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.
Wednesday, March 11, 2009
Thursday, March 5, 2009
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.
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.
Friday, February 20, 2009
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.
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.
Wednesday, February 18, 2009
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!
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!
Monday, February 9, 2009
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.
Wednesday, February 4, 2009
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.
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.
Tuesday, February 3, 2009
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.
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