It’s summer time and people are going places. The kids are out of school and many vacation plans are laid out. It’s also a time when people reflect on their personal development. There are lots of programs to inspire and motivate you to build wealth – there is the book called the Secret, and there is Oprah’s the Power of Now program, and there are many others. But to truly make a change in your life that is sustainable -you must take action. As the famous Zen Master, Suzuki Roshi once said, “You can keep reading the menu, but sooner or later you must eat.“. A lot of wealth coaches work with your money personality or the fears, guilt or shame that surround financial issues and that’s fine, however I am quite different. I acknowledge what has happened in the past but I work with how you are now and where you want to go. In that respect I am very much like a travel agent.
“Hello, my name is Fern. Where would you like to go in the next year, ten years, or even 20?“ We will talk about the barriers to build wealth and the support you have and what you will need to make that happen (skills, contacts, etc.). Above all, what action are you willing to take today to progress to where you want to be? I have my bags packed to go along with you and it is filled with tools and resources (from my 27 years in the financial industry) to help make your journey easier. As a Wealth Coach, I am prepared to support you in any way so when we hit turbulence you will not panic and go off course. I will hold you accountable and I will sometimes challenge you within your boundaries. Along the way, we will make lots of friends and these friends will elevate your financial self-esteem even more and serve as your R&D team long after I am gone.
If you think you can do this yourself, then think about why it hasn’t happened so far. There are lots of excuses why you haven’t started and lots of reasons why you may want to put it off. As we get older, we have a finite number of years left to build wealth and make our dreams a reality. Don’t wait! Would you choose to…
- Launch a new business or product
- Buy a home or rental property
- Transition to a new career
What’s the cost? Click here for my fee schedule to build wealth. My average engagement is 6 months and I promise to inspire, challenge, enlighten and empower the best out of you, to help you to realize your goals in 2010 and beyond. To see results quickly, e-mail me at fern@wholeheartedway.com to set up a date and time for a complimentary first session to see if we are good travel mates. I’ll’ take you there!
by Fern Alix LaRocca
in Credit
Once a month I will be answering a question from my readers. Please submit your question to me by e-mail at fern@wholeheartedway.com.
Question – I get credit card offers in the mail every day. How do I make them stop? I have tried calling but that didn’t help…
- Anonymous
Answer – You can call each credit bureau (Experian, Transunion, and Equifax) or you can call them all at once through Opt Out Pre-screen or by calling.
If you are getting a lot of offers, it probably means you have good credit. If you don’t have good credit than you should reviewing all the data in those offers very carefully. There may be a transfer balance card with no interest for a period of time. For someone building credit or trying to reduce their credit balance, these are great offers.
You can also go to the Direct Marketing Association at www.DMAchoice.org and remove your name from their website.
Privacy Rights Clearing House has directions for how to get off of mailing lists.
www.CatalogChoice.org has about 1,000 catalogs that you can opt out of but you have to register.
Coaching Question – What credit resources do you use?
by Fern Alix LaRocca
in Credit
Question – I want to lend money to my nephew for a business venture. How can I do this without any misunderstandings?
- Richard B.
Answer – People to people lending is growing fast. I have seen here in Silicon Valley many middle-class “angels” who have helped people get their businesses off the ground and share in the profits (hopefully). If the amount is under $25,000 a better way to go would be to use some of the on-line lending networks. They are:
www.propser.com
www.Lendingclub.com
www.Zopa.com
www.GlobeFunder.com
www.VirginMoneyUS.com
The advantages of these sites are that they are quick, have less paperwork, and sometimes have lower rates than a traditional bank depending on your nephew’s credit record.
In some cultures where there is no banking infrastructure, people to people lending was the way the economy grew. Today, micro-finance loans to emerging market economies are doing terrific with a extremely low default rate. I like these micro-finance mutual funds as an investment. In America, these programs have not been as successful, I fear because our ethics and the high standards to pay back what is owed is not respected.
Many non-profits are also creating ongoing support for their recipients so that the default rate is kept to a minimum. Lenders for Community Development is one non-profit where I have coached their successful alumni.
People to people lending is also a great place for students to get a loan for college.
Coaching Question – Would you lend money to a relative and how would you do it?
by Fern Alix LaRocca
in Credit
Our country is drowning in debt and most of us are, too. Why is that?
Well let’s look at the facts. Our federal government is $8.8 trillion (that’s no typo) in debt.* Debt payments for the rest of us rose to record levels last year. In the second quarter of 2006, families had to spend 14.4 percent of their disposable income to service their debt—the largest share since 1980*, and it’s no secret that bankruptcies and foreclosures are on the rise. So what do we do? The media would like us to think that we are just bad consumers paying too much money for designer jeans, BMWs, and the latest iPod. But the reality is that most people get in debt because something came up that they didn’t have the funds for – something like your medical insurance premiums just went up 50% or you got laid off from your job or your adjustable rate has now adjusted to sky high levels.
Credit isn’t horrible if you use it and manage it well- it can actually help you build wealth. Here are 8 tips to help you:
- Make sure you have enough cash reserves to handle a lay off or a car repair, etc. At least a minimum of three months gross salary is what I recommend; more if you have a lot of assets or debt. I personally keep a minimum of six months salary in cash reserves at a high paying money market account like www.VirtualBank.com.
- Keep your credit score high and up to date. You have to have credit in order to get it, and a high score is a good thing. Find out your score and get a free annual credit check at www.AnnualCreditReport.com. I buy stuff on-line all the time so I make a point of checking my credit to look for any unusual purchases that aren’t mine.
- Take out debt for things that can appreciate like your business or your home not your car or snowboard. Pay cash for the car, use public transportation, or use a local service like www.CarSharing.net.
- When the going gets tough, the tough go to Mom and Dad (or Auntie Fern). Make sure that your parents, friends or relatives feel good about lending you money by having the loan structured by an organization such as www.CircleLending.com. Remember, you are not a loser. You just need some financial help. So set it up right so there are no misunderstandings.
- Take on debt to invest in your most precious asset – you. Your income needs to constantly grow in order to keep up with taxes and inflation. Don’t be afraid to take out a loan for classes that will improve your job skills and get you more bucks. I take on-line classes all the time. It’s much better that TV and more fun than the local bar. I get to learn new stuff and meet interesting people from all over the world.
- If you are in over your head, help is on the way. Check out the National Foundation for Credit Counseling (www.nfcc.org) and the Association of Independent Consumer Credit Counseling (www.aiccca.org). Members of these two organizations do not employ commission-based counselors and are more highly regarded than some of the other organizations.
- People often overlook credit unions. They usually have lower interest rates on loans for members and are more willing to work with people with bad credit than the local bank.
- Don’t worry about real estate debt. Keep it manageable but keep it. It is usually your biggest tax deduction. That old school garbage about paying it off the and living debt free – forget about it! Most retirement plans will distribute money that is all taxable. If you paid off your entire mortgage then you could find yourself paying more in taxes than you did when you were working.
Keep in mind that almost every big purchase that you will make in your life – your home, your car, your loans, your investments – may involve a commission salesperson. So it pays to be skeptical and cautious. Your girlfriend’s brother may say he will give you a good rate on a mortgage, but when it comes to feeding his family or yours, guess who is going to come first? It’s a good idea to always ask what the other party will make in fees and commissions. If they are good business people, they will have nothing to hide and be glad to disclose how much they have to gain. The old adage – “if it sounds too good to be true, it usually is” – still applies. Take your time, take a deep breath and use your intelligence to make the right decision for yourself. It will pay off.
It’s tax time once again and I know all of you are scrambling to get that information to either prepare your own return or take it to a tax preparer. I prepared about 100 tax returns for some of my clients every year since 1983. It amazes me to see the various ways that people organize their records. There are all sorts of systems from the basic throw all the receipts in a shoe box and deal with it later to sophisticated spreadsheets and tax software. Everyone thinks that everyone else has a better system. The truth is – the best system is the system that works for you. I remember a well to do widow that had various envelopes with receipts in them that were labeled in alphabetical order inside neat bank boxes. Then there was the young engineer who came in with a very detailed and complex spreadsheet that he had used to put all of his information in. When I asked the widow for totals and information, she readily found the right envelope to give me an answer. When I asked the engineer for certain information, it took him minutes to figure out his own data in his own spreadsheet. The point is that it doesn’t really matter what system you use to keep your financial records. What matters is:
- you have a system in place to keep important records and you know how to use it
- you use the system often and keep it up to date and backed up
- you can get information from your system to make important financial decisions
I have worked with very wealthy people and very poor people and one of the dividing lines that makes the difference is that wealthy people take the time to save a dime. The most precious resource that we have is time. And everyday we make decisions about how we want to spend our hours and days. We live and die by those decisions and their consequences. When we don’t take the time to find all of our receipts for our tax preparer, we leave money on the table (no deductions equals no tax savings). When we don’t take the time to shop for the proper mortgage, we leave money on the table (saving a quarter percent could possibly save you $6,000 on a $400,000 loan). When we don’t understand our 401K and fail to make tax deferred contributions, we leave money on the table (less earnings get taxed so we get more back). When we don’t take the time to read that insurance policy and disaster strikes, we leave money on the table (no coverage means more out of pocket costs). When we get the wrong kind of credit card because we didn’t take the time to read the fine print, we leave money on the table (higher interest means more cash out of your pocket). Got it?
Okay, so it is boring and you can think of a lot more fun things to do with your time — but these actions pay you money and we all don’t mind getting a little more of that.
