Tuesday, October 30, 2012

How to Get Rich - Never Pay Full Price

Do you like to get a good deal on a product or service that you buy ?

Do you feel good when you pay less for something than someone else you know ?

If you are like most people, you would say Yes to both of the above!

Human Nature

Yes, it is human nature to get a feeling of satisfaction when you know that either someone else paid more or that you were successful in negotiating a price down from the sticker price.

Most people, however, only experience this feeling occasionally when something goes their way. Most of the time they pay the full price on everyday items without even questioning the price. This is the way that our modern retail system is designed.

Make It a Habit

There is another way! Why not try to get the very best price on everything you buy ? If you do, you can put your savings towards building your financial future !

An old saying once said that a penny saved is a penny earned. Although this saying is very outdated, you could say that a dollar saved is a dollar earned, or a hundred dollars saved is a hundred dollars earned,etc.

If you are having trouble saving the amount you need to achieve your goals,  then why not develop the attitude of never paying full price for anything again. Make this a habit and put your savings towards reaching your financial goals.

Action Steps

There are many ways to get deals and reduce your everyday living expenses.

For instance, make it a habit to always shop around and compare prices. You will be amazed at the huge difference competitors will charge just to get your business.

Another way is to collect coupons from manufacturers and retailers. Coupons are designed as a form of advertising to get you to try their products at a discount, sometimes a big discount. The key here is to only collect coupons for items that you would normally buy everyday. Don't fall into their trap of trying new things just to get a deal. This will likely increase your cost of living. Be disciplined !

Always negotiate the price on big ticket items, such as an automobile, etc. Prices on the larger items are almost always designed to allow for a price discount. If they won't budge, don't hesitate to walk away and take your business elsewhere. The key here is to never let them think you really like something. Develop a take it or leave it attitude. You may find that they will be chasing you down the street when you walk out.

Never buy the add ons such as extended warranties and auto dealer rustproofing etc. These items are designed as pure profit generators and give you very little if any value. Learn how to say No to the pressure tactics they may try to use. Profit for them and extra cost for you. Not good for making you rich.

Penny Pincher ?

Never look at yourself as a penny pincher or being cheap. After all, it's your money and you should be able to spend it however you decide. Why not get the most out of your hard earned dollars. You really do owe it to yourself to get the most bang for your buck.

As always, I welcome your comments and suggestions for future topics.

Tuesday, October 23, 2012

How to Get Rich - See Your Life as a Business

Have you ever wondered how big corporations ever got started ?

What do you think led to their success ?

Well, all businesses started with an idea and the desire to turn that idea into profits !

Your Life as a Business 

You too can become a big successful business. Think of your business idea as investing in other businesses in order to give you an income. You can even imagine this flow of income as tiny employees that you hire in order to make you more money.

The best thing about these tiny employees is you don't have to pay them or give them any benefits. Also, they will never call in sick or require a vacation. They will be working for you 24 hours a day, seven days a week without the need to take a break.

Basically, the more employees you can hire (the more money you can save !) the faster your growth of new employees will be. These employees will be put to work for you (money invested in other businesses) in order for you to make more employees, and so on and so on. Pretty soon, you could have a whole army of these tiny employees under your command. What power you will have !

Don't Fire Your Employees

The biggest mistake most individuals will make is to fire their employees (spend their money) before they have a chance to make other employees. In order for a business to thrive and grow they must retain their employees (earnings)  in order to invest for their future ( hire more employees)

This is basically a very simple business strategy that anyone should be able to develop. Start by hiring as many employees as you can (saving as much as you can) . Find productive jobs that these employees can do for you (invest wisely) and most important, never fire your employees (never spend the money)

More Now Equals More Later

The more employees you can hire today, the faster your business will grow and the more employees you will have in the future. Pretty soon, you could be commanding your virtual army of tiny employees that will always be loyal to you and never give up on the fight to survive and thrive.

Perhaps this idea is a bit crazy and off the wall for most. However, I like to see it as a way for the average individual to feel the power of control that they alone have in developing their future potential. It truly is within you to do what you want to do.

Start your new business today and go out and hire as many new employees as you possibly can. The sooner you start the faster your business will grow !

As always, I welcome your comments and suggestions for future topics.

Tuesday, October 16, 2012

How to Get Rich - Kill Your Bad Debt

Do you know the difference between good debt and bad debt ?

Do you know how to make debt work for you ?

The wealthy know the answers to these important debt issues, you should too !

Bad Debt 

Bad debt is defined as any debt that you incur to purchase something that you do not receive an income from. Most consumer debt falls into this category.

Credit cards, car loans, lines of credit, even most mortgages fall into the bad debt category.

Good Debt 

Good debt, yes you probably guessed, is any debt that you incur to purchase an income producing asset.
Investment loans, brokerage loans, mortgages for investment properties, etc. fall into this category.

Kill Your Bad Debt

When it comes to building wealth, the key is to eliminate  (or kill) all of your bad debt. You cannot possibly get rich if you have to continually carry around the ball and chain of bad debt. Your income will continue to make someone else rich, namely your bank or other financial institution. Not a good plan.

To kill bad debt, you can either pay it off with a repayment plan or find a way to convert your bad debt into good debt.

Repayment Plan

For most, unless you already have liquid investments, this will be their only option for killing bad debt. Start by identifying which of your debts incurs the highest interest rate. If you have credit card debt, this is normally where you start. Next, proceed to the next highest rate and so on.

To free up funds to put towards repayment, you will likely have to make sacrifices to your lifestyle or increase your current income level. Either way, it will not come without some pain. Motivation is the key in any debt repayment plan. It will take time and commitment.

Turn Bad Debt to Good Debt

If you already have investments that are liquid (easy to turn into cash) and will not incur a lot of income tax if you were to cash them in, it may be best to look at this option for killing your bad debt.

First, cash in all of your investments that fall into the above category. Second, use this cash to pay off all of your bad debt. Third, obtain a new loan for investment purposes. Fourth, use the borrowed funds to buy back your previously cashed in investments.

This will in effect turn your bad debt into good debt. The big advantage of this option is that in many countries, you will now be able to "write off" your interest payments as an investment expense on your income tax. This can be a significant amount, especially as your income increases.

The key for this option to work is that your investment income or expected gains must be greater than the interest you will be paying on the loan. Check with your local adviser before trying this option.

R. I. P.  

Both of the above options could be used together to ensure your bad debt is killed and hopefully will never resurface from it's ugly grave. Motivation and determination to improve your financial life will be absolutely necessary to achieve this ultimate goal.

As always, I welcome your comments and suggestions for future topics.

Tuesday, October 9, 2012

How to Get Rich - Secure Your Main Income Stream

Are you worried about losing your job ?

Are you worried about what will happen if you are unable to pay your bills ?

If you are, you are not alone ! This is one of the top financial concerns of individuals today !

Your Main Income Stream

Chances are if you are like most people, your job is your main source of income that you rely on to pay your bills and have a little fun. The reality is, even if you take the necessary steps to become wealth, you are going to need a job for quite some time yet. This means that you had better enjoy what you are doing and take the necessary steps to protect your income.

Enjoy Your Work

Many people I have talked to hate their jobs. My advise for them is to find a job or career that they can actually enjoy or at least not absolutely hate. This will not only make their life much more tolerable, but they could actually be seen by others to actually like what they are doing. This could create interest by their current boss and actually lead to advancements etc. Grumpy employees generally do not get very far.

It is therefore in your best interest to be liked by your superiors and may prevent you from being the first one to be laid off if tough times are ahead. If you don't like what you are doing, find something you would like to do. Life is too short not to.

Add Value to Yourself

Your goal in any job or career should be to position yourself to be the last one to be laid off. In order to do this, you must give your employer a reason not to consider you for a layoff. If you can work towards being the most valuable employee in the organization, this will certainly help. Be the best at customer relations. Be the most punctual and reliable employee. Do a little more than what is required. Etc. etc. You get the idea !

Adding value to yourself will also make it easier to get a good recommendation some day if needed for another job or career position. This is basically your best insurance from a life of poverty.

Be Prepared for the Worst 

Even doing all of the above does not guarantee you will not someday be the victim of a layoff. Many things can happen that are totally out of your control. A company could go bankrupt. Governments could change policies that eliminate your job. Etc. etc. You therefore need a financial buffer to help through a potential layoff.

Many call it an emergency fund. Today, I call it a survival fund. I recommend saving an amount equal to three to six months of your committed expenses. Keep this amount somewhere where you can't easily get at it such as a savings account with no bank card access.

By following the above suggestions you should be able to prepare yourself as much as reasonably possible for  a possible disruption to your main income stream. Nobody knows for sure what the future will bring, but we can take steps today to help limit the damage should trouble arise.

As always I welcome your comments and suggestions for future topics.

Tuesday, October 2, 2012

How to Get Rich - Have a Destination

Have you ever driven anywhere without knowing where you planned to go ?

Have you ever set out to do a job without knowing the desired outcome ?

Chances are you answered NO to both the above !  At least I hope so !

Plan Your Work

Before starting on a project you should always make a plan of the steps you need to take to accomplish your desired task. You also need to have a method for measuring your results versus what you planned.

Designing a financial improvement project is no different. In fact it should be easier than most other projects because everything can be measured in numbers. Let me use an example to explain this point.  Let's say your project is to get out of debt by a certain length of time. You already know the amount of your debt and the length of time to accomplish your project. You simply divide the debt by the time to know how much you must save out of each paycheck etc.

More complicated projects will require steps. These steps should be planned out in detail and the results should be measured against your desired outcome. For example, let's say you wanted to increase your investment income by a certain amount per month. You must first determine how much you need to save to invest. You must then determine how many investments you wish to make to provide this desired income.  
You must then look for good quality investments to provide this desired income. ( I recommend using my 50/12 Rule for this example - check it out in one of my previous posts)

Work Your Plan

Once you have developed your plan with all the necessary steps, it is merely a  matter of starting to implement your plan. You have already determined what it is you need to do for each step. Start with your first step and just do it.

Of course you may find there to be obstacles in the way which you must find a way to overcome. This is normally the case with all well intended plans. These are the challenges that I mentioned in a previous post that must be overcome in order to reach your desired outcome  (or goal) and to take advantage of the opportunities that await you.

Measure, Measure, Measure

Every step should be measured continuously along the way. Much like your car's odometer measures your distance traveled so that you know exactly where you are at any given time. This way you know how far you have come and how far you have left to go. This is a very important component of your project as it will help keep you motivated towards reaching your desired destination (or goal)

To know exactly where you are will give you a great feeling of well being as you look back to see how far you have come. As your destination grows closer, your feeling of well being will increase and your determination to reach your destination will become overwhelming.

In order to become wealthy, you must first know what wealthy means for you. (Your Destination)
Without knowing your destination and having a plan to get there, you could wander aimlessly in the vast world of financial challenges and opportunities and get nowhere.

As always, I welcome your comments and suggestions for future topics.