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Recognizing Reality

February 26, 2016 by  
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Did you get to read the post from last week when we started talking about common sense? Well while that was about using common sense when getting help and advice from the professionals that support your business, this week, let’s talk about common sense when deciding what financial deals to get in on. Here is just a little more from my old publication, The Financial Freedom Report.

One definition of common sense is “what is sound and prudent but often unsophisticated”. I’ve seen many very sophisticated business decisions that have lost millions of dollars. To avoid financial traps, you need a huge dose of common sense, especially when those all around you are playing sophisticated and getting wrapped up with what is hot or in vogue. Common sense will keep you from being trapped or pushed or bullied or shocked into doing a deal that you don’t want to do.

There are many high powered, complex formulas for success and financial independence, most of which are so mind boggling it would take a PhD to understand them. Many of these formulas were written by people who never actually made big money themselves but sat back and watched others do it. From a spectator’s position they think they know the answers and then they make things so complex and involved that the average person cannot understand them. Take it from me, making a lot of money in a short period of time can be done with a simple game plan. I said simple not easy, since it takes tons of work. You are probably already working very hard but maybe not with the right game plan.

When I studied the lives and fortunes of two dozen millionaires and multi-millionaires, I was looking for a common denominator, something they all did that accounted for their success. I finally noticed factors that were present in almost every fortune. I slowly eliminated those factors that didn’t show up in every case. What I ended up with was basic and somewhat obvious, although it escapes 96 percent of those who look for it.

There are four essential ingredients, and I put them into a formula I call “PSIC”, which simply translates into P=Plan, S=Save, I=Invest, C=Compound. And I will add now in order to compound at high rates you need to use leverage.  

An insistent, fast-talking, and even somewhat logical person many times can persuade somebody to do something he doesn’t really want to do. If somebody asked you if you would like to get in on this super-hot deal that will pay you a 250 percent return without any risk and without a lot of your effort, what does your common sense tell you? Common sense should tell you that if a deal were really that good, the guy trying to sell you the deal and or the promoters behind him would probably not have trouble getting the needed money as a loan from a bank.

The simple fact is, those kinds of returns don’t exist. Yes, it is possible for you to get 100 and 200 and even higher percent returns, but not without a lot of work on your part and certainly not without any risk.  Deals like that don’t come all packaged neat and simple, especially without risk and without great effort on your part. Believe me it won’t happen! If I had a deal with a return like that (and I have had those kind of deals) you’d better believe that I would be able to borrow a whole lot of money, which I have done many times, even if I had to pay 2 or 3 times the going rate of interest. Common sense is recognizing reality and then acting accordingly.

Supporting Roles in Your Success

February 19, 2016 by  
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Last week, I shared with you some great advice from an old publication of mine, The Financial Freedom Report. I quoted from an article published in the Summer of 1995 entitled “Ask Your Barber How to Cut Hair, Not How to Make Money” which was simply saying that people who aren’t a super success as making money are not the people you want to talk to. However, there are some people you will need on the sidelines, but like knowing who to go to for advice on money, know who to go for advice on the other things you’ll need along the way, and when to bring them in.

Generally speaking, I find from experience, attorneys are deal breakers, not deal makers. Knowing that, I usually structure the whole deal before I have an attorney get involved at all. Yes, I want him or her involved. When? Just before I sign the papers. I want the attorney to read the contract to a make sure that everything is legal.

Problems can arise when the attorney steps into a management role. When going to an attorney for legal advice, you should always be sure that you ask very precise questions and not let the attorney overstep his bounds. He will if you let him. He has to play the devil’s advocate, and that is good. The same applies to your CPA, your business managers, and your bankers.

A man by the name of Owen Feltham said, “The greatest results in life are usually attained by simple means and the exercise of ordinary qualities. These may for the most part be summed up in these two words “common sense.”

So what is the bottom line from these words written so long ago? Use common sense when choosing who to go to for advice as well as what advice you take from people, even if they are “professionals” because if the advice doesn’t have anything to do with their profession, your common sense meter should be telling you to set that advice aside and have a word or two with someone that really knows what they are talking about in those matters.

Next week, just a bit more from my old publication but this time we’ll talk about common sense deals and how to avoid getting taken by fast talkers and their so-called ‘advice’.

Surround Yourself with Makers

February 12, 2016 by  
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I happen to pick up an old copy of a publication that I produced for many years called The Financial Freedom Report. It was dated the Summer of 1995 and the article that caught my eye was “Ask Your Barber How to Cut Hair, Not How to Make Money”. I quickly reread what had written all those years ago about that statement and it’s something that needs to be repeated and practiced today. Here’s what I said.

It is amazing how many people seek or listen to financial advice from neighbors who are in approximately the same financial position as themselves. Others run to their bankers to ask if a particular deal is any good or not. What do bankers know about deals? Zip! Sure, a banker knows about loans and checking accounts, and they know a lot about accounting and borrowing and lending money because that is their business. Deals are not. Since people know that there is money in banks, they tend to think that the bankers know how to earn it. Remember they are just custodians; they are just janitors of money. It’s not their own money. It’s yours.

Barbers work on heads, but that doesn’t make them psychologists, because they only work on the outside of the head, so their psychological advice or advice on how to make money is not very credible. Avoid the trap of looking to the wrong outside sources by doing some of your own thinking.

The best way to learn how to make money is with somebody who has made a lot of it. What better place to go than to an entrepreneur who started from scratch and did it all themselves? I wouldn’t even want to go to David Rockefeller. Sure, he has several hundred million dollars and he is the chairman of the board of one of the largest banks in the world, but his grandfather, John D. Rockefeller was the one who made the big bucks.

Everybody needs advisers, but the advisers you need to surround yourself with should be deal makers, not breakers. Sure, you and only you should be the one making the final decisions, but I find that all of us can be influenced and helped by smart people whose opinions we hold in high regard.

Next week, I’ll reveal a bit more about the subject with more from this very same article. Although it was written over 2 decades ago, the ideas in it are still true today. The best ideas do stand up over time!

Celebrating Life

February 5, 2016 by  
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I just flew from Kauai into Salt Lake City. Yep from the beach and palm trees to snow and cold—brrr! We are staying in Utah for just a few days. We made this special quick trip from paradise to the snow country of Park City and Deer Valley Utah for the grand celebration of the life of the legendary world champion skier and our dear, wonderful friend, Stein Eriksen.  In my January 2nd blog I talked about my 2016 New Year’s Resolution to follow Stein and Francoise example of being a great friend; my goal is to be a much better friend and cultivate more and more friends.

When you live 88 years as Stein did, a celebration of life makes so much more sense than that thing they call a ‘funeral’.  My message this week is a simple one.  Life is so very short and no one knows when their life is going to end but we all know that it will end at some point.  So to have a fuller life, we all need to celebrate each and every day. Or as my license plate on my new Tesla reads, “CARPIDM” which is an abbreviated version of ‘carpe diem’ which, of course, means ‘seize the day’.

Let’s set a goal to make every day count and make every day a celebration of our lives and spread that celebration and up beat feeling to all those around us. And do more of that celebration with our family and friends.  Live in the now! We all know we should do that so let’s be more aware of the importance of living in the now and in today and do it every day.  Remember, even if you live to be 100 years old that’s only 36,500 days and for me that only leaves 10,160, so I certainly need to practice what I am now preaching to you!