Do You Manage Your Finances Like GM Or Exxon?

As a financial planner, I have always tried to get people to see their finances as a business, in which they were the CEO and their financial planner was their CFO (Chief Financial Officer). Their tax guy/gal was their Treasurer and yet they were the quarterback in charge of their “financial team”.

When it comes to your finances no one is going to care more about taking care of things than YOU!


I also always stressed the fact that they need a business model, just like a company. We have all heard a lot of talk about (GM) and Ford (F) and Chrysler and how they have business models that don’t work. GM for example needs to sell about 15 million cars a month to be profitable, and this is only really possible in a booming economy. This is why GM has so many problems right now. They can only keep their heads above water when the economy is “red hot”. (Many Americans manage their personal finances this way too!)Many oil companies, like Exxon Mobil (XOM) who are hated for another reason, they have great business models, and make a ton of money. Now that the price of oil has come down, I don’t mind talking positively about the oil companies. Their business models are awesome and they are prepared to make money when oil is at $30 a barrel.

What is your personal business model for financial success? Whether you know it or not, you have a strategy for your financial security. For most people it is home ownership, and homeownership is great but it is not nearly enough. Also, check out this article for more along these lines: Investing in Yourself!

For others, it is to just keep developing themselves in their career to try to make more and more money. Again this is great, but it is not enough!

Everyone needs to be an Investor!

An ideal personal business model, is one in which saving is at the foundation, and you are making the most of all your purchases and resources. Replacing $2,000 TV’s and $30,000.00 cars every three year is just un-imaginable and insane, in a proper business model unless of course these are just fractions of your net worth and income.

Homeownership is preferred over renting long term, but it should not be the nucleus of your business model. Human capital (career management) is high priority too, but again this is just a big piece of the puzzle.

Investing is usually the missing link for way too many people. I can speak from real experience that most people do not have a long term investment strategy.

When I would meet with clients as a financial planner, one question that I would never ask someone is: “What is your Investment Strategy?” I would just say to them, “Let’s develop an investment strategy for you!” After doing this about thousand times, I haven’t had anyone say to me, “Wait Bob, I already have one.”In the rare case that they did have one, they would never interrupt because they wanted to make certain that their strategy was similar to the one that I was going to provide for them.

Not only do you need to develop an investment strategy, but you also need to develop an appetite for financial education in order to test your strategy. Testing your strategy will make certain that it does not become obsolete over time, and it also allows you to have renewed confidence in your strategy.

This is exactly what Sean and I help you do in our online Investing Course. So sign up online today for just $25. Remember, it comes with a money back guarantee and live instructor access. It’s much cheaper than a book AND it gives you a way to get your personalized questions answered from the instructors.

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Who Is Giving You Advice on Personal Finance?

Whose advise are you getting on personal finance? Are you sure this advice, is in your best interest?

One of the biggest financial mistakes you can make is to blindly trust an “expert”, in other words, a financial planner, or to blindly trust a financial institution with your money and future. The reason I say this, is because most of the financial investments sold today, are sold on emotion and not on facts. This is not surprising, as the facts are poor – so poor, that if financial investments were sold on facts only they would not sell well – facts cannot be manipulated! Our emotions, however, can be manipulated – we are emotional beings, in other words, most of what we do is governed by our emotions!The “experts” and financial institutions know this and use this knowledge against us. The “experts” and institutions manipulate our emotions, whilst trying to sell us their packages, or products.

This is done, through financial planners, through the media and through advertising; where subtle messages are put across, all the time playing with and manipulating our emotions, in order to buy their products. Try paying attention to this, when, for instance, you next see an advertisement for a financial institution, on television. By becoming more aware of this, you can avoid falling into this trap!

If you are of the opinion that you can build wealth by trusting in the “experts”, or financial institutions advise and that you are getting the maximum growth on your investment through a financial institution, you are mistaken and are being misled. The most important reason why you cannot build wealth by trusting in an “expert”, or a financial institution, is because they have a conflict of interest. The financial institutions’ conflict of interest is between giving the growth on your money to you, or to their shareholders. Because of this conflict of interest, there are serious faults in what they are teaching and because 99% of people take their word as the truth, 99% of people never become wealthy. By trusting in the “experts” and placing your finances and financial future in their hands, you are giving them control over your finances and in effect, you are taking away your own control over your finances and your financial future.By giving financial planners, or financial institutions, control over your personal finances, you cannot control the risk on your investment. If you cannot control the risk on your investment – you cannot control the growth. Furthermore, if you cannot control the growth on your investment – then you cannot control the outcome either.

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Finance Help – The Obama Economic Stimulus – Everybody Gets to Refinance Their Homes at 4.5%

The US economy is currently witnessing a sharp recessionary phase, especially in the third quarter of 2008. Consumer spending, which comprises of around 70% of aggregate economic activity, has significantly gone down, along with additional payment on personal mortgages.

This, in turn, has resulted in a drastic shortfall in aggregate demand in all sectors of the economy, including the home market. Indeed, according to experts, the current economic downturn is the worst since the Great Depression of the 1930s. In such a scenario, it is not surprising that the home market (particularly, home construction) has experienced the largest downturn of the last 25 years.

Professional financial planners and advisors, however, are optimistic about a recovery of the US economic system. If suitable measures are aggressively adopted, there is every chance that the economy will start moving in the right direction again in 2009. The victory of Barrack Obama (the first Afro-American President of America) is believed to be a blessing for the purpose of this recovery.Obama’s election campaign was based on increasing government spending, and cutting down on tax rates. These steps, along with rate-adjustment measures of the US Federal Reserve, can provide the required fiscal stimuli for an economic recovery in the country.

The current recessionary forces have resulted in an acute credit crunch, tight lending markets, increasing amounts of foreclosures and a consequent rise in the unemployment. These have come as a severe jolt to most of the major companies in the US home market. New building permits are also on a free fall, adding to the problems in this sector.

Experts have assessed that the current recessionary forces can lead to a fall of 8% in the US GDP (Gross Domestic Product) during this quarter. President Obama, however, has a stunning, well-thought-out and carefully-formulated plan, which, if applied in the home market appropriately, can generate a huge economic stimulus to the markets.

Obama’s plan for the home market is, in itself, simple: everybody should have access to 30-year fixed-rate mortgage at an interest rate of only 4.5% (that is almost a full percentage point less than the current national average interest rate of 5.47%). Refinancing of mortgages by existing homeowners would also be made available at 4.5% interest rate.

The benefits of this scheme are simple and apparent – a reduction in the interest rate would result in a fall in the expenditure for a new property or mortgage refinancing. This would help individuals to retain more cash after home refinancing; this additional saving can now be spent on other items, thereby pushing up aggregate demand in the economy. If this plan can actually be implemented, the number of homeowners would go up by significant amounts, stabilizing (or, even raising) property values. Financial planners and experts are saying that this might just work.

This plan, as designed by the Obama team, is envisaged to an effective long-term answer to the problems that the current recession poses in the US home market. The plan comes at an estimated price $3 trillion, and, in theory, can result in a total economic turnaround, and provide a platform for economic recovery. However, in practice, the implementation of this plan is not as easy as it appears. Firstly, if both new mortgages and refinancing are made available at 4.5%, the total plan may turn out to be prohibitively expensive. Hence, the government is currently limiting this plan only to new homeowners.Secondly, and more importantly, individuals can simply take the home loans at 4.5%, and simply buy a house from a person (s)he knows previously. This would render the new plan null and void.

Overall, the plan devised by Obama to provide economic stimulus to the home market (by providing new mortgages and refinancing facilities at 4.5%) is, in theory, an effective device to bring about economic recovery and increase in property values.

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Are You Looking For a Financial Planner?

We all need a little advise every once in a while. Sometimes I find that I need someone to bounce ideas off of. When it comes to money, many of us are looking for confirmation that we are on the right track.

Others of us can’t even get in the general area of the track!

Whether you are financially wise or a little uneducated, a financial planner can be a great advantage. Why do people turn to financial planners? They may simply need advice for a specific situation, or even continuous advice over a long period of time. Others have no interest in learning the ins and outs of investing, how to select individual stocks or how to choose insurance policies. Others have very little time to spend taking care of their finances. Anyone having constant trouble meeting financial goals should consider seeking a financial planner.The financial planner will help you assess where you are and how to get where you want to go. He or she will see where you are on the map and tell you which turns to take to get to the treasure.

Good planners look at the big picture. They don’t just look at right now and what is spent each day, but they take into account investing, taxes, insurance issues and general money management.

The key is to find a qualified financial planner that you can look up to. You want someone who is excited about their work. They have a true passion to help you.

You can find planners in many places, from brokerage firms to your local bank. Many will help you, but will charge a fee. Make sure that you know what the fee will be in advance of your first session.

Take the time and interview several different planners. Look that they are certified and have a good education backing their advice. One of the best places to find advisors is in your friends and co-workers.

Your first interview with the planner should be free. Take a list of questions you may have. You should be comfortable, listened-to and smarter when you leave. You need to make sure that the advisor’s philosophy matches your family’s style.

Don’t forget to ask how the planner charges. You should be comfortable with the method used. It is recommended that you don’t choose someone who could push you to a certain stock just to get a commission. You should try to look for a fee-only advisor, if possible.Make sure that you do a thorough check before you give any personal information. Ask to see the planner’s state and federal licenses. If they are a stockbroker, they should be able to show you a Form ADV and CRD records.

The fees charged will vary. Most planners charge a median fee of $100 per hour. Some charge $700 for a complete financial plan, or $300 for a retirement plan. Again, be sure to discuss charging before disclosing any information. You want to be sure that you can completely trust someone before handing over your financial details.

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