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
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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
Money Smart Skill: Do you know your money model?
Do you know your money model? By this I mean how do you earn and spend your money. Is your model to earn a salary and spend less than you learn? Is your money model to build a business and live off the proceeds of this business? It is a very important money smart skill to know your money model then to ask the very important question – is this model working in your life?
How do you know if your money model is working? Well, are you able to pay all your bills each month and have money to set aside for investment and retirement? Is your quality of life what you want? Are you able to tithe and help others? If you answered no to any of these questions then your money model is not working for you.
Back in 2000 I had to look at my money model. My model of working harder so I would have enough money to pay my bills, invest and still have time to enjoy my horses was not working. Luckily Robert Kiyosaki gave me a new model via his RichDad education books.
Changing models or paradigms is not something one does easily, especially if the model is one that has been in place for a long time. A great book to read about understanding models is Personal Career and Financial Security by Richard J. Maybury. Maybury emphasizes that for you to be successful you have to base your decisions on a sound model.
Personal Career and Financial Security is only the first in a series of books to help you understand models, history, economics and politics. I am finding these books fascinating. They are helping me understand that just because I changed my model does not mean I will be instantly successful in life and finance.
My money model now is based on the money smart skills of:
1. Decrease bad debt
2. Increase my cash flow monthly
3. Invest in assets
This is not an easy model but it is a sound one. One month may get me 2 steps forward and the next 1 step back but I am gaining. How about you? Is your money model working? Madalyn
Want to find out what I am doing to increase my cash flow monthly? This cash flow model is not for everyone but if you are interested in finding out what I am up to get in touch.
Money Smart Skill: Where does your money go?
I am retiring another checkbook cover. I opened this business account in 1986 and I have written over 13,000 checks on it. Even at averaging a modest $200 per check, a lot of money has passed through this account. Where did all that money go? Knowing where your money goes is an important money smart skill.
I went into business with a very poor financial education. Most of my cash flow monthly went to paying bills. I was not introduced to the Kiyosaki, RichDad financial education program until I read his first book in 2000. After a brief period of total shock at how little I understood about finances, I set about figuring out what was happening to my money.
In the year 2000, despite having a thriving veterinary practice, I had no assets. Kiyosaki stressed the importance of looking at profit and loss statements to determine where your money is going. When I started tracking my money it was clear that paying interest on consumer loans was where much of my money went. What a shock to find that a simple thing like not planning for consumer purchases was keeping me broke. Tracking my money was a money smart skill I had to develop if I wanted to change my future.
According to Kiyosaki, it is not only important to determine where your money actually goes but also to plan for where you want it to go. The Kiyosaki, RichDad education program teaches you how to invest in assets that will pay you and then you can use that money to buy things you want. This way you keep your original money or principle intact. What an amazing concept.
Tracking your money, budgeting your money and investing your money are all critical in controlling where your money goes. If you don’t take control of your money it will take control of you. Madalyn
Three money smart actions:
1. Reduce bad debt – consumer loans, loans with variable rate interest
2. Increase cash flow monthly – increase income or reduce expenses
3. Invest in assets – investments which bring in positive cash flow monthly
Photo credit: Flickr via creative commons
Spend Now to Pay Debt, Borrow Later … and Other Recession Economy Lessons
Guest Post by Stephanie Yeh
Doing the right thing is always a good thing, but not necessarily an easy task, especially in this recession economy. Turn on the news and you are likely to end up depressed. Ignore the news and you might miss an important newsflash that could affect your financial future.
So what’s a person to do?
Two Basic Money Smart Principles
I’ve learned quite a bit reading the Go Cash Flow Now blog by veterinarian Dr. Madalyn Ward, and that’s why I’m writing this guest post. I want to share some of the money smart lessons I have learned from this blog. Hopefully these lessons will help other people as well, since making the right financial decisions can be terminally confusing. I have learned a lot from this blog, and here are just two basic principles that have really played a big role in my financial security in this recession economy.
Money Smart Lesson #1: Pay Off Debt ASAP
One of most important and counter-intuitive lessons I have learned from this blog is this: pay off debt now, even if that means borrowing again later. This important lesson comes from playing Robert Kiyosaki’s Cash Flow game. The goal of the game is to get out of the rat race, where you trade your time for money rather than having passive income sources like rental income. In the game, you play a character, like a plumber or a doctor. Being a veterinarian, Madalyn frequently picks the doctor card because it matches her lifestyle of high income AND high expenses.
What is really interesting is that when Madalyn pays off debt every chance she gets, starting with the high-interest credit cards, she gets out of the rat race faster than if she waits to accumulate enough cash to pay off the whole debt. Even if she has to borrow money from the bank later, she still gets out the rat race sooner. I have done this and I feel so much better. I really sleep better at night … even knowing that I might have to borrow again in the future.
Money Smart Lesson #2: Save Money but Stay Sane
While belt-tightening is definitely a big money smart strategy, I have learned from this blog that you still have to spend money occasionally so that you can stay sane. If you over-tighten your spending so that your quality of life is low, you won’t feel positive about your life or your money situation.
Madalyn and I are both horse-crazy, and we both have spending weaknesses in this area: Madalyn likes to buy high quality tack and I collect horses, especially mustangs. Whenever we feel like splurging we call each other and prevent each other from over-spending.
For instance, if I spot a gigantic jumper-perfect mustang that I want to go adopt, NOW, Madalyn talks me out of it and helps me spend a lot less to maximize my experience with my two current horses. I spend a little bit to stay sane, but don’t saddle myself with the expense of taking on a new horse.
We are always looking for others who want to inspire each other to spend wisely on horses and other hobbies. Want to play?
Money Smart Skill: How to resist impulse spending
Perhaps the most overlooked and under appreciated money smart skill is patience. Patience is required to resist impulse spending. My Kiyosaki, Rich Dad education has taught me about how to be patient in waiting for my businesses to grow into income producing assets but gaining long term financial freedom also requires the ability to resist impulse spending.
Impulse spending has been a huge challenge for me in past years so I have to put safeguards in place to help me resist. For instance, I really, really want a yard fence. My goats and horses are constantly knocking over my stuff, eating out of the bird feeder and pooping in my yard area. I would love to have an animal free zone around my house. Before I would not have hesitated to spend this money even if it meant putting the expense on my credit card. I did not worry about having credit card debt because I knew I could just work a little harder to pay it off.
Thanks to my Kiyosaki, Rich Dad education, I have come to realize what a disaster credit card debt is and how it holds me hostage from realizing my long term financial freedom. This past year my focus has been on developing the money smart skill of patience to resist impulse spending. I can’t do this with willpower alone so I have some built in systems to help me.
Steps to help you prevent impulse spending:
Have a short term budget and long term financial plan in place and stick to it
Have your monthly expenses automatically withdrawn from your bank account
If you have any non fixed credit debt, have a set payment withdrawn from your account every month until this debt is retired
When you shop, make a list and bring only enough cash with you to cover your list
Keep a set amount of cash on hand to reward yourself for resisting impulse spending
So, my yard fence will have to wait. I am paying down some credit card debt and the payment is being withdrawn from my account each month. Skipping one payment would cover my yard fence but it is easier for me to resist since I would have to stop the auto payment. By waiting the extra 9 months to pay off this card debt I will be able to build my yard fence and have a clear conscious that I am sticking to my long term plan.
I know myself well enough to realize that if I have money in my accounts I tend to spend it. I have learned to have money automatically transferred out of my main account and into an investment account that is not to be touched except in an emergency. Unfortunately, my yard fence does not constitute an emergency. I do keep a little cash slush fund for occasional shopping sprees as a reward for resisting big impulse spending.
I also listen to and trust my spirit to guide me where and how to spend money. Sometimes deals appear that justify deviating from my plan. For instance, a great deal on hay comes along that will save me money in the long run. Even with these kind of deals I ask for guidance before I make a decision. Over the years I have learned that some impulse spending can look good at the time but not end up working out. If I listen and trust guidance from my spirit things work out well. Madalyn
Check out our Free E book
Money Smart Skill: How to raise your monthly gross income without working more hours
Raising your monthly gross income without killing yourself overworking is a valuable money smart skill. I was raised with the belief that if I wanted more money the only way to have it was to work more hours. This is the classic time for money trap that can lead to overwork.
The person who is an employee or is self employed understands well the concept of working more hours to make more money. The challenge is when you run out of hours you can work and you still need to increase your monthly gross income to make ends meet or enjoy the lifestyle you desire?
To increase your monthly gross income without working more hours you have to master the money smart skill of generating passive income. When I was growing up I never heard the term passive income so I did not even know such a thing existed. The first time I read the Robert Kiyosaki book, Rich Dad Poor Dad, light bulbs started going off like fireworks in my head. The whole concept of having money come to me that I did not directly trade my time for was mind boggling.
First, I want to say that the term passive income can be a bit deceptive. It kinda sounds like you don’t actually have to do anything to earn the income and nothing could be further from the truth. Building a passive income producing asset is hard work. The secret to passive income is doing the hard work up front and then reaping the rewards for your efforts on an ongoing basis.
For example, I have been working of building an internet product sales site into my veterinary website for over 5 years. My goal has been to provide holistic products to my customers and generate passive income from repeat sales. Sounds easy but in reality it has been a huge challenge and learning experience. After 5 years of effort, my partners and I are beginning to see an increase in our monthly gross income and for the most part we are not having to put significant time in. If someone were to look at our current business they might conclude that we were making profits without working for them but in reality we have worked very hard for those profits through past effort.
So, what I am saying is to raise your monthly gross income without working more hours initially you have to work more hours. You also have to learn new money smart skills and stay focused on your goals even when you do not have a boss or customer breathing down your neck.
A few possibilities for raising your monthly gross income without working more hours indefinitely include:
Build an internet marketing business
Write and market a book
Invest in rental property
Grow a stock portfolio that focuses on raising your monthly cash flow
Join a network marketing company and build a network of customers who order monthly
Of all these options, network marketing is by far the most accessible to someone who does not have significant money to invest. A company that offers a solid product, business plan and long term vision will save you years of time and learning curves. Raising your monthly gross income without working more hours is a money smart skill that will serve you for the future and allow you to live your dreams. Madalyn
Check out our free E book
Interested in starting a home business: Contact me
Rich Dad Education: Where does your cash flow monthly come from?
One of the most important money smart skills a Rich Dad education teaches is to know where your cash flow monthly comes from. When I first began studying the financial education of Robert Kiyosaki, I learned to understand the cash flow quadrants.
The cash flow quadrants are:
E for employee
S for self employed
B for business owner
I for investor
The E and S categories are on the left side of the quadrant and the B and I are on the right.
In the E Rich Dad education quadrant your cash flow monthly comes from your salary. Salary is the money you get by trading your time for dollars. Assuming your salary covers your monthly expenses then you maintain a positive cash flow but should your expenses increase for any reason you have little ability to increase your salary to meet the extra need. Money shortage is often a concern for those in the E quadrant.
In the S quadrant your positive cash flow monthly is based on the profit you generate over and above the operating expenses of your business. If your business does not generate a profit then your cash flow monthly is negative. In the S quadrant, which includes many storefront business or professionals such as doctors, you work in your business. To raise your profit level to generate positive cash flow monthly often means working more hours so you give up time freedom. Time freedom is often the concern for those in the S quadrant.
In the B and I quadrants your cash flow monthly comes from passive income. Passive income is based on previous effort and it comes in monthly without the ongoing time for money trade. A B quadrant leverages the time of employees and works off a proven system rather than the individual effort of the owner. In the I quadrant, passive income flows in the form of stock dividends or options, interest payments or real estate rental income. In the B and I quadrant you have money and time freedom.
To summarize, cash flow monthly can come from:
Salary from the E quadrant
Profit from the S quadrant
passive income from the B or I quadrant
I was frustrated in my life because I wanted money and time freedom but could not understand how to have both. My Robert Kiyosaki, Rich Dad education taught me first to understand where my cash flow monthly came from and how to move from the left side of the quadrant to the right side. This simple concept has changed my life immensely. Madalyn
For a similar topic, check out: Money in your mailbox
Do you want to earn passive income? Contact me.
Photo credit: Flickr via creative commons
Rich Dad Education: Reducing debt burden secret to increasing cash flow monthly
Played a wonderful game of CashFlow last weekend and was reminded how critical it is to reduce my debt burden as a step to increasing cash flow monthly. I selected the doctor card on purpose because I feel it is one of the most challenging professions when trying to escape from the rat race.
My friend, Jeannie, and I sat down to play with anticipation of a great learning experience. Jeannie drew the police officer card so her cash flow monthly started out much lower than mine but her expenses were also much less. Both of us focused on reducing our debt burden and every time we passed the pay check space we used a portion for this purpose. This strategy did not leave either of us much money for investing in deals to raise our cash flow monthly but our expenses went down which had the same effect.
The whole point of CashFlow is to get your passive income higher than your expenses so reducing debt burden would not seem like the fastest way to win since it creates no passive income. What Jeannie and I both found, however, was our emotional state improved dramatically as our expenses went down. We had less fear of the downsizing space and we felt we were controlling what we could control.
Soon our debt burden was not an issue and we started getting excited about finding some deals. Jeannie bought a stock at a discount and sold it for a nice gain. This gave her a next egg to buy a nice little 3/2 rental house. I was also able to make a similar purchase. We hit a market card and both sold our houses. Now we could really have fun with some big deal cards.
Almost immediately Jeannie drew a great deal with wonderful cash flow monthly. She was frustrated that she did not have enough money to cover the down payment but when we did the math we found she could borrow the down payment from the bank and her additional cash flow monthly would cover her payment. Not only that but the passive income from this deal was greater than her expenses so she was out of the rat race.
I had to play on and do several big deals in an effort to get my cash flow monthly higher than my expenses while Jeannie gallivanted around on the fast track. Despite being downsized 3 times and hitting the baby and doodad spaces repeatedly, my cash flow monthly continued to grow. As my cash flow monthly increased I lost all fear of the bad spaces and continued to invest in big deals every chance I got. I got out of the rat race just as Jeannie won the game.
This was the best game of CashFlow I have ever played for several reasons. By using the strategy of reducing debt burden I got out of the rat race faster than ever before and with the least frustration. This is where I am in my life right now. I am making some sacrifices to pay down my debt burden and I am making significant progress. Patience, discipline and focus on cash flow monthly is getting me to the place where I can take advantage of any small or big deals that come my way. Madalyn
For more on reducing debt burden check out Money Smart Skill number one.
Ever feel like you are all alone with your money challenges? I am not a coach but I invite you to have a look at what has worked for me to increase my cash flow monthly. Contact me.
Wealth Building 101 – Why you need a coach
Last Monday I had 3 coaching calls before noon. One with my Kiyosaki, Rich Dad education coach, one with my network marketing coach and one with my personal and business coach. Yesterday I took my horse and had a lesson with my barrel racing coach.
Why do I work with all these coaches? The answer is simple. All these people know more than I do about what I want to get better at. I want to become more money smart, be a stronger network marketer, a better writer and person and learn to barrel race. I sure can’t do these things by myself and be successful.
Being coached is not always a pleasant experience. I don’t particularly enjoy being told what I am doing wrong but I know my coaches have my best interests at heart and they give me positive feedback along with the constructive criticism.
My coaches see what I can’t see. For example, with my barrel racing, I am supposed to run my horse full speed to a spot a few feet from the barrel, slow down enough to turn, but not lose momentum. I find that when I slow my horse down we lose momentum and end up losing a lot of time in our turns.
My coach was able to see that I was stopping my body momentum instead to continuing to drive my horse forward even as we slowed down to prepare for the turn. She modeled what she wanted me to do on the horse she was riding.
My coach pointed out that I was thinking slow down when I really needed to be thinking gather and prepare. A Ha! I got it. I doubt I would have figured this out myself and even if I did it would have been after much stress for me and my horse.
I also tend to be off in my timing when I ask for my horse to get ready to turn. Unfortunately, this is not something my coach can teach me. Perfect timing has to come through feel and this will take lots of practice. What my coach can do, however, is help by calling out when to give the slow down cue until it becomes instinctive for me.
In summary, why you need a coach:
A coach knows more than you about the subject you want to get better at
A coach has your best interests at heart and gives you encouragement even as they point out your mistakes
A coach sees things that you can’t see
A coach will model the correct actions
A coach will point out your limiting or incorrect beliefs
A coach can cover for your lack of skill while you practice
I love my coaches. I would recommend the Kiyosaki, Rich Dad education training program to anyone looking to go to the next level in becoming money smart. I love my business coach. She is a true friend and mentor. I love my network marketing coach and would never try to work my business without her. My network marketing coach works with me and my group in the big business, network building model. I am looking for a few partners who are ready to increase their cash flow monthly quickly and predictably. Contact me. Madalyn
For similar information check out: Is you dream big enough?
