have to be willing to work and delay your gratification. Second, like building a fence, you have to have a plan. If you are starting a business from scratch this can be a huge barrier. You will not likely get a loan or investor support without a solid plan on how you intend to create cash flow monthly. If you have never built a business of your own you may have no clue where to start the process.
A great place to start in building a business that can generate cash flow monthly is with a solid network marketing company. With a good company and good partners you will have the security and mentoring from people who have already put the infrastructure in place for you. You will still have to learn the skills needed to be successful and there will be a lot of work involved but you will have a plan. You don’t have to quit your job and you can build your business working as little as 7 to 10 hours a week.
The reward part of creating cash flow monthly is often very slow in coming. This is probably why so many people lose track of their goals and give up on their dreams. They stick to what they know, even if it is painful – like fence building. Madalyn
PS My network marketing business gives me cash flow monthly so I can have and enjoy my own farm. Fence building is not my real job:).
Money Smart Skill: Appreciation of residual or perpetual cash flow monthly
Recently I asked myself why I get so excited about small increases in my residual cash flow monthly and take my more significant earned income for granted. It is not that I don’t appreciate the money I earn in my veterinary practice but I see that money evaporate when the bills come due and then I have to earn it all over again.
My residual cash flow monthly, on the other hand, is based on past effort and financial investment. Although generally a smaller amount than my earned income I don’t have to earn it every month, it just shows up. I love that. I have spent to last 15 years developing the money smart skill of shifting my overall income from primarily earned income to residual cash flow monthly.
Residual is what is left over at the end of a process, in the case of residual income it is money that comes to you regularly in return for your past work and investment efforts. You might argue that you should have money left over after paying bills with earned income. This is true but you have to work for that money each time.
Passive is another term for residual income but I don’t like it because it implies that the income happened with no effort on the part of the receiver. Nothing could be further from the truth. Creating residual cash flow monthly requires significant effort, sometimes working months or even years with little reward.
I prefer the term perpetual income which means something that continues indefinitely without interruption. Some people call this mailbox money from back in the days before direct deposit.
Lets look at a hypothetical example of how earned and perpetual income compare over the course of a few months:
Month 1
Earned income $1000 with $200 left over after paying bills
Month 1
Perpetual income of $200 from investments such as rentals or a network marketing business
Month 2
Economy slows. Earned income $800 with none left over after paying bills
Month 2
Economy slows. Perpetual income of $200 remains consistent
Month 3
Great economy. Earned income $1200 with $400 left after paying bills
Month 3
Great economy. Perpetual income of $200 remains constant
Month 4
Brief illness limits work. Earned income of $800 with none left over after paying bills
Month 4
Brief illness does not affect perpetual income of $200
Month 5
Vacation needed to recover from illness and overwork. Earned income $800 with none left over after paying bills
Month 5
Perpetual income of $200 comes right on time while you enjoy vacation
Month 6
Back to normal. Earned income of $1000 with $200 left after paying bills
Month 6
Perpetual income of $200 remains constant
Lets look at the final tally over a typical 6 month period:
Earned income $5600 with $800 net
Perpetual income of $1200 with $1200 net
Earned income and perpetual income combined $6800 with $2000 net
This may seem like a simplified example but it is a reflection of reality. If you ever wonder why you don’t get ahead with earned income alone I hope this helps you understand. I am not saying quit your job but I am suggesting you consider adding a source of perpetual income. Keep your job to pay the bills and create perpetual cash flow monthly to enjoy your life. Madalyn
Free E book: Journey to Enlightened Wealth
Photo credit: http://www.flickr.com/photos/joeshlabotnik/ / CC BY 2.0
Saving with solar power
Guest Post: Kevin Gibson
If I told you there’s a minimal risk investment that could return 16% per annum, would you be interested?
I have known Madalyn for about ten years now and although our common ground is horses, we usually end up in discussions around politics and economics. I have read with interest her blogs on money and offered this piece as a guest contribution to her ‘gocashflownow’ site.
In terms of ‘Money Models,’ mines about to change dramatically as I will be retiring in a few months. I will go from a 6 figure, tax free income to a zero income scenario. That’s kind of a scary change in lifestyle. So a big question is how I get my capital to work for me in this economy. Well obviously passive income is good and we do have some income from property rental, but an alternate is rather than using capital for income how about reducing your expenditure.
So about 18 months ago I decided to install a grid tied solar panel array. Most people would agree that solar powered electricity would be a better solution for the planet, but the cost still seems to be a deterrent to residential systems. Going solar might be easier and cheaper than you think, but you have to do some research and math. I’ll talk later about some of the options available but let’s start with the example of my system.
The nice thing about grid tied is you don’t have to worry about peak loads or getting through cloudy days. When you generate excess electricity it is pushed back to the grid on a separate meter . When you’re not generating enough power you pull from the grid through the regular meter. The difference in the two meter readings is charged if you used more than you generated, or is credited in kWh (kilo Watt hours) if you’ve over generated.
SYSTEM SIZE: My old electricity bills, which I could download on-line, showed I used 12,000 kWh in a year. This varied from 730 kWh in spring to a peak of 1,400 kWh in August when the A/C was running. So I needed a system that averaged 1,000 kWh per month or 33.3 kWh per day. So the next question was how much sunlight do we get here in Snowflake AZ. There are published maps and charts of average sun hours for our location (see resource’s at end) from these we get an average of 6 sun hours per day.
So for 33.3kWh in 6 hours of sun I need a power rating of 33.3/6 = 5.56kW
There is loss due to inefficiencies of about 10% so 5.56*1.1 = 6.1kW
So the solar panels are connected to a controller and inverter and the size that covered my requirements was nominally 6.3kW with 28 solar panels which were ground mounted.
SYSTEM COST: To connect to the grid the system must be installed by an approved contractor, this is also required to apply for the benefits or rebates available. I got quotations from 3 contractors and then haggled down a few hundred.
So the cost break down:
System hardware $18,000
System installation $18,000
Power Company Rebate – $18,000 that was $3 per watt on a 6kW system
Federal Tax rebate – $5,400 that’s 30% of final cost to owner
Total cost of system $12,600
SYSTEM PERFORMANCE: The system came on line early Jan 2010 and generated 11,016kWh of power. Regretfully we had a problem with the controller and lost 6 weeks of power from half the panels. The loss was refunded by the vendor as the equipment was on a 7 year guarantee. To date this year we have generated 6,360 kWh of power and are ahead of target of 1000kWh/month. So in a typical year we expect to generate the 12,000kWh that we designed for.
COSTS ANALYSIS: You may have seen figures for cost of electricity for different states. Here in Arizona that cost is supposedly 10cents/kWh. However when I took a closer look at my electricity bill, there were additional transmission costs, service costs and taxes all proportional to the kWh used. In the final analysis I paid $8.80 to have the meter read and 16.7c/kWh for my power.
12,000kWh of power at cost of 16.7cents/kWh = $2004 per year. That’s a return on my $12,600 of 15.9%, and you won’t match that in today’s market. Another way to look at it is that the system will pay for itself in 6.28 years at the present cost of electricity. In the next few years I would expect an increase in power cost, so the payback may well be less than 6 years and there after my electricity bill is $8.80 per month to have the meter read.
A tricky part of retirement planning is knowing how long to live. If I die in the next five years I have plenty of money, if I live to 100 things might be tight. We plan everything on 30 years. If we make it that far we’ll sell all assets and move into assisted living. When you start looking at time frames like 30 years the numbers get more dramatic at 3.5 % inflation we would have needed $100,000 to support our electricity habit.
Now if you don’t have the capital to invest immediately, you might still be able to go solar by using a rent and purchase agreement. There are several companies offering this kind of agreement, where basically they install the equipment; you keep paying the electricity bill as usual and after several years the equipment becomes yours. So you’re no worse of for the next few years, then you get the benefits afterward and all the time you’re helping the planet.
RESOURCES:
Solar maps
Solar/Rent purchase
Photo credit: Flicker via creative commons
Network Marketing: Customer or business partner, Follower or leader?
I have come to believe the age old discussion of product verses business in network marketing is not getting to the real issue. Instead of asking if you want to build your network marketing team with customers or business builders, ask yourself if you prefer to work primarily with followers or leaders.
Are you a someone who likes people who don’t ask a lot of questions and follow directions well or do you want your team to do their own research and be creative. Followers will appreciate your guidance but leading leaders is kind of like herding cats. Whether your business is product or business oriented you have to decide if you want to be the only leader or share the responsibility. Being the only leader of many followers keeps you in control but doing the majority of the work. Being the leader of other leaders is less time consuming but you give up control.
Why is knowing who you like to work with and if someone is a follower or a leader so important? Culture! Your network marketing team will develop a culture whether you intend this or not and that culture needs to be a match to your style. For example, I appreciate a good follower but I enjoy the challenge of working with leaders. When I first started in network marketing I tried to make everyone into a leader and I used the same training with all my team. The results were that the followers felt like I was badgering them when they did not have clear understanding of what to do and the leaders were bored and thought I was too controlling. I was frustrated and my team was miserable. Does this sound familiar to anyone?
Followers:
Don’t ask lots of questions
Want clear instructions about how to use products or work the business model
Will work hard when they understand what they are supposed to do
Follow directions well
Often need to be regularly motivated and acknowledged to stay with a program
Need to see significant, timely reward for their efforts to keep working
Leaders:
Have many questions before making any commitment
Like to do their own research
Are wiling to learn as they work
Don’t follow directions worth a flip
Require little motivation
Are willing to delay gratification and work for future rewards
Successful network marketing businesses can be built around customers or business builders and most good groups will have a mixture of both. That being said, your core team that you work with regularly must be a match for your personality and leadership style. Do you prefer to be the “go to” person or do you like your team to share in leadership even if this means a significant number of cat herding moments?
You can have a very successful network marketing business by attracting customers or business builders but if you don’t understand the difference between followers and leaders you can create a nightmare scenario for everyone. After almost 20 years in network marketing I can say I have a wonderful balance of followers and leaders and I have learned how to work well with both groups.
Other posts on network marketing:
Company events – Do you love them or dread them
How important is your product
Network marketing – See it, Want it, Do it
Interested in network marketing as a source of additional income? Feel free to contact me.
Photo credit: Flickr via creative commons
Money Smart Skill: Patience
I got a very late start with my financial education but I have been working hard to catch up. My favorite mentor is Robert Kiyosaki of RichDadPoorDad fame. Kiyosaki created a board game called cashflow to help teach people his financial strategies. In the game you draw a card that has a profession on it and you get a list of expenses and your cash flow monthly. The goal is to escape the rat race board and graduate to the fast track.
After playing the rich dad financial education game, cashflow, many times I have found the way to consistently get out of the rat race in less than 2 hours. I always draw the doctor card even if I am not trying to. I think God is wanting to make a point. The doctor card is one of the most challenging cards because it carries the highest cash flow monthly.
Right, I said the highest income. It also carries the highest monthly expenses and the object of the game is to get your passive cash flow monthly higher than your expenses. You might think a big monthly paycheck would be the ticket to building passive income but that is not necessarily the case. Passive income is money that comes through businesses, rental income or other investments. In the rich dad financial education game, cashflow, you must build up a portfolio of investments until your passive cash flow monthly exceeds expenses.
In the cashflow game you have expenses that are fixed and you have debt that you can pay off to lower your monthly expenses. Like the game I have fixed expenses such as malpractice and liability insurance, home insurance, license and association membership fees as well as mandatory continuing education. In the game you have fixed child expenses and they are higher for the doctor card. I have 4 legged children and they have significant expenses associated with them that are not negotiable.
When I first started playing cashflow I was so frustrated to see other players, who drew the truck driver or mechanic card, breeze out of the rat race once they got the hang of the game. Despite all my money making efforts I was always the last to make it. This cost me a few sleepless nights.
So what is the secret I finally discovered about getting out of the rat race? Patience! This has not been an easy lesson for me. When I first played the game I tried to save my money so I could invest in some big deals. This never worked. Then I tried to borrow money to make big deals. This did not work either. I resisted the reality of my situation and was sure I could make one big deal and change my financial situation quickly.
Finally I resigned myself to being the last one in the game to get out of the rat race and low and behold I started having success. I learned to follow a boring plan of paying off as many of my high expenses as possible. While other players were able to invest and buy real estate I did best when I stayed with my plan. Get a paycheck, pay down debt was my life for 75% of the game. My action oriented temperament fought against this strategy but I persisted.
As my expenses went down I began to have a little extra to invest if I was careful. When I stopped trying so hard to get ahead and focused instead on the basic principles of paying down debt and investing in good deals when they presented themselves I made headway.
The cashflow game has been such a powerful learning experience for me. Based on my experience playing the game, when I decided to make my move to Fischer I took on my high expenses with open eyes. I knew I would be challenged but I also understood that I could work smarter to lower my debt and build my passive income at the same time, SLOWLY.
The path I have taken in not what is recommended in most financial education books. I did not start saving when I was 20 and I don’t have a big retirement account. I chose to live above my means and continue to work smart to get my means up to speed. I avoid consumer debt but sometimes I have to use short term credit which I pay off as quickly as possible. I understand that high, non fixed interest payments on credit cards make it very hard to get ahead financially.
Even though I got a late start with my financial education, I do have some savings and I am continuing to add to my passive income from several businesses. I love being a veterinarian and an entrepreneur. I am looking forward to having even more time to spend with my animals but I am not wanting to retire early.
Some months or even years are tight and I don’t get to do all the improvements I want to on my property but I know I am on the right path. I am learning to be patient and let time work for me as my debt gets steadily lower and my cash flow monthly gets higher. I am so glad to have the financial education to understand about money and have a plan and watch it unfold over time. Every day I am more appreciative of the gifts God has given me. Like patience. Madalyn
Did you get started late? Not sure how to get your cash flow monthly up? I would love to have a conversation. Contact me.
Photo credit: flickr via creative commons
