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
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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
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Money Smart Skill: Is refinancing a mortgage right in this recession economy?
Robert Kiyosaki often says that being able to gain experience from solving problems is an important money smart skill. In this recession economy, I am having lots of learning opportunities. I made a bad real estate investment by purchasing a rental property close to the height of the real estate boom and keeping the property rented and the negative cash flow monthly covered has been a challenge.
One benefit of the recession economy is that lenders are lowering their standards on refinancing but not all deals pay in the long run. It is a money smart skill to be able to sort through all the hidden costs of a refinance deal to determine if it is worth the lowered payment. I recently got all excited about a deal I thought I was getting but reading the fine print quickly burst my bubble.
I had heard that refinancing usually costs between 3 to 6% of your outstanding mortgage principle so I was thrilled when my agent told me my closing costs would only be $1300 hundred dollars to lower my monthly payment by $200. Luckily I did not break out the champagne. When I read over the papers the trade off for decreasing my negative cash flow monthly was not only the $1300 at closing but an additional $6200 in fees added on to my loan and a new 30 year mortgage rather than the 24 years I currently had remaining. Not a good deal!
Refinancing can be a good idea if these criteria apply:
You will be living in your home long enough to recover the refinancing costs, usually 5 to 7 years
Your new loan is for less than 80% of the current value of your home
Your new loan balance does not exceed the total amount of your existing mortgage
Your credit rating is equal to or higher than when you took out your original loan
You have an adjustable rate mortgage(ARM) and you expect a significant increase in rates before you plan to sell your home
I am not blaming my loan agent for not being totally clear about all the costs. It is my responsibility to get my money smart skill level up to speed. I learned a lot by going through the process even though I did not decide to do the refinance. I also looked into making my payments twice a month instead of once and found that this would not give me additional benefit over making 1 extra principle payment each year. I am not losing faith. This recession economy may be around for a while and I may have another opportunity to refinance at lower rates. In the meantime, I am smarter now. Madalyn
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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?
Wealth Building: Appreciation even in a recession economy
True wealth building doesn’t happen without daily appreciation of blessings. In a way the recession economy has helped me realize what is really most important in my life. The things which are most important don’t put any money in my bank account but they make me smile.
Appreciation for every blessing, no matter how small, helps me keep my attitude right. Willow Sibert, a personal coach, taught me to make a list of 5 things I am grateful for and write these things in a journal everyday. I have done this ever since and this practice has been very meaningful to me. I have changed it a bit by listing 4 things that have happened and one that I believe will happen. The fifth thing is often some aspect of my character in which I want to see positive growth.
The first 4 on the list are for daily blessings. For instance, I have 2 new kittens I am thankful for. I went with a plan to get 1 male kitten to keep my other cat company and ended up coming home with 2 females. It was love at first site for me. My other cat, Owl, is not so sure. The new kitties are entertaining for him but when he tries to play they run away. I have tried to explain to Owl that girl kitties don’t like to play so rough.
My goats also keep me entertained. I am blessed to have a nice milk goat named Sally. I also have 2 young does, Dixie and Trixie, that I have raised and they will be ready to breed next spring. Not everyone can have fresh goat milk to put in coffee every morning. Even the recession economy does not keep me from this small pleasure.
I am blessed with the most wonderful friends, family, business partners, clients and customers. All around me God has placed the people I need and enjoy. Another area the recession economy has not affected.
My horses also give me hours of pleasure. Keeping up with the feed bill in a recession economy does little for my wealth building but it is worth the effort in terms of joy. Isn’t that really what wealth building should be about. More joy and things to be thankful for. Madalyn
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Recession Economy: Inflation is a hidden tax
This recession economy has been with us for much longer than most similar periods in the past. Words like deflation and inflation are thrown around but few actually understand the implications each of these has on our lives. Our understanding is complicated by the fact that we can have one or the other in different sectors of the economy.
At this time we have deflation in the housing market, but inflation in the cost of energy, consumer goods and health care. Our interest rates are still at record lows but starting to rise. The challenge with deflation is that businesses have such low profit margins that they can’t afford to expand and hire new employees. At some point, continued deflation in prices will put many companies completely out of business. Increased energy costs also drive up the cost of raw goods further eroding profits.
The federal reserve is attempting to combat deflation by keeping interest rates low to encourage people to borrow more money and spend it. They are also printing massive quantities of dollars in an attempt and create controlled inflation to shift us out of the recession economy. The problem with both of these strategies is that interest rates will eventually have to come up and, controlled or not, inflation eventually lowers the value of the dollar.
To summarize:
Deflation of the dollar increases its purchasing power but too much can slow down expansion of the economy and jobs
Inflation decreases the purchasing power of the dollar but supposedly helps with growth and expansion in our economy( I don’t believe this)
This is where the hidden tax concern shows up. The government can take a portion of your income in the form of a obvious tax or they can use printed money from the federal reserve to sell as bonds which lowers the value of the dollars you have. In other words, the government gets the printed money before it goes into circulation and loses value. For more on this concept check out The dollar is not money.
The fact that we are printing money to lower the value of the dollar is not lost on the foreign nations we have loans with. They have no desire to be paid back with dollars that are worth less than what they were when the loan was made. Based on our actions, future loans will come with much higher interest rates, if they come at all.
What we can do to protect ourselves from manipulation of our currency during the recession economy:
Elect officials to all levels of government who will be fiscally responsible and curb spending
If you foresee a need in the next year for a product, make that purchase now to support our businesses
Do not spend money on non necessities
Do sell stuff now that you do not need
Do not hold savings in the bank in the form of dollars
Do hold your savings in products that have real value such as real estate or precious metals, such as silver
If you invest in the stock market, focus on commodities that people must have for survival, such as energy and food
Pay off all debt that does not have a fixed, low interest rate
Educate yourself on economic and financial issues
Do not depend on elected officials or proclaimed financial advisors unless you see positive results from their actions
Do look into starting a home based business that will give you additional cash flow
I make these recommendations based on my research but you should do your own study to determine what is best for you. I have a good books section of my blog that can help you get started. I believe our recession economy will right itself based not on government action but the actions of each of us as individuals. I believe the American people will get it right and lead the rest of the world back to prosperity. Madalyn
Check out this video on the Fed Printing Money
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Money Smart Skills: How to plan for the future
These are exciting times we live in. Right now, in the midst of a major recession economy, you can make a plan for your future. Developing your money smart skills to focus on increasing your cash flow monthly will keep you in solid control of your financial destiny.
Here are three money smart skills to consider:
Look for trends!
Focusing on what is currently happening will not change your future. You have to look ahead. For instance, interest rates are at historical lows right now. It is tempting to think that they will stay low but history tells us that what comes down must go back up. When looking at taking out a new loan or refinancing now would be a great time to lock in at a low rate. A money smart person would resist the temptation of lower payments from an adjustable rate mortgage because they would be making a plan for the future.
We are also in a deflationary phase with the dollar right now. Prices for houses and other items of true value have dropped. I have rental property and the value has dropped and part of me wants to panic and sell but because I have learned the money smart skill of looking for trends I plan to keep my property until the prices trend back up. As long as my house stays rented it will bring me cash flow monthly regardless of how it is valued.
For those in business, study of trends can make or break your future. When a business correctly recognizes a trend it can get a jump on the competition. Right now there is a large movement of people into home based businesses. Companies are downsizing so jobs are scarce and many people do not want to commute to work every day. Personal computers allow individuals to reach large audiences without having a huge advertising budget. Even people with a secure source of income are seeing the benefit of additional cash flow monthly to make ends meet and to have money to plan for their future.
Budget for today, save for your future!
This sounds so simple but in our current recession economy it is not so easy. Chances are your money is already running out long before you pay for everything now, much less having anything left over to plan for the future. Money smart planning would be to get your head out of the sand and cut every possible expense you can right now.
Our government has poured literally trillions of dollars into our system to combat the recession economy and the bill for all this spending will have to be paid. At the same time you are cutting every expense you will need to increase your cash flow monthly. Plan to put your head down and work some extra hours to build a home based business.
Use the extra money to pay down your debt and then invest in assets to bring you more cash flow monthly. As a hedge against inflation, rather than saving money only in the bank or in other paper assets like stocks, you will want to hold a certain sum in precious metals such as silver. Hold a portion of these in physical form, not only in paper form such as exchange traded funds. Silver is a liquid asset that you exchange for cash if needed but it is not as easy to squander as paper currency. Silver is a metal used in industry so it has value other than as money and it is not as prone to speculation as gold.
Increase your money smart skills!
Your level of financial education will absolutely determine your future. Seek advice and guidance from professionals and successful money smart people. Not all financial advisers are actually successful investors themselves nor is everyone who writes a book or blog. I am blessed to have a very talented financial adviser in Neil Walters at Ameriprise Financial. Neil can be contacted at 512 314 5340. Much of the information I am sharing today is out of the monthly newsletter his firm sends out. I am also a huge fan of Robert Kiyosaki and his cash flow monthly principles.
The recession economy is a bummer but also an opportunity for money smart people to make plans for the future. The steps you take today will determine what the rest of your life looks like. Madalyn
Want to look at a good home based business model. One that actually follows a proven system and yields consistent results! Contact me.
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Financial Education: Has the recession economy crashed your retirement?
You may be young and fresh out of school and think retirement is a long way off but now, even in this recession economy, is exactly the time to make good choices based on money smart thinking.
I, on the other hand, fresh out of school, had no clue about how to save for retirement and did not even get started until I was in my late forties. Not only that, I started saving for retirement about 2 years before the dot com bust. What little I had was cut in half and just as I was getting back to level I started with the current recession economy hit.
Like so many others, I depended on advice from my stock broker and this did not serve me well. Becoming money smart helped me realize why my best laid plans had gone so wrong. Here is what I came to understand.
In 1974 the Employee Retirement Income Security Act (ERISA) was passed. This act made retirement accounts such as the 401K possible. This shifted the responsibility of saving for retirement from the person’s employer in the form of a pension plan to the worker himself. No longer was a defined benefit guaranteed but instead a workers retirement income was dependant on the rise and fall of the stock market.
While the stock market can be a good investment for a skilled investor it is akin to gambling for the person without money smart skills. Investing in mutual funds that grow steadily at the rate of 8% a year sounds good but the plan goes south if person needs to withdraw money during a down market. While long term growth in the stock market does occur but did you know that down markets have persisted in the past for up to 30 years?
The fact is, people who are money smart about how the market works will invest in stocks for cash flow rather than hoping the market will rise faster than inflation and be high when they need their money. Investing for companies that pay dividends, using options that pay whether a stock goes up or down or investing in start up companies are a few ways money smart investors make money. Money smart investors study trends and use them to their advantage rather than getting burned.
Are you investing money in a retirement account and if so, do you like many other hard working Americans, simply throw you statement away each month because you don’t want to acknowledge how much money you have lost? Instead, with money smart skills, you can be getting excited about the cash flow monthly you are making even in a down market.
Financial mistakes can be aggravating but they don’t have to be devastating. Having a source of cash flow monthly over and above your expenses allows recovery from dips brought on by a recession economy. I don’t claim to have this all figured out but I am willing to share the lessons I have learned with those who want to work with me. Madalyn
Money Smart skill above all others: Trust in God
As important as our money smart skills are, especially in this recession economy, God never ceases to amaze me with his abounding Grace. Everywhere I look I see examples of all the blessings God has given me and how he always works behind the scenes for our good. For example, here is what my day has looked like:
I got up early to make some soup for my cousin, Libby. Libby is taking care or her 79 year old, husband, Sonny, who is bedridden with a brain cancer. Sonny helped me build 5000 feet of fence when I moved to my new property.
While visiting with Libby, our neighbor, David, called. David is a mason and a friend of his called to offer him some free flagstones. David knew I wanted to build a patio so he called me and we went to load up this beautiful free rock that was about to go into a landfill.
While loading the rock with David I noticed the tires on his truck were worn badly. David said he really needed new tires but they were not in his budget. As it turns out my friend, Debbie, had brought me 4 free tires the day before. I had loaned my flatbed to Debbie to pick up some round bales and she said if I knew anyone who needed the tires I could have them. They were a perfect fit for David’s truck.
This, my friends, is God’s Grace in action. His magnificent Grace does not usually come like a lightening strike but through our friends, family and neighbors acting under his guidance. In addition to bestowing His Grace upon us I believe God also guides us to take right action such as becoming money smart so we can be part of the solution to the recession economy not part of the problem. Madalyn
Looking to become money smart and increase your cash flow monthly by $500? I invite you to work with me.
Money Smart Skill #3: Invest in assets
First of all, what is an asset? Sounds like a fancy accountant term. In reality, an asset is something of value which you own but smart money investors expect to not only own assets but have those assets bring in cash flow monthly. Boy, was this a lesson for me.
For example, by definition my horses are assets, but they cost me money rather than making me any. Money smart investors would not invest in horses but they are my family. Money is not everything and I never think that way. I love my life now even though I am hardly rich but investing in the asset of a network marketing business has given me back my dream of spending time with my horses.
According to one of my money smart mentors, Robert Kiyosaki, there are 4 classes of assets which bring you cash flow monthly. They are:
Businesses – the advantages of owning a business are tax benefits, the ability to leverage other people’s time to increase your cash flow monthly and control of the way things are run. The disadvantages include high start up costs, managing people and developing the money smart skills to turn a regular profit.
For me starting a network marketing business was perfect to help me get started in building an asset. Once I understood the power of leveraging other people’s time without having to actually employ them I was on willing to get started. I did not have the money or desire to get into a franchise business so the low start up cost of network marketing was perfect. I found a product I loved and was passionate about and a company I believed in.
The first network marketing company I joined did not have a strong training and marketing system in place so I struggled with maintaining a positive cash flow monthly but despite this my business grew. After working hard to build a strong customer base I wanted to look more for business partners and I needed a company that focused on the money smart principles I had learned from Robert Kiyosaki about the power of building networks.
With my current company, Xango, I am getting support for developing my leadership skills so that I can work with a smaller group of dedicated partners and guide them to the training systems the company provides. Not only does this make the best use of my time but I end up reaching and helping more people with my product as the process duplicates through my network.
Five hundred extra cash flow monthly is so doable with Xango. This is the average income for the 5K level, only the second step in the company compensation plan.
Actually the average 5K distributor makes over $800 but I am talking about a net cash flow monthly after you pay for the products you personally consume. I pick the $500 amount because studies show with this amount of extra cash flow monthly 95% of the home foreclosures could have been avoided. This level of extra cash coming in each and every month is life changing for many households.
Real Estate – the advantages of owning investment real estate include the ability to leverage the banks money, take advantage of tax benefits like depreciation and collect a steady cash flow monthly if the property is managed well. The disadvantages include significant skills to select good properties, the money smart skills to manage them and ability to have money tied up in property.
After realizing that my raw land was not an asset, by money smart thinking, I set about to turn it into one. I refinanced the land and built an office building/barn on it. My plan was to rent this out to cover the new mortgage payment and then eventually move my practice to the new building. My lack of money smart skills showed up with one mistake after another. I certainly did not do my research about rental rates and location.
Despite making many mistakes I was able to rent my property and eventually sell it which gave me the money to buy my current farm and a rental house in Arizona. Of course, I sold my land and bought at the height of the real estate bubble so my rental house is not currently an asset. I am learning and the willingness to learn from mistakes is an important money smart skill.
Paper assets – the advantages of paper assets include the ease to buy and sell them and the ability to start with a small investment. The disadvantage is the need to become educated and spend the time to monitor your paper assets closely.
I got started very late with my stock market investing so I did not have the luxury of waiting for gains based on compounding interest over many years. I wanted to learn about investing in stocks so I read several good books and worked some with a dependable stock broker. I picked a few good stocks and had some nice gains but invariably I would get distracted and miss important news that affected my holdings. I ended up losing money on most of my stocks.
I decided I was better off going with managed mutual funds and I saw my holdings go up and down at the whim of the market. I decided to pull out of mutual funds before the market tanked completely. With what I am learning about how inflation eats away at gains in the stock market I am very pleased with this decision even as the market is currently in a rebound.
Commodities – Oil, Gold and Silver are examples of commodities. These are real, physical assets that go up in value as inflation increases. Commodities are less likely than paper assets to increase or decrease rapidly in value and they are less affected by people’s daily fluctuating emotions. The disadvantage is that since they are physical they have to be stored and this can increase the cost.
I moved into commodities such as precious metals, real estate and natural gas that I could follow more closely. Since I bought these exchange traded funds to hold long term, I then sold options on them to bring in income even if the funds did not go up in value. With this kind of option I sold the right to buy my stock at a set price over what I paid for it. If the stock went up more than this price the purchaser of the option made more money for his extra risk money and I made a small profit. If the price did not go up to the set price I made the option money and the risk taking option buyer lost his money. This is a more conservative style of investing but it allows me to make money even in a flat market. Even though I pay more in commissions I work with a trained stock broker to handle my account.
Part of being money smart is to pay attention to trends and cycles. What is working right now may not work next week, month or year. It is important to pay attention to your money but not dwell on it. Dwell on your dreams. Those you gain the money smart skills of getting rid of bad debt, building cash flow monthly and investing in assets will be able to live their dreams. Madalyn
