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You're not a Great Leader, but You Could be

Many people want to be leaders and world changers. Entire libraries of books exist on the subject and people like Zig Ziglar and Stephen Covey have made great livings helping others become effective leaders.

If you want to be a great leader there are many things you could do, but without a doubt, there is one thing you must do to move beyond normal. It stands to reason that if you cannot manage yourself you’ll never be a great leader. To that end I see a lot of people reading books, attending seminars and getting personal coaching to help them become better leaders. However, you must first learn to manage yourself.

Managing yourself is about having priorities and doing the right things. For instance, if you want to lead a team of people in your office you must earn respect from those around you. If projects need to get done on time but you’re constantly arriving late to the office there’s a problem.

It’s also about living a balanced life. If your career track is going well but your family is suffering you’re not managing very well. Other people may not see this happening so you might get promoted, but you probably won’t last long in the position.

If you want a promotion, seek to be a leader. Become a leader by managing yourself and soon people will notice.

Taxicab Secrets to Business Success

This Ain't IBM

It used to be you could find a job soon after college and work there the rest of your life. After years of faithful service you could cash in on your retirement and receive a nice party and a gold watch on the way out.

But things are changing. Pontiac got the axe, Saturn is being discontinued within the next 12 months and companies like Microsoft, IBM and just about every airline are laying workers off at an astonishing rate.

Here’s the thing ... change is happening right now. You don’t have to like it, but you must learn to accept and deal with it. Change isn’t a recent phenomenon caused by a bad economy.

We can look back 150 years to find very few people working for corporations. Most worked for themselves and provided a product or service that other people needed. Imagine the surprise experienced by some when the assembly line was perfected by Henry Ford. People left their ‘jobs’ in droves to work in factories.

When the cotton gin was perfected by Eli Whitney in 1793 you might have expected many people to suddenly find themselves out of work. Instead, the cotton gin revolutionized an industry and created jobs.

Thomas Edison perfected the light bulb filament in 1880 and I’m guessing many candle makers thought they’d be out of work forever. Today seven out of ten households use candles (even though they have electricity as well) and in the U.S. alone sales topped more than $2 billion last year.

During the first half of the nineteenth century ice harvesting was big business until refrigeration standards were perfected. We still find ice for sale in nearly every grocery store and gas station in America and recent yearly sales have come close to $6 million.

Change is clearly all around us. The challenge is to stop viewing it as a negative event and instead welcoming it as an opportunity for growth.

Are Your Customers Otaku?

It’s easy to find everyday products made for everyday people. Just take a look at everything Proctor and Gamble makes. Luvs® is a diaper made to fit every baby. It’s priced for everyone and marketed to everyone.

FuzziBunz is a diaper that is marketed to a select group of parents and namely moms. They are expensive and you won’t find them in Wal-Mart. After all, they are the “GOLD standard” in cloth diapers.

The Japanese would say the followers of FuzziBunz have the Otaku, which refers to an intense obsession. Do your customers have Otaku? What would it take for them to get it?

When you make everyday products that appeal to mass market you don’t make it very easy to talk about what you do. When’s the last time you heard someone going on about how well their Luvs work?

The trick here isn’t to try and get people to talk about your products and services but instead to create products and services worth talking about from the very beginning.

Treadmills are for Losers

Starting a Business? Three Things to Include in Your Marketing Plan

Business marketing plans need not be complicated. In fact, the simpler the better. When you put yours together don’t forget to include these very important details:

1. Clearly identifiable market
2. That market is reachable
3. Price must be affordable to that market
   

Clearly Identifiable Market
You must be able to identify your market. It can’t be too broad because no one wants to do business with a generalist. Instead, we prefer to do business with a specialist.

One look under plumbers in the yellow pages shows hundreds of choices in big cities. I don’t know about you, but when my pipes burst at 2am I’m going to call the guy that advertises 24 hour emergency service. Wouldn’t you? Don’t be a generalist.

Your Market is Reachable
Can you reach your market? If you can’t reach them with your message you don’t really have a business. There might be a big need for your product or service, but if you can’t reach your market with the message they need to hear, you’re out of luck.

Price must be Affordable to that Market
If you can identify your market and reach them easily, you’re still out of luck if your offering isn’t priced so they can afford it.

My friend Dave Munson at Saddleback Leather makes very expensive leather bags and he doesn’t apologize for it. He knows the market he’s after and he does a great job reaching theml. At $400 for a briefcase he’s not after the price conscious shopper. If he were to go after them he’d need to charge less.

If your business is struggling in the marketing arena take a step back and make sure you’re addressing each of these three areas. It does no good if you’re doing great in two of them only to leave out the third.

Starting a Business? Three Things to Include in Your Marketing Plan

Business marketing plans need not be complicated. In fact, the simpler the better. When you put yours together don’t forget to include these very important details:

1. Clearly identifiable market
   
2. That market is reachable
3. Price must be affordable to that market
   

Clearly Identifiable Market
You must be able to identify your market. It can’t be too broad because no one wants to do business with a generalist. Instead, we prefer to do business with a specialist.

One look under plumbers in the yellow pages shows hundreds of choices in big cities. I don’t know about you, but when my pipes burst at 2am I’m going to call the guy that advertises 24 hour emergency service. Wouldn’t you? Don’t be a generalist.

Your Market is Reachable
Can you reach your market? If you can’t reach them with your message you don’t really have a business. There might be a big need for your product or service, but if you can’t reach your market with the message they need to hear, you’re out of luck.

Price must be Affordable to that Market
If you can identify your market and reach them easily, you’re still out of luck if your offering isn’t priced so they can afford it.

My friend Dave Munson at Saddleback Leather makes very expensive leather bags and he doesn’t apologize for it. He knows the market he’s after and he does a great job reaching theml. At $400 for a briefcase he’s not after the price conscious shopper. If he were to go after them he’d need to charge less.

If your business is struggling in the marketing arena take a step back and make sure you’re addressing each of these three areas. It does no good if you’re doing great in two of them only to leave out the third.

He Taxes Me, He Taxes Me Not Part 2

We received some good questions after last week’s article, “He Taxes Me, He Taxes Me Not.” This week we’re providing the answers.

Based on the way I’m currently investing, I have some questions about SEP IRAs and Roth IRAs. Can I open a SEP Traditional IRA and contribute to this even if I contribute to a Roth IRA? Is there any benefit to having a SEP Roth IRA (I'm not even sure this can be done)? If I can only invest in one type of IRA annually, which is the best alternative – a Roth or SEP Traditional?

-Kent in Atlanta, GA

Hi Kent,

Wow! These are some great questions! Here are some answers:

You can open a SEP IRA and continue contributing to the Roth IRA. The reason for this is that the business contributes to the SEP IRA while the individual contributes to the Roth IRA. I know that seems a little unique because in a sole proprietorship, the business is the individual, but from an IRS perspective, SEP IRA funds come from the business revenues, not the personal income of the individual.

There is no such thing as a SEP Roth IRA; as a matter of fact, the IRS pretty explicitly states that a SEP IRA cannot be in any way, shape, or form associated with a Roth IRA.

If choosing between investing in a Roth or SEP IRA, depending on your anticipated tax bracket in retirement I typically recommend the Roth IRA first, then supplementing with the SEP IRA. All signs are pointing toward higher income tax brackets in the days ahead. While we don’t know what they’ll look like 20 – 30 years from now, we do know that we can build tax free savings by going the Roth route. From a tax liability management perspective, I would always like to take a lower income tax hit today for tax free savings in the future. The SEP IRA defers the tax liability until you withdraw the funds in retirement.

Thanks for your questions, Kent!

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He Taxes Me, He Taxes Me Not

As the economy continues to lumber along in an upward direction, Americans are throwing open the storm shelter doors. Surveys of retirement plan participants show that investors are trading out of conservative investments and back into stock mutual funds.

For many years, conventional wisdom for investing for long-term wealth building held that you should pile every penny possible in traditional IRAs, 401(k)s, and other tax-deferred accounts. The assumption was that when you stopped working, you’d likely slide into a lower tax bracket. When you withdrew your funds from those investment accounts, you’d pay lower taxes on them. Conventional wisdom doesn’t always hold in unconventional times. Enter the Roth IRA.

The Roth IRA is perfect for spreading out the impact of taxes in your retirement years. With a Roth IRA, you pay your taxes upfront on the dollars you contribute. That means you pay today’s income tax rate. When you withdraw the funds in retirement, they’re completely tax free. Tax FREE!

With the tax cuts from the Bush Administration expiring soon and new taxes on the horizon, the Roth IRA may be exactly what your long-term wealth building plan needs. Many financial advisers are currently recommending a minimum of 30% of a person’s retirement portfolio be held in a Roth IRA.

Since there are tax implications for putting money in a Roth IRA, it’s important to know the rules. This year, the maximum contribution amount for individuals under age 50 is $5,000 (if over 50, you get an additional $1,000). Likewise, there are income limitations on Roth IRAs: individuals making more than $120,000 and married couples making over $176,000 aren’t able to contribute. However, in 2010 anyone will be allowed to convert existing retirement dollars to a Roth IRA without limitations.

When planning long-term investment strategies, always start with the goal of making money. From there you can protect those gains from taxes, and the Roth IRA is a great tool to help in that effort.

Your Order is Delayed and it's MY Fault

Share your customer service stories . . .

My Friday Office

Thou Shall Prosper

How to Know When to Outsource

My friend Bill Davis pointed out this formula to me to know when to outsource instead of doing a task yourself. I've included numbers but make up your own.

Yield per hour
Target income ($100,ooo)

Number of weeks of work per year (40)
Number of hours of work per week (35)

= 1,400 hours per year

$100,000 / 1,400 = $71.43/hour

That is the number you need to earn to make achieve your desired lifestyle. If you can pay less per hour for a task (personal or business) and it can be outsourced, a great case can be made that it should be outsourced.

Resurrecting Your 401(k)

Back from the dead, for many 401(k)s are beginning to recover with the recent market uptick. The question remains, though: is my 401(k) really going to make it?

Study after study confirms that investors chase past performance, buying whatever made money for other people. These same investors also chase their own past performance, buying more of what has worked for them in the past.

Economist David Laibson of Harvard University has researched 401(k) participants and their investment behavior to find they will add significantly to the funds they already own that have gone up in value the most. “Investors expect that assets on which they personally experienced past rewards will be rewarding in the future, regardless of whether such belief is justified,” Laibson says.

Apparently this is how investors are currently making their buying decisions. In June, 401(k) participants contributed about 41% of their investment dollars to stocks. In July, as the Dow rose by 725 points, 401(k) participants increased their funding of equity investments to 42.3% of contributions. At the same time, they were dumping value preservation funds that hold bonds and cash.

In The Intelligent Investor, Benjamin Graham wrote “the investor with a portfolio of sound stocks should expect their prices to fluctuate and should neither be concerned by sizeable declines nor become excited by sizeable advances.” Basically, to be a true investor, you must strip emotion from you decision-making process.

Ultimately, to buy more of a stock, fund, or investment simply because its value has gone up is to believe that stocks become safer as their prices rise. This type of investing belief system is what perpetuates bubbles, not unlike what we’ve recently experienced. Defining an investment objective, maintaining a disciplined approach, and regularly saving money will help you avoid bubble-vision and make the most of that 401(k).

Like it? Check out LukasCoaching.com and join the Reader's Group to get real weekly insight about money, life, and business.

Throwdown in the Office - Watch to see who won!

I Wish I had More Hours in the Day

If you haven’t found yourself utter the phrase “I wish I had more hours in the day” before, I bet you’ve at least heard someone else say it. If you had more time, I bet you could clean the garage and the bathroom, launch the business you’ve been dreaming about, and maybe, if there’s a small amount of time left in the evening, find a solution for world hunger.

I’d like to be bold and propose an easy solution.

If you spend 3 hours per day watching TV (the average American spends 2.7 hours), that adds up to 1,095 hours per year. If you spend eight hours sleeping each day, you’ll spend 45 days each year doing nothing but watching TV. There seems to be a disconnect happening in our culture. Many people want to make a difference but aren’t doing a thing to make it happen.

So, now that you have all this new found time freedom, what do you do? My friend Dan Miller has some great suggestions in his book No More Mondays. Among them:

• Attend Seminars
• Listen to training CDs
• Read Magazines
• Read Books
• Spend thirty minutes each day reflecting and learning
  

Just like when you free up money in your budget by cutting expenses, if you don’t reallocate your time to another area, your effort will be lost.

“Give the best you have, and it will never be enough.

Give your best anyway.”

- Mother Teresa

How can clients take me seriously without a certification?

I just met with a potential vendor for a service I'm thinking of using. He's not a good fit for my business but he threw out an interesting argument.

He made it known all of the MBAs and other certifications he's received over the years from some very prestigious organizations and schools. I find this very interesting for a number of reasons.

1. Your certifications and degrees are features and I don't care (I need benefits)
   
2. Your certifications also don't mean anything to me, so again, I don't care

Case in point: CPT, ACE, CI-CPT, NFPT, ACSM, ISSA, NCSF-CPT, NSCA-CPT. These are all certifications and organizations that will give you letters after your name, but it's likely most people would not know they are for personal fitness trainers. Even those who do know likely don't know the differences.

A personal fitness trainer should help me lose weight or make me look like the guy in a magazine. That's the bottom line. I don't care about your certifications or the school you attended.

No, the vendor I just met with did not sway me with his certifications and degrees. They are meaningless to me unless he can back it up with results.

Don't let a lack of certification slow you down in business. Get the training you need and then some experience, but don't rely on a piece of paper to prove competency because it won't.

It Takes Backbone to Lead the Life You Want

In the movie "Revolutionary Road" Kate Winslet's character, April Wheeler, tells her husband in frustration "It takes backbone to lead the life you want." That phrase rings true for me and many of the clients I work with.

Do you desire to get out of debt, stop working at a job that simply drains you for the majority of your life, just so you can retire one day?

If that's the life you want to live, have at it. But I'm with the camp that's chosen to act out on the parts of their life that are out of whack.

Wake up! If it's easy, it's probably not worth doing!

Go out right NOW and make something happen. Every second you sit there and do nothing you're going backwards.

Grow some backbone and LIVE!

Unlike the President, You can Keep Your Promises

It's frustrating to get behind a president and vote for him for the promises he makes. Once he gets to office and finds the political culture too bogged down to make any promises we second guess our decision.

Unlike the U.S. president, you have a much easier time standing behind your promises.

I just met an architectural printer who has never been late delivering drawings to his clients . . . until last week.

So when they were complete he didn't mail them like he normally does; he put someone on an airplane to hand deliver.

While he may have lost money on that transaction, he made up for his lateness and likely gained a client for life.

Life and Money Outside the Box

Would you classify yourself as an independent thinker? Would you say that you are a visionary? Your thought-life has direct implications on your real life, so what do you think about? In researching the characteristics of millionaires, independent thinking and casting vision are common denominators.

Millionaires think differently about everything – not just money – because they know that conforming to social norms is a recipe for mediocrity. From how they spend their time to how they use their energy, these people identify what is important to them and then go about pursuing it.

We tend to sensationalize millionaires in our culture, believing they all have private jets, homes around the world, and heated toilet seats. In truth, the typical millionaire in our country observes what works and doesn’t work, then casts vision for his or her financial future.

What works? Saving and investing money, making wise purchases, living with a purpose for monthly income, and helping others. What doesn’t work? Trying to borrow your way to wealth, having a “keeping up with the Joneses” mentality, following the herd, and being self-centered.

We’ve all heard the phrase “think outside the box,” and most of us recognize that we’re at our creative best when we avoid groupthink. What if instead of just thinking outside the box, you lived outside the box? What if the way you approached all of your financial decisions took into account what you want to accomplish for your life – not just tomorrow, but also ten years from now?

Thinking independently requires we get away from the noise and clutter in our media. Having a vision means sitting down and honestly deciding what you want out of this life. Creativity and a positive attitude accompany those who know what they want. They are the ones who align their beliefs and values with their actions somewhere outside the box.

A Nice Day for a White Wedding

The summer is upon us and the temperatures continue to rise. Welcome back to wedding season and all the spending that comes with it. We all know the folks footing the bill for a wedding these days are bearing an increasingly large financial burden. What of those who attend weddings as guests? Travel, hotel, clothing, and gift expenses add up fast. Wouldn’t everyone come out ahead if the happy couple just flew to Vegas and had Elvis marry them?

The average cost of a wedding these days is $20,398. If you figure that a typical wedding event lasts for about six hours – from ceremony through reception – that’s about $3,400 per hour! If you’re interested in discovering the cost of a typical wedding in your area, visit CostofWedding.com.

Think about the financial implications of being a guest at a wedding. How far do you have to travel? Will you fly? Are you in the wedding party? What will you spend on a gift? Is your presence present enough? Where will you stay? Are you paying for meals?

As with anything else, the best place to start is with a budget. As you learn of a couple’s pending nuptials a few months in advance of the wedding, begin preparing your plan by totaling your anticipated expenses. The costs of travel, lodging, gift, and food must be included. Take that total and divide the amount by the number of months remaining until the wedding. If you save that dollar amount each month, you’ll be in great shape to enjoy the ceremony, do the Macarena at the reception, and not have to drag the couple’s commemorative sachet bag of personalized M&Ms home along with a bulging credit card bill.

What if there isn’t as much advance notice? Then it’s decision time. We can either decide to spend a little extra on a gift because we choose not to attend or vice versa. Or we could plan to attend while keeping lodging, food, and gift costs to a minimum. On a tight gift budget? If you find out where the happy couple is registered, buy all the serving utensils or dish towels you can; you can fill a gift box with items like this for less than $20.

Marriage is supposed to be the union of a man and woman committing their lives to each other in front of all their loved ones. With a little forethought, you’ll enjoy supporting the newlyweds without breaking the bank.

Think you can't be a successful entrepreneur in a bad economy?

That seems to be a pervading thought in the minds of hopeful entrepreneurs through the ages. Our current economy is less than promising, but still offers many people the chance to succeed.

Just try telling soup maker Campbell's that you can't launch during a depression. They introduced their famous Cream of Mushroom and Chicken Noodle soups at the end of the the Great Depression in 1934.

Revlon launched its long-lasting nail polish in 1932.

Innovator 3M invented Scotch tape in the heat of one of the worst years, 1930.

More recently, Diet Coke made its debut in the worst recession since the Great Depression in 1982.

One thing I've noticed with each of these products is they are not necessities. I could live without any of them and that includes the Hula Hoop, introduced during the Eisenhower recessions of 1958, just 3 years after the first McDonald's opened.

But each of these ideas has brought the companies who introduced them millions of dollars in revenues.

Instead of sitting on the sidelines waiting for conditions to get better, be bold! Take your plans and back them up with action. The world will thank you.

Want to Save some Money?

In this week’s Sunday edition of The Wall Street Journal, Brett Arends wrote a short article about saving $5,000, fast. Before we begin saving any money, though, we have to make a choice. Making a choice means taking responsibility.

There are three uses of money: we give it, save it, and spend it (the average American was brought into this world already knowing how to do the latter). In order to give or save any money, we must create a margin in our lives. Creating a margin requires that we live on less money than we make; this is the choice we make. Novel idea, I know, but when 70% of the country lives paycheck-to-paycheck, we have to lay this foundation first.

So what can you do to save some money? First, create a spending plan – or budget – you must know where every dollar is going in order to allocate more toward savings. Likewise, with a budget you’ll know exactly where each of those saved dollars is going so they don’t vanish. The vast majority of those who create a spending plan – and execute on it – feel like they get a raise because each dollar is accounted for and has a purpose.

Look at your grocery and eating out spending categories. Our rule-of-thumb is budgeting $150 per person per month in the household. Consider great resources like Angel Food Ministries to get groceries for more than 50% off. Pass on one restaurant meal each month and you’ll save around $600 a year.

If you’ve gone for more than two years without having your insurance policies re-quoted, it’s time to make some phone calls. If you have a solid emergency fund in place, increase your deductibles. Auto, homeowner’s, and life premiums are constantly being evaluated and updated. Just because you’ve been loyal to one provider doesn’t mean you’re getting the best rates. Consider contacting an independent agent who can find the best rates at a variety of providers. Don’t be surprised if doing this saves you anywhere from $300 to $1,500 in premiums this year.

Once you get the ball rolling, you’ll find plenty of other categories in your budget to generate savings. Look at your cable and cell phone packages, estimate savings by packing a lunch, and try brewing your own coffee at home instead of buying it on the run. Craigslist and eBay are your friends; sell what you know you don’t need and generate some cash.

All of these lifestyle and financial changes require a choice. Having a few thousand extra dollars in the bank would be sweet affirmation of a choice well made.

The Best Car Money Can Buy

Remember your dream car when you turned 16? I remember thinking a candy apple red Ford Mustang would do the trick. I even went through a Chevrolet Corvette phase. As I grew older and wiser to the wide world of automobiles, I began exploring the offerings of our friends across the pond: the BMW 3-series and Mercedes E-class.

In recent years, our friends across the other pond have been producing cars heavily sought after by Americans: Toyota Camry and Honda Accord. Neither of those automakers can even shake a stick at the most popular car in the United States: The Little Tikes Cozy Coupe.

Yes indeed, the Cozy Coupe is being inducted into the Crawford Auto-Aviation Museum in Cleveland, Ohio this month. In 2008, the Cozy Coupe outsold all other cars in the U.S. with 457,000 units. In its storied 30-year history 10 million units have been sold and it ranks as one of the top-20 best-selling models of all time.

The Cozy Coupe has been (and always will be) the eco-friendly vehicle of choice, as it runs entirely on foot power. Likewise, maintenance costs are kept low due to the minimal number of moving parts on the vehicle. I’m told the insurance premiums are very affordable, too, and would be even more so if the Coupe had side-impact airbags. The MSRP on the Cozy Coupe is $49.99, but be on the lookout for dealer rebates and incentives.

All kidding aside, I can’t help but smile and shake my head. We spend a lot of money on our cars. As a matter of fact, the average monthly car payment in North America is about $470. We’ll even attempt to impress others at stoplights we’ll never meet by leasing luxury cars (70% of luxury vehicles are leased). Given the state of the auto industry, it sure is encouraging to see an American-made vehicle topping the popularity charts.

Who knows: maybe Little Tikes will start making larger versions of the Cozy Coupe for the kid in all of us operating on an adult budget.

When Dominos Fall and Snakes are Charmed

Dominos have a way of mesmerizing us, don’t they? The whole point of dominos is to watch how one seemingly insignificant piece of plastic can impact literally thousands of others, simply by falling over.

For banks, the first domino to fall was their mortgage portfolios. Now all eyes are turning to credit cards.

Historically, credit card default rates have followed unemployment rates nearly step-for-step. At the end of the fourth quarter of 2008, credit card defaults were at 7.73% on nearly $1 trillion of outstanding credit.

In an effort to cut (their losses) and run, the credit card issuers have been offering some of their customers some unprecedented incentives for – of all things – discontinuing their business. Left and right customers are receiving settlement offers for anywhere from 25% to 60% of outstanding balances. The rationale is that banks will take 25% of what they let you borrow in order to avoiding getting 0% of what they let you borrow.

Unfortunately, not all customers are faring as well. For those who don’t pose a serious default risk, the credit card issuers are looking to make up their lost ground…by raising interest rates and slashing credit limits. In mailboxes all across the country, loyal credit card holders are being notified that interest rates are going from 4% to 24%. For others, they’ll find their credit card limit has been reduced. In one instance, a customer with a credit card balance of $2,345 found that her credit limit was reduced from $5,000 to $2,350 – just enough for one last hamburger.

With their portfolios on very shaky ground, these credit card issuers are recoiling and finding themselves charmed. The same folks, who’ve been shown to purposely delay applying payments to generate a late fee, reduce limits to increase overlimit fee activity, raise interest rates when they find it convenient, and mail applications for their products to three-year olds and dogs have been charmed.

As consumers, we have to ask ourselves: are these the kind of people I want to do business with? And if so: how long can I play with snakes before I am bitten?

Become an Expert, Explode Your Profits

I was floored this week when I got back a survey from hundreds of business owners. 80% of them said that becoming an expert would likely mean an increase in profits of $60,000 or more this year!

I'm not as amazed at that part because I know the benefits. What I'm amazed about is that very few business owners are making any effort to become an expert in their fields.

For $7 this Monday I'll show you exactly what to do.

By the way, I'm really passionate about helping you and I'm donating 100% of the revenue to the Haitian Children's Home.

Start with an Idea that WON'T Make You Money

Pierre Omidyar wanted to trade Pez dispensers not create a business for himself.

He started with an idea which later became e-commerce Bay area, or eBay for short.

Pierre is now the 120th richest person in the world and to date has committed over $270 million to economic advancement throughout the world.

I see far too many people try to build their idea into the next "big" thing and not focus on the passion that brought it to their imagination in the first place. That's like an NFL player catching a ball just for the money. I guarantee he didn't start out with that mindset when he first picked one up at 6 years old.

Instead of getting trapped in the "how" (not enough money, time or resources), focus your idea on the "what" (what do you want to accomplish?). Your idea could quickly (or slowly) bring you the financial outcome you're dreaming about right now.

Like Cheese, You Become Worth MORE with Age

Many people mistakenly believe they become worth less as they age. I hear it every day with statements like "I've climbed as high as I can on the career ladder" (actually heard from a receptionist), "I'm so old, why would anyone hire me?" (stated by a 49 year-old client) and my personal favorite "my company is firing all the older employees so they can hire kids fresh from school at a fraction of the pay" (from a client with 30 years of knowledge and experience in his field).

Ubriaco is one of the most expensive types of cheese in the world. It is aged nearly 12 months before going to market and usually commands over $30 per pound. Unprocessed cheese (i.e., those with hard to pronounce names like Ubriaco) technically don’t ever spoil. After all, cheese is nothing more than spoiled milk. Can you really spoil, spoiled milk?

Cheese does however grow mold. Just leave it wrapped in a plastic bag in your refrigerator for about six months. I just found one in my mom’s fridge and it wasn’t pretty.

This may have happened with your career. Have you stopped growing and learning and now you find yourself stuck as a receptionist with no where else to go?

If your refrigerator houses moldy cheese your situation is not hopeless. Technically you can cut off the mold and not be harmed in the least by what was formerly growing. You may find that you need to do this with your career. You can attend a few night classes, check out some free tele-seminars online or visit your local library. I’ve posted my favorite reads online if you need a kick-start.

If nothing changed in your life over the next five years would that be OK? If it’s time to dust off the mold, identify where you want to be and then develop a plan to get there.

Dusting off Layaway

Remember layaway? I sure do – I remember when all the big box retailers had a layaway counter in each store. Scores of shirts, pants, toys, lawnmowers, and unassembled kitchen tables would be scattered around the counter as the layaway folks processed tickets and moved the items to storage. Remember what happened to layaway? I sure do – the big box retailers started offering “10% off your entire purchase if you open a store credit card.” A pretty smart idea for the retailers, really: no longer did they have to store items that weren’t completely sold. And – oh yeah – those little things called interest and late fees were a bit more lucrative.

Layaway grew in popularity back in the 1920s and 1930s, long before credit card applications lined the checkout counter. For a small fee, typically around $5, customers can pay for their purchase over a 30 or 60-day period, then take it home with no strings attached.

Kmart and Sears have both remained stalwart in their adherence to the longstanding layaway tradition. Since the economy slipped and sputtered some of their retail brethren are reintroducing the payment option to entice more folks through their doors.

What interests me about the resurgence of layaway is how so many folks refer to it as “old fashioned.” The idea of buying something only when you can afford it is foreign to our microwave culture. Certainly, credit cards are not going the way of the dinosaur anytime soon, but if the latest economic dip has taught us anything it’s that living outside of our means is a recipe for failure.

While I definitely prefer the use of layaway to credit cards, I would recommend trying a non-monthly expense fund. Rather than put a lawnmower or new wardrobe on layaway, try paying a portion of what you’ll need to spend into a savings account. Once you’ve saved what you need to make the purchase, head to the store and spend your cash. You’ll avoid the layaway fee and come home with your purchases right away. Want to have some fun? See if you can negotiate a discount when paying with cash upfront – you’d be amazed what bargains retailers are willing to give for a sale.

How Much Does Your Penny Cost?

“With each new penny and nickel we issue, we increase the national debt by almost as much as the coin is worth.” - Edmund Moy, Director of the U.S. Mint.

I find it interesting that it costs the U.S. Mint (and ultimately the tax payers) 1.5 cents to create a penny and nearly 9 cents to manufacture a nickel.

Copper prices have risen but the mint seems to be rooted in the mindset that says “but this is always the way things have been done.” Steel just happens to be a metal, that if used to manufacture pennies, could save up to $100,000,000 annually. Due to a shortage of copper during World War II the U.S. actually used steel to make pennies. That year was 1943.

I help individuals and businesses who are struggling nearly every day, doing things the way they’ve always been done, afraid to try something new. In the current Business Coaching Group that I’m leading, I pointed out on the very first day that the economy has changed. Regardless of the economy changing however, it’s important to point out that the market, and thus our reality, has changed so we must be doing things different, regardless of the economy.

The bottom line is this... If you’re doing the same things now that you were doing at this time last year, you’re getting left behind. Broaden your horizons. Try new strategies and ideas. Be open to change; after all, without change we wouldn’t have electricity or indoor plumbing and we’d all be riding horses and buggies. I bet the guy manufacturing horse whips down the street from Ford Motor Company in their early years had wished he embraced change instead of remaining rooted in his current reality.

Non-conventional Street Level Marketing

In a grass roots campaign, KFC has hit the streets in its hometown of Louisville, KY to fix potholes. Once fixed, the newly smoothed over potholes are stenciled with a white chalk logo that says "Re-freshed by KFC."

While it looks like KFC is taking matters into their own hands and doing something the city should have done, it does create an air of good will. It's also a great advertising opportunity as passing motorists begin to take notice.

But all KFC did was to figure out how much money it was spending to acquire a customer the conventional way and redistributed that money in a non-conventional way.

What if, instead of spending $500 per month on radio or yellow pages advertising, you instead handed a $5 bill, with your business card stapled to it to 100 of your best prospects. You could tell them "This is a free preview of what I can help you save." I'm guessing they'll call you, but I'm also guessing you're a little too scared to try this.

Everyone wants to think outside the box, but what do you think would happen if you acted outside the box?

The Small Business Marketing Mistake

I’m the first to admit that you should not price your services to on the WalMart level. Doing so puts you in a mode of competing with other businesses on price. I’m willing to bet that your quality and service is a lot better (or you should want it to be) than your competition.

There's a dry cleaner that has a sign on the wall above the register. Here’s what it says:

1. Quality

2. Service

3. Price

"Pick Two"

It's true, you can't have all three in your business and I don't think you should either.

Keep this formula in mind:

Intention + Mechanism = Results

Let’s view this as a simple math problem. First, determine the results (the phone rings or someone visits your website, etc.). Second, determine your intentions. What do you want to say to your target market? The very last part of marketing is then determining the best mechanism to reach your market.

Contrast that example with what most business owners do...

As a business owner we tend to first focus on the mechanism. We buy an ad somewhere and then we figure out what it's going to say. We sit back and wait to see what results come from it. This is so backwards!

Honestly, think back to your last advertising mistake. I’m willing to bet that someone sold you an ad (mechanism) in the yellow pages, radio, newspaper, magazine, etc. They got you really excited and then asked what you wanted to say (the intention). All you really knew you wanted out of the deal was a few customers, but the results are the last part of your planning process. It’s like throwing a balloon with a marketing message on it into the wind and hoping it lands in your prospects backyard. It won’t happen and that’s why your last marketing venture failed.

Stick with the above formula and you’ll have no more wasted marketing dollars.

The Tax Man Cometh and... Giveth?

April showers bring May flowers – so they say – which gives us something to look forward to. April also ushers in the annual deadline we all love bumping up against. It’s tax time again.

Many of us will receive tax refunds this year. I’m not a huge fan of refunds simply because I want that money in my pocket throughout the year rather than sitting in the government coffers as an interest-free loan. Please recognize that if you divide your refund by 12, that’s how much more you could’ve been bringing home each month last year. We can’t change the past, though, just the future. So what is the best use of those refunds anyway?

Given the pervasive attitude of fear in the economy right now, I imagine some are viewing their refunds as an unexpected boon – kind of like finding a $20 bill in a pants’ pocket that you completely forgot about. Fear is a terrible motivator – often times causing us to make brash decisions without a solid basis in reality. The reality is that we can’t control everything around us, but we must have a plan for what we do have authority over.

Start with a budget for your refund. Of course, you definitely need a monthly budget – where every dollar is spent with purpose before each month begins. Now we’ll create a plan specifically for the tax refund. Take a look at the Seven Financial Freedom Steps.

Do you have a beginner emergency fund? If you don’t have around $1,000 in a savings or money market account, then use your tax refund to open and fund an account like this. There’s no sense in throwing caution to the wind – unexpected expenses happen all the time, it’s called life. Money Magazine tells us that 78% of Americans will have a major negative financial event in any given ten-year period; that’s plenty of reason to be prepared. Likewise, if we’re going to get out of debt for good, we have to stop going into debt for these expenses, which aren't really "unexpected" after all.

Are you aggressively paying off your debt? After you’ve gotten your beginner emergency fund in place, go ahead and pay something off with your tax refund. Believe me, it’s going to feel really good! Use the debt snowball process: list all your debts from smallest to largest, pay minimums on everything except the smallest – throw as much at that one until it’s paid off. After that, move on to the next one and repeat until free of consumer debt.

If you’ve already dumped your consumer debt, find a creative way to give a portion of your refund to help someone else. Use the rest to top off your full emergency fund of three to six months’ expenses, invest toward retirement and your kids’ college, or pay down the principal on your house. The most important thing is to have a plan for this money; without one it’ll sprout legs and wander out the door.

To estimate your 2009 taxes, visit the IRS Withholding Calculator.

Testing Live Streaming of the Radio Show; What do you think?

We're testing and might be rolling this out soon. Is this something you think would be interesting? Please respond and let me know.

http://www.ustream.tv/recorded/1309352

Don't let the Economy Dictate Your Finances

Yes, the economy is changing. Should you be alarmed? Yes and no. If you are reading this and over fifty or sixty years old, you may be seeing your portfolio taking a nose dive to somewhere south of the equator. If that does not scare you I don’t know what will.

Even if you are only thirty or forty years old, a sudden drop in your retirement funds can make the sweat pop up around your eyes. What is a seasoned or new investor to do? The answer: not much.

I for one do not want to live day-to-day with changing rules. I’d be restless all the time and stressed out. The good news is that I have never bought into the world’s economy and I never will. The only economy I invest in is God’s economy, and thankfully, it stays very consistent. 

The rules today are the same as the rules yesterday. Wouldn’t it allow you sleep better at night if you knew that no matter what news was announced in Washington yesterday, the rules of investing and handling your money never changed?

They never change for my family. No matter what happens in the world’s economy the same rules still apply. Getting out of debt and staying debt-free is always a good idea; in a good economy or bad. Investing for the long-term is always a good idea as well.

Never let a few people who did not apply common sense principles to their business practices determine your course of action.

Your Life, 2.0

The world is changing at breakneck speed. If you have not noticed, now is the time to open your eyes to the blazing changes going on all around you. Most of us are walking around with more memory in our pockets today than was used to put the first man on the moon. While you may feel stuck in the same place, it is even more likely that you have actually been going backwards.

To keep up you have to invest in continual learning. Want to find that perfect job? After finding out how God made you, you have to invest in a number of tactics to land that dream career. Gone are the days when you can answer a newspaper ad or ask a friend.

Firstly, if you do not own the number one spot on google when you search your name, you have to do something about it. Nearly every employer does a background check on you. If you sleazy MySpace page comes to the top, you must do something about it.

Purchase the domain name for your name and set up a free website. You will pay a few bucks per year but you have the final say as to what employers and other think about you.

Another free option is to set up a LinkedIn account. Last night I was able to connect with hundreds of the best minds in Raleigh, NC because of LinkedIn. Establish your profile and keep others in touch with what you are doing on a regular basis.

Facebook is a popular application for fun as well as business. Create your profile, link to your website and blog and present something that prospective employers and those wishing to do business with you see as pleasing and worth while. A buying decision, and deciding to hire you for a position is a buying decision, comes down to an emotional and personal connection. I would hire a qualified friend before someone else that is qualified and yet unknown to me.

A blog will keep you in the forefront of your customer’s minds (top-of-mind positioning) if you are in business. An updated blog will also help you stay at the top of the search engines. Did I mention this option is also free?

Twitter is an application for a new generation. Use it to stay in front of your prime audience. If you have an interesting life or do something that your crowd wants to follow, use twitter to stay up-to-date.

If all of this is overwhelming, I agree. It can be very overwhelming, but the decision is not up to you. It is up to your clients and prospective employers. Even if you do not plan to need any of these services in place for a long time, begin now. The longer you have a website in place, the higher it will show in search listings.

Here is the thing with any of these options. If you are going to use them, you must use them well. Keep your profile updated. Your blog should not have a most recent entry of December, 2007.

Do it well or not at all.

My Life Insurance is Killing Me!

Have you ever purchased a life insurance policy? Did you squirm as much as I did when you were filling out the paperwork? Life insurance – like estate planning – forces us to confront our own mortality.

From a sales pitch perspective, life insurance can be a veritable minefield. Imagine a smooth dude in a snappy suit ushering forth a slick line like, “what will your family do if something unexpected happens to you?” Or, “you don’t really want your wife and children to wonder how they’ll make ends meet, do you?” Talk like that can make your skin crawl! Of course we don’t want our families to wonder where their next meal is coming from after we’re gone!

The problem is that many of us make an emotional decision when we buy life insurance and we miss the financial implications. Make no mistake, caring for your family by purchasing good level term life insurance is absolutely essential. However, one of the greatest myths handed down through the insurance world is that the need for life insurance is permanent. From a financial perspective, this couldn’t be further from the truth.

Insurance is a financial tool that allows us to transfer risk. We transfer the risk only while we cannot afford to assume the risk ourselves.

Many insurance salespeople encourage life insurance products that have a cash value savings account built into them. They go by names like whole life, universal life, variable life, and so on. They’re an easy sell because we like the idea of having some of our premiums saved for us to use down the road – you’ll see these policies called “investments.”

Unfortunately, these cash value life insurance policies are very expensive for the consumer. The commissions are huge on these products and the returns on the savings accounts are depressingly low. To make matters worse, because of the expense related to these policies most policy owners don’t realize they’re underinsured. And should they kick the bucket, the beneficiaries only receive the policy’s death benefit – all the saved up cash value is kept by the insurance company.

Good thing we have an alternative! Term life insurance is purchased for a specific period of time. There isn’t a savings account built into the policy and the premiums are kept level throughout the duration of the term. As a result, we get the coverage we need without any of the fees, lackluster savings, and fluff we don’t, so the premiums are super affordable. If we die during the term of that policy the beneficiaries receive exactly what we paid for.

I recommend buying ten times your annual income in good level term life insurance – typically a 20-year term will do. This way, when your beneficiaries invest the death benefit at an average return of 10%, the annual interest will be equivalent to your former annual income. You’ve been replaced…financially speaking.

I’m currently working with a couple who have about $350,000 in universal life insurance coverage. They’re paying around $250 each month in premiums. The problem is that they really need about $650,000 in coverage to be adequately insured. I ran a quote for them to discover they could get two 20-year term policies with the increased coverage for – between both of them – $50 a month. That’s a $200 difference each month! In 20 years, the cash value of their current policy would grow to around $55,000. But if they invested their $200 per month difference over 20 years, they’d have over $173,000! By now the picture is very clear.

See, in 20 years, this couple’s children will be grown and gone. Because they got serious today about developing a plan for success, they will be debt free and will have invested at least 15% of their income for retirement. In 20 years, they’ll have about $650,000 in investable assets. Now, if something happens to the primary income earner those funds can be invested and the surviving spouse can live off the interest. They’ve become self-insured and don’t need life insurance anymore.

For those that currently have cash value policies, don’t run and dump them right away. Be sure to purchase a good term policy first. If for some reason you’re uninsurable, you’ll still have some life insurance available – cash value policies are not ideal, but they’re better than nothing at all.

If all this insurance talk is making your head spin, recognize that by not understanding your policies you could be paying hundreds of dollars every year in unnecessary premiums. On March 24th, we’re holding a Past Due: Insurance eCoaching event covering seven different insurance areas – homeowner’s/renter’s, auto, health, disability, long-term care, identity theft protection, and life. We guarantee you’ll save at least $300 – $800 a year in premiums when you apply what you learn during this program to your current insurance plan. Visit BeyondPastDue.com to register today!

5 Resumes, 4 Job Offers

I taught a class Crosspointe church last night and covered the process for an effective job search.

If you're limiting your job search to internet and newspaper listings you must know that, out of 100 resumes sent, you'll only receive a job offer between 1 and 8 times.

You can still peruse these places for career opportunities, but an effective job search (understanding your personal tendencies, identifying 30-40 target companies, sending an introduction letter, followed by a cover letter and resume a few days later and then a phone call follow-up) will land you a job about 86 out of 100 times! I like statistics and those are pretty good odds.

Make $1,000,000 by Accident

Is it really possible? Inc. Magazine points out a few stories such as that of Richard and Betty James. In 1934 (wasn’t there a recession going on?) Richard was working in a Navy tool yard and saw a spring coil fall off a table. His wife Betty found the word slinky, Swedish for sleek and sinuous, and the couple followed the idea with two years of testing.

Two years later they placed their invention in a store for $1 each and sold out within the first hour. To this date more than 250,000,000 Slinkys have been sold worldwide.

At only 16 years old, Catherine was able to convince two others to put up over $250,000 to start Yearbook.com. With over 20,000,000 unique visitors each month it has had growth spurts that have outpaced facebook and MySpace.

The point to be made here is that neither of these ideas made their inventors millions of dollars by accident. Each of them took a great idea and brought it to the marketplace to fill a need that was missing at the time.

Ideas really are a dime a dozen. Your ability to act on the ideas flowing through your mind is the only thing that will bring compensation. I’m convinced there are many ideas out there that will never be acted upon, and I heard some tremendous ones this past weekend at the 212 Connection Round Table.

What’s holding you back from significance? I have two suggestions to get moving on your ideas.

First, don’t get hung up in fear. Don’t choose a life of comfortable misery over one of significance. It is easy to look back on a long life and wish you had done more. It’s much harder to do something great and look back with abundance and thankfulness.

Second, don’t get hung up on the “how”. Instead, take the time to develop your “what”. Too often I see people putting their ideas on hold because of a lack of time, money or other resources. If your idea is a good one, nothing will stop you from greatness.

My Father-in-law is my Master

Three times in the last two weeks I’ve encountered people engaged in or preparing to engage in lending money to family. All three cases are the same: parents wanting to help their kids financially are lending money at a lower interest rate than the kids could get from a bank on their mortgage. Financially, it all looks like a good deal: the parents get some guaranteed return on their money better than most Certificates of Deposit are offering now and the kids have lower mortgage payments.

One of the cases I’ve encountered resulted in the parents, daughter, and son-in-law sitting around a table in my office, the two kids in tears. Yikes! What looked great on paper resulted in an incredibly burdened relationship when unexpected events derailed the “good deal.”

The very first debt myth I cover in our Past Due Boot Camp is “lending money to a family member or a friend is wise because I’m helping them.” The truth comes from a trustworthy source: the Bible. Proverbs 22:7 – “the rich rule over the poor and the borrower is slave to the lender” – packs a lot of punch. In practice, if you have the means to help someone financially just give them the money and don’t expect it back. Let it be a gift instead of a loan because no one likes eating Thanksgiving dinner with their master.

Two weeks ago a friend in a position to pay off her daughter and son-in-law’s mortgage (and then replace it with a lower interest loan to her and her husband) asked me if I thought it was a good idea. The kids get a lower payment and the parents make a better return than they could get at the bank; seems like a win-win. After I cited the Proverb, I told her she asked the wrong financial guy if she was looking for affirmation. She is financially savvy, and so I think it important to address the financial merits of such an endeavor along with the relational.

Let’s say that the mortgage currently has an outstanding balance of $200,000 and the couple has an interest rate of 6%. If they’ve been in the house for a year already, there are 29 years left to repay. The parents propose an interest rate of 4%. On paper everything looks like a great deal. The mortgage payment goes down by $227.15 each month; the total saved on interest and principal is just over $93,000 during those 29 years. The parents’ $200,000 investment becomes $338,000 when the mortgage pays off.

Let’s put ourselves in the shoes of the parents. Would it really be wise to tie up $200,000 for 29 years in an investment yielding a whopping 4%? Sure, we look around at the current market conditions and a 4% return seems like 40%. But in the next five years, the likelihood is that the market will turn around. We could even make the argument that investing $200,000 today – when the stock market is deeply discounted – could make these parents at least $381,000 more than the mortgage option during the same amount of time.

So, financially, it doesn’t appear that tying up those assets for so long is an ideal option for the parents. However, if you asked them, they’d probably say they just want to help their kids out. What if the kids sell the house three years into their deal? That’s a lot of lost interest. What happens if, six years from now, the son-in-law loses his job? What if he becomes disabled and doesn’t have disability insurance? What if…? What if…? What if…? Could any of these life changes leave a sour taste in one or both parties’ mouth? Basically, have these parents considered all the relational pitfalls of this financial deal? They could wind up holding a mortgage for kids who can’t repay and relationally they would become their children’s masters.

Why disrupt a great parent-child relationship or strain a daughter’s marriage in the name of 2% lower interest? I’m sure we all can think of examples in our own lives where what looked great on paper didn’t unfold according to plan. Placing a higher value on relationships than the almighty dollar will help us all keep the big-picture perspective we need when mixing family and finances.

A Fast way to Make Easy Money

Four year-olds can be pretty creative. After lunch at home I was getting ready to head back into work when my oldest daughter Ava asked why. In passing I said "Someone needs to make some money." She was quick to point out that she has no problem making money.

As a benefit to our readers, she wanted to share how to make as much money as you want in just 1 minute. Easy. Enjoy.

For Love and Money

The look in her eyes said, “I am frustrated and I am nervous.” The look in his eyes said, “You’re just overreacting.” I love working with married couples as they begin setting goals together for their lives and their money. I also love to show them that their marriages will get stronger in the process of communicating better about their financial condition.

But let’s face it. Men and women are different creatures; some say they come from different planets. A husband might throw his hands up when his wife talks anxiously about money. A wife may harbor resentment over financial decisions that were made by “the head of the house.” If this sounds like you, the good news is that you aren’t alone. Money is the number one thing couples fight about in marriage. It’s also the number one cause of divorce. But who wants to be normal?

I met a young woman today who said she and her husband are about to start saving for a house. I could tell there was a slight bit of hesitation in her voice before she revealed that before they were married, her husband borrowed some money from his parents. She told me that her in-laws probably weren’t expecting it back because the money was more given than loaned. Then why was her body language so tense as we talked about this “gift”?

This is where personal finance gets personal. There is more to it than paying mom and dad back. There is stress and tension on a young wife who feels like every purchase she makes is being scrutinized by her in-laws because how can she afford the new towel set when she hasn’t paid us back? If she and her husband are going to get on the same page about the loan from his parents and saving up for a home, they’re going to have to talk about it. The truth of Proverbs 22:7 – “the borrower is slave to the lender” – has been ringing all too clear.

Remember when you were dating your future spouse? Remember talking about dreams and desires – everything you wanted out of life? Who said you had to stop after you exchanged vows? I told the young wife to sit her husband down and tell him that paying back some or all of the money he borrowed from his parents was extremely important to her, and she would have trouble putting any other financial goals in front of that right now.

I also said that if he has learned anything as a husband, he should know that “if mama ain’t happy, ain’t nobody happy.” That’s not to say she should always get her way, but it is to say that a subject causing tension, anxiety, and stress must be addressed. In talking about her feelings, the husband has an opportunity to serve and show love to his wife. Imagine that! In their book For Men Only, Shaunti and Jeff Feldham found that women prefer emotional security in their marriage to financial security. They’d rather be broke than think their man is distant and indifferent. So, men, be sure to show love – especially when dealing with finances, because financial security is still very important to your ladies.

This couple can sit down and address the stress point, then talk through a plan to shed the burden. That’s the beginning of setting goals together. When two people love and serve each other they have a lot of fun dreaming together. Getting out of debt. Buying a home. Traveling the world. Starting a business. Share your dreams with your soul mate.

Dreams become goals and goals need plans if they are ever to be accomplished. Each spouse offers a unique skill set and personality that will play a part in making those dreams into realities. Embracing those differences is the first step toward a sound financial plan, better communication, and a stronger marriage. Now go ahead and have some fun together!

Football Would be a Tame Sport if not for Women

This week’s Super Bowl brought the football season to an end. What an exciting game it was; or at least the last three minutes.

If you begin to think about the passion and intensity shared by players on both sides of the field you cannot help but wonder what their motivation for winning is. Is it just for a diamond-studded ring or the notoriety that a big win brings? Allow me to suggest that they do it for the women.

Imagine if you will, a bunch of guys standing on a football field with no fans. There is no one there to cheer them towards victory and no one to celebrate with except each other.

Now add women to the mix. When a guy looks to the sideline and sees his girlfriend or wife with a hopeful look in her eyes, it adds so much more to the sport. The passion and excitement not found in the first example quickly return to the game. Men will do super-human feats to impress the woman he loves.

Who is the cheerleader in your life? When a guy comes into my office with a plan that could revolutionize his family’s way of life but his wife is either unsupportive, not on board, or simply not an encouragement, then his plan is likely shot. He loses his motivation and his plans will never succeed. His family will never know a better way of life because the one thing he usually cares about above all is disconnected.

Who is the biggest cheerleader in your life? Regardless of whether it’s a professional coach, your wife or a supportive friend or family member, you need to surround yourself with people who care and can help you get to where you want to be.

When I started my business years ago it was hard to find people that supported my ideas. They asked questions and always seemed to pick out the reasons why my ideas would not work. My wife Christine was always there to help me find solutions to make it work. That is the difference between someone that wants you to fail and someone that wants you to win.

I Want Off the Roller Coaster

What can I say, I love statistics. I tend to follow certain statistics like some folks follow their favorite baseball player. I know, I’m a nerd. One of the most intriguing stats out there that I follow is the American savings rate.

Back in January of last year it was negative (approximately -0.4% depending on the research data). Imagine that – a negative savings rate! When I teach our Past Due Boot Camps, I always ask a member of the audience to help me with some math: “What’s $40,000 per year minus $42,000 per year?” Of course, the response is typically collective laughter as the audience recognizes the point I'm making.

But why is it that we all laugh at something as preposterous as spending $2,000 more than we make in a year? The average person is doing it. Well, the average person was until the impact of the “economic downturn” really started to take effect back in the summer. One year after Americans had a negative savings rate, the Commerce Department reported that the savings rate was 3.6% of after-tax income.

We can infer from this data that when times are good in the economy, we tend to throw caution to the wind and “let it ride”. When there’s as much money floating around like there was just a couple years ago, we figure that we’ll just reach out and grab some if a negative event occurs. We can always out-earn our bad financial decisions, right?

When times are tough, though, we go into lock down mode. Batten down the hatches and hold on to your hats because we don’t know where this wild ride ends! I think that’s a pretty stressful way to live. Talk about a roller coaster. This isn’t just about the amount in your bank account, it’s about the burden and pressure on each of our shoulders when difficult times motivate us to save some cash.

The trick with savings is making it a habit and a priority all the time. Recognize that saving money is essential to cover emergencies, to get great deals on big purchases, and for long-term wealth building. There just isn’t any other way about it.

Since the average person reading this has been able to save more money in the past few months, I encourage you to continue building on that discipline even as our economy recovers. Making it a habit will diffuse financial “management by crisis” and restore peace and hope to your home.

For other articles, check out the growing community at BeyondPastDue.com.

Put your website at #3 on Google... I did

I haven't paid a dime to position my website as #3 on Google broad search terms such as "Financial Coaching". Others have paid upwards of $250 monthly and not risen as high.

You can't trick the search engines. Build a site (or page) that has high relevance for whatever it is your visitors are searching for. Write articles, link back to it always as I've done here and most of all be persistent.

Getting out of Debt: The Debt Snowball

A little over a week ago we had a freak snowstorm here in North Carolina. Four inches later, all the kids in the neighborhood were in their yards sledding on trashcan lids and using beach toys to gather up the white stuff for snowballs. Some of the kids had never seen snow, but they all wanted to build snowmen.

The first step to building a snowman is gathering up that chunk of snow that you can start rolling across the ground. The more you roll, the bigger the ball gets. Before you know it, there’s a real-life Frosty keeping watch over your home. Those kids were rolling snowballs all over the ground, delighted to see them grow larger and larger.

Being a financial coach and certified nerd, I immediately linked the snowman process to dumping debt for good. I teach clients a process called The Debt Snowball for completely eliminating their consumer debt – typically in 24 months or less. Here’s how it works:

With the debt snowball, you list the debts from smallest payoff to largest. While paying minimums on everything else, you attack the smallest debt with such a vengeance that it can do nothing but hit the bricks. I’m talking about selling stuff, tightening the budget to free up cash, and doing whatever else you can to kick that first debt out of your life for good.

Once the smallest debt is gone, you take the minimum amount you used to pay on it and roll it into the payment on the next debt – along with any other funds you can free up. Remember, we’ve already discussed putting your foot down and being done with debt; your ferociousness can shine in all its glory now. Once that second debt is paid off, you roll its payment, the first debt’s payment, and any other cash you can scrape together into the third debt. Just like a snowball for a snowman, as you pay off a debt and roll the funds into the next, your payments get larger and larger.

But, why wouldn’t you pay off the debts in order of interest rate – from highest to lowest? I get this question all the time. Personal finance is much bigger than numbers and interest rates. We’re talking about emotions and behaviors here. It’s personal. If the debt with the highest interest rate has a huge balance, it’s going to take a while to pay it off. It won’t take long before you lose your enthusiasm and motivation. But when you taste some victory by paying off a small debt you’ll be invigorated to push forward and kick that next one out of your life.

I’ve worked with people who were able to throw thousands of dollars each month at their largest debts after they’ve gotten rid of smaller ones. That’s a huge snowball rolling downhill, destroying every debt in its path! Thousands of others across the country have used this process to achieve debt freedom, so what do you have to lose? Debt.

I suggest quitting

Every year when I complete my goals for the coming year I look at what I'm doing and identify about 15% that I need to quit doing. Here's the irony: the 15% I end up quitting is usually something that works for me.

This may sound backwards, but what if you could replace that 15% that's working with something that would work even better for you.

I have a business group that I'm a member of that helps my business. Even though it works well for me, I've decided that I'll stop doing that this year and replace it with something that should help even more.

So it's not all about putting the right things in. Sometimes you have to quit something, even if it's working for you.

Here's a short article I wrote on this over a year ago.

What are you going to quit?

Bad Economy, Great Business Ideas

Campbell’s Chicken Noodle soup, McDonald’s, the Hula Hoop, UPC codes, Diet Coke and Apple Computer; these companies and products are so ingrained in our minds that we fail to think of them as brand new ideas that could either make it or break it. At one time people and companies bet their livelihoods on bringing all of them to market and all were introduced in bad economies.

Campbell’s Chicken Noodle soup was introduced in 1934 right in the midst of the Great Depression. Ray Kroc opened the first McDonald’s during the 1955 Eisenhower recession. During the same recession the Hula Hoop debuted in 1958. UPC codes were introduced during the Vietnam War and an oil crisis. Diet Coke came to market during the most severe recession since the Great Depression in 1982. Apple introduced the first iPod in 2001 while many other technology companies were crumbling.

There is a lesson to be learned here. You can either bury your head in the sand when times are tough or you can take your great idea, use it to change people’s lives and make a fortune doing it. The choice is yours.

Here are a few tips if you truly do want to bring your great idea to market.

1. Take a chance. The bigger the chance the greater the rewards.
2. Once you make a decision be confident about it and don’t look back. Hindsight is 20/20. You are where you are now because of the decisions you’ve made. Right or wrong, deal with it and move on.
3. Quit worrying. Matthew says “So don’t worry about tomorrow, for tomorrow will bring its own worries. Today’s trouble is enough for today.”
4. There are no mistakes. The lessons you learn by doing are invaluable and usually less costly than going to college.
5. Ask yourself “What’s the worst that can happen?” It’s usually not that bad so why worry?
6. Step out of your comfort zone. Nothing great is ever accomplished with taking a risk.
7. Do. What’s holding you back? The missing ingredient between a great idea and the money it could bring you and your family is action.

"All men dream, but not equally. Those who dream by night in the dusty recesses of their minds wake in the day to find that it was vanity: but the dreamers of the day are dangerous men, for they may act their dream with open eyes, to make it possible." – T. E. Lawrence (of Arabia)

Don't get Stuck on "How"

As I'm coaching someone through a career transition and especially into the formation of a business I find they often get stuck on the "how".  As an idea begins to form thoughts begin to enter their mind: "I don't have the money for that", "I don't have the time", "I'm not smart enough", "I don't know the right people", "No one will take me seriously."

If this describes your thought process I encourage you, as I do with my clients, not to get hung up on the "how" and instead focus on the "what."  Until you fully know the possibilities the "how" doesn't even matter much.  I've found that it's easy to get hung up with worry before an idea is halfway developed.

So take the time in the beginning to fully develop your "what."  Only then should you start planning the "how."

Getting out of Debt: Expect the unexpected

My wife and I were driving home from my in-laws a few months ago when I hit a pothole. Lo and behold, the darn thing blew out my tire and put a nasty dent in my wheel rim. That little pothole cost me nearly $600! You know what, though? I knew it was going to happen before it ever did.

Sorry, no Magic 8-Ball here. Money magazine says that 78% of us will experience a major negative event in any given 10-year period. Now, busting up my tire and wheel don't qualify as "major" in my book, but because we know that life happens - usually unexpectedly - my wife and I have an emergency fund in place for when the rain comes.

Remember that the first part of getting out of debt is changing the way we view debt and making the choice not to go into debt any more. If you have an emergency, you have to cover it with your emergency fund - not your VISA. Putting emergencies on credit cards will keep you locked in the vicious cycle of debt.

For most of us, having $1,000 in a savings or money market account is the First Step on the road to freedom!

Getting out of Debt: Putting your foot down

Debt has a way of lingering, always for too long. So, if the debt is lingering how can we get out of it? What is the best method of getting out of debt?

There aren't any magic pills that make debt go away. If someone on a late-night TV ad or on the radio tells you they have the secret to eliminating your debt without any effort, they're lying. To start getting out of debt you have to do one simple thing: stop going into debt. It's crazy, I know!

I think about it like this: when I was a boy, I joked with my friends about "digging a hole to China." Imagine digging a hole - a big hole - so deep that you'd need a ladder to climb out of it...but you don't have a ladder. So you're stuck in your hole with a shovel. If you want to get out of that hole, obviously the first thing you're going to do is stop all that digging, right?

Proverbs 22:7 says "The rich rule over the poor and the borrower is slave to the lender." If you want to get out of debt, you must stop going into debt and allow for a paradigm shift in your way of thinking. Debt doesn't build the prosperity we've all been led to believe by our culture. When surveyed, 75% of the Forbes 400 (the 400 richest Americans) said they got there by becoming debt free. So, instead of putting the cart before the horse by talking about how to actually go about eliminating debt, we first have to change the way we think about debt altogether - otherwise, we'll wind up right back where started...in that hole.

Make Money by Accident

It was a cold and brutal winter morning in New York on January 2, 1924 but Richard Simon had promised his grandmother that he would visit. During his visit he discovered that his grandmother loved doing crossword puzzles with her neighbor. The two ladies kept each other company in the long winter evenings while they worked on the puzzle from the Sunday edition of the New York World.

Richard discovered the two ladies had a problem however; by Tuesday the puzzle was usually solved. After thinking for a moment, Richard asked the two women if they would like to have an entire book of crossword puzzles. I’m sure you can imagine the excitement between the two friends when the idea was proposed.

A friend, nicknamed Linc, was persuaded to join Richard in creating and publishing a book consisting of nothing but crossword puzzles. The subsequent Crossword Puzzle Book later became the foundation of the publishing empire Simon & Schuster, which today has annual revenues upwards of $14 billion.

There are a few things to point out here; the first being that you do not need to have an incredibly brilliant idea in order to make money. Two boys from New York identified a problem and set out to find a resolution in order to make someone’s life better. I don’t think either of these men realized they would create an empire; they just wanted to have some fun and help a sweet grandmother.

This leads me to my second point; these guys were having fun! They did not sit around brainstorming ideas to make a quick buck. They did it for the fun of it. Crossword puzzles were all the craze in the mid-20s and they capitalized on people’s enjoyment.

What ideas do you have resonating in your mind that could not only improve another person’s life, but that could also make you money? What is preventing you from turning your ideas into income? My advice to you is don’t get stuck on the “how”. Instead, focus on the “what” and then develop a plan to make that a reality.

If you are short of ideas there is a wonderful discussion going on right now at BeyondPastDue.com. Join in and add your ideas or take one already there and turn it into income.

It's no Great Shame to be Poor, but it's no Great Honor Either

The words spoken by Tevye the milkman in “Fiddler on the Roof” ring loud and clear. “It’s no great shame to be poor, but it’s no great honor either.”

There is absolutely no shame in being poor. But is that really how you want to live your life? Broke, always scraping by, never being able to help anyone because you only have enough for you?

Is there something wrong with desiring more income; to increase your standard of living beyond your current level?

Many people get stuck here. After all, it was Paul who stated that “It is the love of money that is the root of all evil.” 1 Timothy 6:10 But notice here what Paul does not say in this passage. Paul does not say that money is evil, but rather the love of it. Simply put, if your motivation for more money is to worship it and make it the main thing in your life that is completely the wrong reason. King Solomon wrote that wealth is a crown for the wise.

But the desire to make more money is good. I want to surround myself with people that are making money. The more money we all make the better off our society is. The government actually had this right when they decided to send refund checks to stimulate the economy in 2008.

As long as we spend our money wisely, we all benefit when we all make great incomes. The world benefits when you make a greater income. Think of all of the organizations you could support. The ones you have yearned to support but never had the resources.

What is stopping you from increasing your income? Once you wrap your mind around this singular idea, not only does your life and that of your families change, but so does mine, the rest of America and the entire world.