Saturday, December 25, 2010


The book of the week was Mojo by Marshall Goldsmith. I liked this book. It's a textbook self-help genre, and I think it definitely has the potential to do that with anyone. Goldsmith writes about how to get your Mojo going. There are several ways to test what gets your Mojo pumping, but there is one over-arching idea throughout the book and that is Acceptance and Forgiveness.

There are several areas in your life that you need to use these ideas to become successful. It makes you successful because it enables you to focus on winning instead of the uncontrollable. Focusing on the uncontrollable is a cornerstone for most people's lives. It could be past, a life decision that your would have liked to have done different, or a colleague of whom you're jealous.In all of these areas it is important to accept the situation and then forgive the situation. It's completely out of your control. The past is the past and someone else's favor is none of your business. If you spend half the time you would normally spend on focusing on the uncontrollable, doing something of merit in an effort to change your future, you will astound yourself! Accept the uncontrollable situations and forgive yourself or others for the outcome, and move on.

Short post on account of Christmas! Hope all of you had a Merry one... and I will see you back here next week to celebrate the New Year. I liked this book and it is really neat. I think Goldsmith is a good writer and I look forward to reading more of his work. As always, if you have any questions on the book don't hesitate to ask. I would be more than happy to help anyone that wants it.

Saturday, December 18, 2010


The book of the week was Tribes by Seth Godin. There are quite a few little tidbits that give me that "Oh yeah! That's true!" kind of thought process. Right toward the end of the book Godin writes this: "Leaders have nothing in common. They don't share a gender or income level or geography. There's no gene, no schooling, no parentage, no profession. In other words, leaders aren't born. I'm sure of it." It's very smart... obvious, yet thought provoking. To be a leader is to make a choice. Sure, it may be easier for some to make that choice, but anyone can make it.

The book is about leadership. The idea is that a tribe is a strong organization with a strong fan base of members and strong leadership. I like the idea of a tribe. An organization that is so strong that it's members will fight for it's survival and put every ounce of effort in to maintaining continual success. Tribes don't grow on trees. They are developed by strong leaders. The leader doesn't need to have authority in the organization it is trying to transform into a tribe. A leader just needs raw passion and hunger for their desired outcome- The Tribe.

Two things I want to talk about from this book... Fear and Entertainment. Interesting couple of words. But they both deal with leadership as Godin writes about in this book.

Fear is a huge deterrent for individuals to step into leadership roles. That is the choice I was talking about earlier. It really comes down to choosing to step away from the status quo and into something new and better. It's easy to stick to the status quo, but the status quo is boring and not effective. People fear criticism more that anything else when stepping into a leadership role. "What will people say?" "What if people don't like my decisions?" "Will people follow me?".... The answer to all of the above- "It doesn't matter." These questions should not be a determining factor is stepping over the fear-line. This is easily the most difficult part of being a leader, but it should never deter you from continuing your path to make a better organization. The bigger and better changes you make, the more people will judge and criticize your actions. But no one has ever achieved greatness in the area of leadership by sticking to the status quo.

The next concept I want to talk about is Entertainment. This is an idea that is missed by a lot of leaders. They don't have the attention of their audience. If you can't make people interested in listening, then you have the cards stacked against you. The best way to illustrate this is with a teacher in a lecture hall. A teacher has a great venue for leadership. A lot of teachers are arguably some of the best leaders in the world. However, when you have a teacher in front of a bunch of students and the students are bored out of their minds, they aren't retaining the information and thus, they are not being led effectively. The same idea applies to organizations, if you are trying to lead the people of your organization to be more successful, but you can't capture the troops attention. You are fighting a losing battle. You have to bring charisma to the table. Get excited, fake it if you aren't. It's not easy to always be energetic, but it's the best way to get people's attention.  So do whatever you have to do to make sure you aren't being boring.... coffee, tea, red bull... Whatever it takes! Once you have their attention, you just need to stick to your plan and choose everyday to continue to be a leader.

I think this was a fun little book. And it's been a few weeks since I had read a leadership book. And this one was really good to get me thinking about my own leadership techniques. As always, if you have any questions on the book don't hesitate to ask. I would be more than happy to help anyone that wants it.

Saturday, December 11, 2010

The Power of Passive Investing...

The book of the week was The Power of Passive Investing by Richard Ferri.

I am going to make this quick because I am stuck in a blizzard in the middle of no where in Minnesota. So... The book was very good. It is everything you ever need to know about passive investing ie. using index funds or ETFs. It is very academic, so it gets a little dry in parts of the book, but all the information is still very interesting.

If you have interests in the details of why passive investing is so much more effective than active investment funds then this book will tell you everything you need to know and more. The history of passive investing is pretty neat too. As always, if you have any questions on the book don't hesitate to ask. I would be more than happy to help anyone that wants it.

Saturday, December 4, 2010

The Automatic Millionaire...

The book of the week was The Automatic Millionaire by David Bach. I was still pumped about the book I read of his a couple weeks ago. This book was just as good or better than the other two I read. However, I am not going to discuss specifics about this book because the other two books I have read by Bach basically cover all the relevant information I would want to relay to you all. What I would like to talk about instead is investment mediums...

This book had me thinking quite a bit about this concept I read all the time by conservative personal finance writers. The concept I am talking about is investing 10% of your gross income for the long-term and then in 30 years you'll be able to retire will a ton of money. I have even used examples of this showing that if you invested X amount of money you'll end up being a multi-millionaire in 30 years. Perhaps, I wasn't thinking completely clear when I talked about all the great results. The reason Bach had me thinking about this is because he kept talking about the average salary being a little less than $50,000 right now. Well 30 years ago, the average salary was $14,000. Now, your gross pay at $14,000 makes $816.00 a month, and your 10% investment would be $81.00 a month. If you invested $116.00 a month for 30 years at a return of 12% APY you would accumulate $320,000 which is hardly enough to retire on in 2010. Let's say for fun you made twice the average pay in 1980 and brought in $30,000. That would be ton of money in 1980 standards. If you invested 10% of your gross monthly income for 30 years you would accumulate just over $700,000. Nice chunk of change, but hardly enough to last through 15 years or more of retirement by 2010 standards.

Right now, having about $5 Million for retirement sounds awesome. But half a million also sounded good in 1980... I feel it is nearly a certainty that you must use other vehicles of investing if you want to cross that threshold between being who you are now and being wealthy. Grinding will not do it. So, where do we go to invest in addition to our 10% or possibly in place of it? Well I think the best option is to start using OPM. That means Other People's Money. The easy was to use OPM is with real estate. If you put in $20,000 as a down payment and land yourself a $200k property and then that property increases in value (while simultaneously producing cashflow) to $220k over the course of 2 years (not all that uncommon) you would realize a 50% return on your money but the property is growing at 5%. That sounds pretty awesome. Other ways to get access to OPM is to either start a business (pretty risky), or buy an existing business (sometimes time intensive and requires more work than real estate).

Okay... stepping of my soap box. The fact is that you need to do more with your money then just invest in your average stocks and bonds if you want to accumulate any kind of real wealth. Bach is a great writer and I love his books and his attention to real estate as a vehicle for wealth building. As always, if you have any questions on the book don't hesitate to ask. I would be more than happy to help anyone that wants it.

Saturday, November 27, 2010

Creating Wealth...

The book of the week was Creating Wealth by Robert Allen. I was skeptical of this book at first because Allen is also the author of a book called Nothing Down. And I was a bit cynical of anyone that would promote his readers taking on the risk with getting a property for 'nothing down.' And... I was completely wrong, Allen is brilliant. I have not read Nothing Down yet, but I certainly intend to after all the knowledge I acquired while reading this book.

So far I have had a range of real estate risk that ranged from buying one property a year, being the most risky, to slowly purchasing properties throughout your life, this would be the least risky. Allen opened my eyes to a whole new type of real estate investing. It's nothing revolutionary, but it sounds very doable after reading this book. The strategy involves buying two properties a year. And doing this for ten years. The concept I liked about his pitch is what you do at the end of the ten years... sell the first ten houses you purchased and pay off the mortgages on the second ten you purchased. At this point you will have ten cashflowing properties that you own with zero debt. I really like that idea!

Another idea that Allen discussed was diversification. Until now I have been a big advocate of diversifying investments, however, after reading this book it doesn't seem like diversifying is universal at all times in an investor's life. If you give someone a hundred dollars to invest, should you expect them to split it between a few different investments? Probably not. How about a thousand dollars? What is the right amount of money that requires diversifying? Andrew Carnegie was quoted saying "Put all your eggs in one basket, and watch that basket." When you are in the early stages of investing to make wealth it is important to maximize your return on investment. After you have accumulated some wealth you should start to diversify, but if it's done too early you may never make it to becoming wealthy. I am reminded of one of the Rich Dad Poor Dad books... Robert Kiyosaki writes about a lesson he learned from his rich dad, he said that if you think a million dollars is a lot of money you will never be a millionaire because you will not risk the money required to become a millionaire. When you are investing your dollars, at what point should you start moving your eggs into different baskets? I can't set this number for you... But it is something you should give some thought.

I liked this book. It was really well written and very detailed. I feel very confident I can go out and purchase two houses a year and do it well. As always, if you have any questions on the book don't hesitate to ask. I would be more than happy to help anyone that wants it.

Saturday, November 6, 2010

45 Effective Ways for Hiring Smart!

The book of the week was 45 Effective Ways for Hiring Smart! It's a book all about how to predict the best candidates when bringing new people into an organization. It is really really expensive hiring the wrong person, this book estimates that hiring the wrong employee costs at least 2 and a half times the salary you are hiring them. So if you are hiring an executive that makes $100,000 it will cost the organization a quarter of a million dollars if you make a mistake and hire the wrong person! An organization is defined by it's people. The people in an organization are the end all be all. There is no single more important portion of a business.

The book goes through a list of 45 ways to hire the right person starting with before the interview all the way through the post-interview process. Most organization don't know how to interview... They think they do, but they are mistaken. I have been a part of one of these organizations and I have been interviewed by many of these organizations. If someone gives you a 'good interview' it proves nothing more than that they are a 'good interviewer.' Con-men are terrific interviewers, think fast on your feet and give a clever answers to questions, establish chemistry and build some rapport... that person will get a job with about 90% of organizations. What you don't know is that person could be a thief, a liar, or lazy. It's going to be an expensive mistake for those organizations than bring this person in.  I'll quickly give you a run down of how to do everything you can to bring good people in.

When interviewing, there is a chance you can do everything right and still end up with a lame duck. I read a book a few weeks ago where Donald Trump alluded to this same idea. That being said, you are much more likely to end up with a great candidate if you do these things:

Screen your candidates in person- there is not enough time in a day to comb through resumes and interview based on hope. If you can set up to have a meet and greet with other members of your organization, you can make decisions whether or not you want to spend half an hour of your life interviewing them with just a couple minutes of small talk. You can arrange a dinner or even a resume acceptance, put out the word in the local newspaper and let the local colleges know. Using these methods, it's not uncommon to have a very large showing.

Call your candidates- Talking to someone on the phone can give you all types of information. How do they answer the phone? What questions do they ask? If you get their voicemail, what does their message sound like? How quickly do they get back to you? You can eliminate lots of candidates just from your phone conversation.

Face to Face- Your first interview is looking for integrity, not showmanship. Intimidation does not work, make them feel comfortable, and be up front and let them know you are looking for honesty, not a perfect answers. You can also let them know that you do background checks, reference checks, and drug tests, and you want to confirm everything you discuss matches with what your checks find. You can verify information against their resume- do they know what they put on there?, (dates, supervisors, experience, GPAs, etc.) Ask about criminal background and potentially drug use. Ask them what their references might say about them, good and bad- this give them an opportunity to tell you how their relationship really was.

Walk- Take a walk around the office with them. When people are walked around, instead of sitting face to face, they are much more open and you can get some really good information. Ask them how they feel about different concepts that you are a expert on and see how they repond- watch body language carefully.

References- This is very important. A lot of organizations don't give out information on past employees anymore, but generally, HR and the some Execs are the only ones that follow some of these company policies. If you can, get in contact with previous co-workers, more often then not, they will speak up. Another easy way to do reference checks involves calling when the contact will be out of the office- potentially at lunch. When you call, end your message with them by saying, "Please call me back if the candidate was outstanding"- this way you can get call backs from only the candidates' contacts that really are outstanding. You aren't looking for juicy gossip with reference checks, you are looking for an outstanding candidate. Don't get caught up in the game of only looking for negatives.

From beginning to end, you should dwindle your pool of potential candidates down more and more. After your reference checks, background, and drug tests come back positive you should only have a couple more candidates standing. If they truly are outstanding, my advice, hire them both if you can.

This book was very informative and it reinforced my knowledge on the subject. I think that anyone that hires for an organization should use every tool at their disposal to make the best decisions possible. This book is a tool to be used. As always, if you have any questions on the book don't hesitate to ask. I would be more than happy to help anyone that wants it.

Saturday, October 30, 2010

The Power of Less...

The book of the week was The Power of Less by Leo Babauta. This book is about having a very simple and efficient focus on work and life. The idea is to have higher productivity and live a more 'zen'-like life. The author, Babauta, even has a blog entitled Zen Habits.

I only have one tip for you this week. The book is very consolidated and a lot of the ideas in this book might help it's reader, but I the only one I find will help everyone is the concept of batching. Batching is consolidating emails, voicemails, and calls into one or two times a day. People get in the bad habit of checking emails and voicemails several times a day. Anytime they have a couple minutes between projects they go in and see if anything has changed within their inboxes. At the very most with this type of habit, you'll have one email each time you check it, if any at all, and then you'll spend a few more minutes composing a response. The main thing that makes this unproductive is the effect it has on your focus. If you have a project to work on and you work diligently and are in 'the zone' the whole time, you get more done and produce better results. If you stop to make yourself distracted every hour or two, you nearly have to start from scratch in terms of creativity and momentum.

When you batch emails and voicemails, you pick the minimum number of times possible dip in to your outstanding communications. I use two times for voicemails and one time for emails a day, at 10am and 4am I check voicemails and at 6pm I check emails. This way it consolidates the work into a good number before I spend any amount of time digging into it. Again, batching phone calls is very productive and depending on what you do you should combine this task with a different activity. You will inevitably be taking phone calls periodically throughout, and potentially have to make certain 'important' calls too. However, there are a lot of calls that are optional and those should all be written down and done later on. I do a lot of driving, so I have these calls written down to be made when I am on the road. Other people I have talked to go on walks every morning and they make calls when they are taking their walks. It's a good way to kill two birds with one stone and be as productive as possible with your calls in the process.

I thought this was a good book. There is a lot of a bullet point format throughout the book, which shows the author practices what he preaches with using 'Less.' If you think you could use a little less stress and a little more simple in your life I recommend you check out this book. As always, if you have any questions on the book don't hesitate to ask. I would be more than happy to help anyone that wants it.

Friday, October 15, 2010

The Only Guide You'll Ever Need for the Right Financial Plan...

The book of the week was The Only Guide You'll Ever Need for the Right Financial Plan by Larry E. Swedroe. That is quite a mouthful... It's a pretty good book. It is jam packed with information too, and it explains everything with just the right amount of detail.

I think what I'll do is a couple small segments on things that Swedroe writes about. Let's go ahead and discuss Active vs. Passive Management, Roth vs. Traditional IRA, and College Savings Plans. All things things are more thoroughly discussed in the book. I'm just going to do my regular cliff-notes version.

Active vs. Passive Management

If you are a regular reader, you probably know where I stand on this issue. Passive Management is the best way to go hands down! Active Management means that you have a person actually picking stocks and trying to beat the market, it is still spread across lots of securities, but again, someone is trying to beat the market picking and choosing.  Passive Management is run by a computer that distributes stocks across whatever portion of a market you invest in.... for example the American Beacon S&P 500 Index  is a blend of the S&P 500 index. This passively managed index fund will automatically readjust when the market changes.

Actively managed funds are more expensive because you have to pay more for the fund managers 'expert' advise. And since passively managed funds are ran by a computer, there is a much lower expense ratio. To show a comparison. The passively managed fund above has an expense ratio of .15% (pretty typical of passively managed funds). The average actively managed fund has an expense ratio of 1.5%. That means that if you invest in an actively managed fund, not only does it have to beat the market (which is what a passively managed fund represents) but it has to beat the market by 1.35%. And over the long-term, only 5% of actively managed funds can beat the market. And in the short-term only 50% can beat the market. The choice should be pretty simple given the facts... don't let Wall Street sell you on what you don't really need.

Roth vs. Traditional IRA

Again, a lot of you know where I stand on this issue as well. I stand by Roths vigilantly. Roth IRAs are accounts that you invest in after taxes have already been assessed on your income and when you take the money out, when you retire, you take the money and all the interest earned tax free. Traditional IRAs are accounts that you invest in before taxes and you get taxed once you withdraw the money including any interest it accrued, again at retirement. The idea of going one way or the other is where you will stand with your tax bracket when you retire compared to where you are now. Most people think that when they retire they will be in a lower tax bracket because they will not have much in terms of income when they are retired. I think that logic makes sense if nothing changes within the US monetary policy or inflation for the next 40-50 years. But if you look at historical trends, taxes have steadily increased. In the 1950s income taxes were between 1-6% and now we are looking at anywhere from 25-33%. I think given historical trends that taxes will more than likely increase in the next 40-50 years. That being said, it would make more sense to invest primarily in a Roth.

I do however, think that it makes complete sense to invest in a 401(k) if your company offers any type of match. If it were me, I would max out the matched amount by my company and then put everything else into a Roth... potentially maxing out the Roth- which as of 2010 is $5000.

College Savings Plans

If you want to put away money for your kids college and achieve some tax benefits today it makes sense to invest in some sort of college investment account. But what kind??? Swedroe does a wonderful job in this book explaining all the different types of college savings types and the pros and cons associated. The one that makes the most sense financially is a 529 plan... pretty much every state has these plans now. However, I also like Coverdell Education Savings Account. The 529 plan is awesome because the federal government doesn't count it toward the parent or the students finances when figuring up the EFC- expected family contribution. The EFC is a magic number that says how much money you can receive in federal financial aid. The federal calculation is that the child's assets are treated as different than the parent's. The child must contribute 20% of his or her assets each year towards expenses and the parents must contribute 5.6% percent of their total assets. So... If the 529 plan doesn't count toward either of their assets, it makes the student look more favorable to receive money from the federal government. The Coverdell Account is great because it is a tax-advantage account like the 529 plan, but it can be used for educational expenses for grades K-12 as well as college, not just college like 529. So... it's a nice way to save yourself some tax dollars. The only down side to a Coverdell is that there is a $2000 cap per year per beneficiary.

Alright... Well I hope I gave you guys some good information from this posting. The book has a lot of information and although I don't agree with all of Swedroe's opinions on investing I agree with most and I learned a lot from him. This book does a good job living up to it's title. As always, if you have any questions on the book don't hesitate to ask. I would be more than happy to help anyone that wants it.

Saturday, October 9, 2010

Abraham Lincoln...

The book of the week was Abraham Lincoln by James M. McPherson. I thought I would do something different this week and read a biography. My intention was to read it and find an aspect from that leader's life and write about incorporating it into your life. Turns out this idea didn't quite pan out the way I intended.

What I can tell you is Lincoln was a pretty great guy. He was honest and intelligent. He had a number of great speeches and his Emancipation Proclamation was vital for America to be the great country it is today. The problem with pulling out ideas from Lincoln's history to use in today's business world, is that the world is a different place. I feel it is much more difficult to differentiate yourself in today's world than it was back then. No longer does a college degree assure you a great job and a nice salary. Being the smartest person in the room no longer means you will be the most successful. In fact, a gaggle of the richest men in the world are college dropouts.

After realizing the large differences that face our two worlds, I decided that I would like to talk about one aspect of Lincoln's leadership that is absolutely transferable into leadership today: The ability to control emotions. To have control over one's emotions has an incredible effect. If you wear your emotions on your sleeve the people working with you will never want to give you 'bad' news. However, if you have the same demeanor when you are upset as when you are mad then it will be very easy to have open communications with you. It is extremely difficult to master the art of controlling your emotions... There are a couple ways to do this. I'll give you my method, as well as, Lincoln's.

My Method

My extremely simple approach to not losing my cool is to have a 'big picture perspective' all the time. Having a big picture perspective is just what is sounds like... I look at everyday from a 2-3 month perspective. I handle all things in the present, but when 'bad news' comes I always put it in a 2-3 month perspective. So I ask myself if this bad news will be anything I will still be concerned with in 2-3 months, or is it even something I'll remember hearing. More often than not, any bad news you'll receive is inconsequential in the big scheme of things. I feel there is no reason to get stressed or make someone feel bad for something that doesn't have that big of an affect. People make mistakes every day, and usually they learn from them. If you lose your temper every time you hear about a mistake, no one will learn anything.

From the first day you are with any organization be a Rock. Encourage the professional development of every person within your organization. Make sure that when the day comes that you have to leave that organization, you can look back and see the impact you've made. Because if you don't encourage that development and make your people better, the organization won't evolve, and neither will you. And organization must evolve to keep up. Don't be a caveman.

Lincoln's Method

Lincoln was just like anyone else, he got mad. But no one could ever tell he was mad. This was because Lincoln would write "hot letters"- they were just angry letters with how he felt and then he would put them into his drawer and never send them. It was his was of taking all the anger and getting it out of his system.

Whatever system you use, just make sure you aren't that volcano of emotions within an organization. Be remembered for the right things.... helping people grow professionally and helping an organization evolve.

This book was pretty good. I know a whole lot about Lincoln now and it was written very well. Typically biographies aren't my thing, but I wasn't disappointed. As always, if you have any questions on the book don't hesitate to ask. I would be more than happy to help anyone that wants it.

Saturday, October 2, 2010

The Wall Street Journal's Complete Money and Investing Guidebook...

The book of the week was The Wall Street Journal's Complete Money and Investing Guidebook by Dave Kansas. It's kind of an embarrassing week. I didn't even realize that I had already read this book until I finished the first chapter. I suppose there was a reason everything seemed familiar...

It is a real 'back to basics' week. This book is a really good one to have handy on the shelf (I don't know what happened to my first copy). It gives a really great basic approach to everything in the world of money and investing... from Exchange Trade Funds to Money Creation this book covers it all.

I was thinking all week what I would do for this book in terms of this blog. Sure I could do a laundry list of money and investing terms and give the definitions, but that sounds extremely dull.. I don't know if I could get through typing it without taking a nap, let alone forcing you all to read it. Instead, what I would like to do is talk about inflation and money creation. Both are covered in this book with a basic amount of detail, but it really makes sense right now because I expect we will see more and more inflation in the upcoming years. In the past year silver, one of my favorite commodities, has gone from a low of $14.98 to this week hitting a record high of $22.09. Who else has seen a 30% yield in an investment this year? Not many. (This is the best scenario possible, more likely you would have purchased silver at $16-17, however, that is still about a 20% yield).

This all has happened while the dollar has dropped in value. There are a number of ways to evaluate the value of the dollar. These are the CPI, the GDP Deflator, the consumer bundle, the unskilled wage, the compensation of production workers, the GDP per capita, and the GDP. This may indicate to you that there really isn't a great way to establish this value. The most popular number to gauge inflation by is the CPI although many people question it's reliability. A large cause of inflation comes from increases in the Money Supply. If new money is put into an economy without doing an even trade for old money then all the money that currently existed is worth less than it did previously. Simple supply and demand... the more of an item there is the less it's worth. We have had a bad habit in the US of creating new money and "stimulating" the economy artificially. The idea behind a stimulus is that we pump billions of new dollars into an economy and everyone will take that money and start buying new 'things' and when new 'things' are bought then more people will need jobs because we need to make more 'things.' It doesn't work because in a poor economy based on debt driven society people are more likely to pay off old debt than buy new toys. So the US has been injecting the economy with dollars and because the majority of those dollars didn't go to create any new jobs or create any new society switch for our economy we are on the road to see massive inflation.

When hyperinflation hits a country it starts very subtly. Then it picks up and you'll see prices for items raise a couple times a week, then a day and then hourly. When it starts salaries start to increase with it, but eventually it happens too fast and salaries can't increase at the same rate. Anyone that owns that country's currency at the end is out of luck. Other countries that experienced hyperinflation, the currency toward the end is used as kindle for fires because not only can the countries residents not afford to pay for their heat, but the money is worth less than anything else that might be burnable. However, if you are invested in other things outside that currency; real estate, commodities, other currencies, you'll be better off because those items will most likely increase in value while the currency depreciates. Here is a list of countries that have experienced hyperinflation- including the US in 1861.

Angola 1991-1995

Argentina 1975-1991

Austria 1921-1922

Belarus 1994-2002

Bolivia 1984-1986

Bosnia-Herzegovina 1992-1993

Brazil 1986-1994

Bulgaria 1996

Chile 1971-1973

China 1948-1949

Free City of Danzig 1922-1923

Georgia 1993-1995

Germany 1922-1923

Greece 1942-1944

Hungary 1945-1946

Israel 1970-1971

Japan 1948-1951

Krajina 1992-1993

Madagascar 2004-2005

Mozambique 1977-1992

Nicaragua 1987-1990

Peru 1988-1990

Philippines 1942-1944

Poland 1989-1991

Romania 1998-2005

Russia 1921-1922 and 1992-1999

Turkey 1990-1995

Ukraine 1993-1995

United States 1861-1865

Yugoslavia 1989-1994

Zaire 1989-1996

Zimbabwe 2004-2009

Hyperinflation is a worst case scenario, however, I like to always be prepared. It does not hurt to invest outside the dollar anyway because regardless of whether we experience hyperinflation or not, we will experience some inflation and they will increase in value with respect to the dollar.

I hope that was a little less boring than definitions. The book is good. It gives you a little taste of everything out there. It's a easy and fun read. As always, if you have any questions on the book don't hesitate to ask. I would be more than happy to help anyone that wants it.

Saturday, September 25, 2010

Think Like A Champion...

The book of the week was Think Like A Champion by Donald Trump. Good Book.

"Greed, for lack of a better word, is good. Greed is right, greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, knowledge has marked the upward surge of mankind."- Gordan Gekko

Last night I went to see the new Wall Street movie. In the original movie Gordan Gekko makes the quote above in one of his speeches. Surprisingly, I don't completely disagree with Mr. Gekko. (This should create some amount of shock because Gordan Gekko is a tyrant, a manipulator, and a thief) I agree with him on two accounts though... Life and Knowledge. I don't agree with being greedy for money, but I think you are a fool if you aren't greedy- "having an insatiable desire"- for life and for knowledge.

Say what you will about Donald Trump, but I think that he is greedy for both of these things. He has lived his life. He has had a tremendous amount of momentum in life to reach his personal goals. He has a thirst for life and knows exactly what he wants to do with it... and then does it. And while he conquers life, he also has an insatiable desire for knowledge. This book is a compilation of small essays written by Donald Trump about a myriad of different ideas. He writes about confronting fears, destiny, thinking positively, financial literacy, learning, and about 50 other ideas. Every essay is very well written and there is a tremendous amount of experience poured out onto the pages as well.

Trump writes in one essay about a conversation he had with a group of people when a gentleman spoke up and mentioned how powerful the Trump name had become. Donald Trump replied, "What's in a name." The man just laughed and said "in your case, a lot." Trump noticed the guy was a little out of the loop so he said "That's Shakespeare. What's in a name is a famous line from Shakespeare." The man, still perplexed asked "From what?" Even though Trump knew that it was from Romeo and Juliet, he said "Look it up. You might learn some interesting things along the way." I love the story. It shows a couple things. It shows that Trump is about as brash as they come and it also shows that he clearly has a greed for knowledge.

Ralph Waldo Emerson is famously quoted " Do not go where the path may lead, go instead where there is no path and leave a trail." I like this quote. Trump writes about how important it is that you don't just follow in someone else's path, but instead find your own path and your own purpose. There are two parts to being greedy for life. One finding your purpose and two keeping up your momentum. Donald Trump sets aside quiet time each morning to center himself and focus on his path. Many of the other Greats throughout history have other techniques including taking walks or taking naps in the middle of their day. Find what will help keep you on your path and use it.

So is greed good? Yes. Greed focused on the right things is completely acceptable in my opinion. Find an insatiable thirst for knowledge and life and conquer the world, just like Mr. Trump. Make yourself a household name.

I liked this book. Trump has been around the block and that block happens to be real estate, of which I am very interested, so it shouldn't be to unusual that I want to know what he knows. I do recommend this book. It's a fun read with lots of fun content. As always, if you have any questions on the book don't hesitate to ask. I would be more than happy to help anyone that wants it.

Saturday, September 11, 2010

Questions Great Financial Advisors Ask...

The book of the week was Questions Great Financial Advisors Ask by Alan Parisse and David Richman. I was not super excited by this book. In fact, I am not a huge fan of Financial Advisors to begin with. In the past, Financial Advisors used to be a great tool, but with the accessibility of information nowadays they just aren't all that necessary.

The book was really for Financial Advisors and talked about all the ways to sell yourself in an effort to have a lifelong client. However, it doesn't hardly take any time at all to manage your own funds, so using a fee based advisor is crazy and using a advisor that takes a percentage is just taking away from your earnings.

I don't have a lot to say this week. I don't encourage the use of a financial advisor... if you really need some advise on any investments I am more than willing to help.

The only thing I want to say is this week is... diversify. A lot of Financial Advisors don't really understand the real idea of diversification. They will put your money in 10 different mutual funds, and those are a mix of lots of different stocks and bonds. What's wrong with this? Well... when it really comes down to it.. you are still investing in just stocks and bonds! It may be a 1000 different companies, but you only have two types of investments. To really diversify you need to invest in stocks, bonds, real estate, gold, silver, ETFs, personal businesses etc. If the stock market crashes, like it has a tendency to do, and you only have stocks and bonds you will end up losing your shirt. So diversify.

This book was not riveting and would only be helpful if you are a Financial Advisor. I do not recommend this book for the casual reader. As always, if you have any questions on the book don't hesitate to ask. I would be more than happy to help anyone that wants it.

Saturday, September 4, 2010

The One Minute Negotiator...

The book of the week was The One Minute Negotiator by Don Hutson and George Lucas. This was a very good book. I had a couple take-aways that I am excited to use in my daily leadership detail. The book is about taking simple steps to reaching a better agreement.

When most people think about negotiating they think about big business deals and before I read this book that is what my first thought was when thinking about a negotiation. However, you don't need to be putting on your negotiation hat just for the big things in the business world. Any small conversation with someone within your organization can be a time to use what we know about negotiating. Let me take a little time and illustrate some of the main ideas from this particular book.

Like all the 'One Minute..." books the main idea is encompassed within a story format. It makes it entertaining for a lot of people and helps with the memorization of the subject matter. But I'm not going to go into the story... just the proverbial "meat and potatoes" here at The Guide to Get Rich....

My favorite part of the whole book stems from Hutson and Lucas's Negotiation Strategy Matrix shown here:

You can either have a proactive or reactive strategy while at the same time having low cooperation or high cooperation. The ideal quadrant to operate within while negotiating is collaboration; this will result in a win-win. Any other quadrant will result in a win-lose situation for the most part. Again you can negotiate within any small conversation that you intend to reach an agreement. Generally, when people have what is perceived to them as a small conversation they will be reactive instead of proactive, so they either avoid the conversation, letting the other person make the decision without them involved or they will accommodate and give into whatever decision the other person wants. Being reactive can have devastating long-term consequences.

And the other side you can be proactive in your negotiations. On one hand you can be collaborative and make your ideal win-win solution, however, if you are on the low end of cooperation you end up in the competition quadrant and you end up with a win-lose situation. But while the previous situations led to you being the loser, this situation leads you to be the winner and the other party being the loser. This still isn't ideal because you end up tearing down that relationship in the long-term.

If you focus on this very simple negotiation strategy matrix you can effectively make better agreements and build up your long-term relationships. Ultimately, resulting in the strengthening of your personal leadership abilities and, additionally, achieving results within your organization.

A little more about the book… it was just released a couple weeks ago. Inside the book is a quiz to analyze what quadrant you are most inclined to use on a regular basis. The quiz is a very effective tool in self-evaluating your subconscious negotiation technique. The authors also add an EASY process for negotiations… it stands for Engage, Assess, Strategize, and Your One Minute Drill. It’s a fun little tool to help you habitualize (it’s not a real word, but you get the idea) your negotiation strategy.

Overall, very good book and simple read. I recommend it to everyone because not only is it something you can use in the business world, but since we now know that negotiations are not just intended for the business world, you can use the techniques from this book at home and have tremendous results. As always, if you have any questions on the book don't hesitate to ask. I would be more than happy to help anyone that wants it.

Additional Content!!! In celebration of paying off my student loans this month I would like to share with you an Infographic I found about student loans.... Lots of great information!

Student Loans Scheme.
Infographic by College

Saturday, August 28, 2010

Thank God It's Monday...

The book of the week was Thank God It's Monday by Roxanne Emmerich. It's all about creating a workplace that an employee and customer will both love. The book was pretty good.

The book hits on two areas that I think are ideal for transforming a work environment- getting rid of unproductive habits and staying enthusiastic. It's simple, but if everyone within an organization is on board with these two areas then your organizations transform into a "Thank God It's Monday" organization, where the employees are looking forward to the start of their week.

Unproductive habits are awful for organizations. They include whining, gossip, complaining, feuding, and many more. And these habits are not uncommon by any means. The most prevalent ones I have noticed personally are gossip and complaining. Both of these are completely unproductive and very difficult to avoid unless everyone within an organization is on board to avoid them. That is why it is important to get everyone together and introduce them to the new plan. The "Thank God It's Monday" plan... You can't expect everyone to garner support for an organization's transformation unless everyone feels equally involved. When bringing everyone together focus on goals, a vision, and make sure there is a large focus on open communication throughout the organization. Open communication is so important because if everyone feels comfortable talking to their leaders about anything on their mind then they are less likely to gossip or complain.

The second big part is enthusiasm! There is a trickle effect in every organizations... whether your trickle is up down or across. One persons attitude is contagious to everyone else. So what ever role you are within an organization be enthusiastic and help it spread. (Side note: I was told this week that I am fun to have around because anytime any employee asks me how my day is, it's either "Outstanding" or "Excellent" and I make other people feel good when I say it). The goal is to make our customers feel good when they come and when they leave our organizations, so find a way to do that. Human nature suggests that people have an urge to give back when they are given something- even if that something is a "good" feeling. If you give customers a good feeling, they will give you back more business, more word of mouth advertising, and do whatever they can to help your organization succeed.

Additionally, if everyone is communicating openly, and in turn not gossiping or complaining, while remaining enthusiastic they will be happier to be there. The way I keep myself so enthusiastic all day is reminding myself to be enthusiastic- I know sounds too simple. But I have found that even if I am having an awful day and fake some enthusiasm and happiness while I am working then I really do become happy and enthusiastic. It's just like the smile exercises I was writing about last year. If you just smile for 60 seconds, just a big ol' toothy grin, and hold it. You will actually feel happier. The human brain is an amazing thing...

Saturday, August 21, 2010

Guide to Investing...

The book of the week was Guide to Investing by Robert Kiyosaki. It's the third book in the Rich Dad series and I think all the books from the series are great. None of the books are a step by step plan, they are more of a broad focus on investing and how to get into the right mindset to escape the rat race and be more financially independent.

This book is by far the longest one that I have read within the series. It's about 400 pages, but Kiyosaki writes in a very clear way so it makes for an easy read. This book does talk about some more complicated businesses that the rich investor uses to invest. I say businesses because that is what really separates the rich investors from the average investors. The difference between owning a company and having a savings account. And the last thing you want to be when it comes to your financial arsenal is average... Why?... Because the average person's financial arsenals is being $4,000 in credit card debt, carrying 1.5% of their yearly income in credit card debt, only 40% have a monthly budget, and one-third don't even know what percent their credit cards are charging. Shocking, I know! Let's not be like them...

The first step to not being average is to have a basic understanding of personal finances. There are very few things about personal finance you learn in school. That is why there are so many people with the problems they have with finances. The most basic thing that you can lean about is assets, liabilities, income and expenses. People use these terms on a daily basis to explain their finances, but I have serious doubts whether many of them understand what they really are and how to use them to make additional cash flow streams.

There are three types of income: earned income, passive income, and portfolio income. Most people only have earned income (money that comes from their job) and that money is used to just pay off expenses. Meaning that their personal income statement looks like this...
Some of the expenses might be a personal home mortgage, credit card bill, student loans, food, entertainment and then after paying off all those expenses they have nothing left. Most people have no or very few assets... these would be rental properties, stocks, index funds, gold, silver, etc. However, most people do have liabilities... these would be home mortgages, and any outstanding loans- school, credit card, cars etc.

The rich use that job and pay off expenses and then find money to be able to acquire assets. These assets then produce portfolio income (interest and dividends) and passive income (rental income). The idea is to continually grow your wealth with this simple method of increasing income streams. Earlier I said the rich have businesses... those businesses each have their own financial statements like the one shown above. It may be a property management company, a real estate holding company, a retail outfit, a farm... or all of the above. Each of these would provide income. Then your financial statement looks something like this:

There was a great metaphor in the book. Robert told a story about him talking to his Rich Dad. He said "Everyone says that investing is risky, is that true?" His Rich Dad said "Investing is like driving. Sure, driving is risky, but it is even more risky if you drive without your hands on the wheel. Most people investing today are investing with their hands off the wheel." It really true... investing is all numbers. If the numbers make sense and you talk about it with your team and everything checks out then you are making a good decision. Don't hesitate, just go for it!

I encourage you all to write up your personal financial statement and see where you stand financially. Then go out and research a couple assets to acquire. Run the numbers, find the start-up money (if the business makes sense and the numbers are there, someone will want to invest), and don't be average. This is a very good book... the more you know about different areas of the financial world the more areas you'll have to invest in. As always, if you have any questions on the book don't hesitate to ask. I would be more than happy to help anyone that wants it. 

Saturday, August 14, 2010

The Ultimate Gift...

The book of the week was The Ultimate Gift by Jim Stovall. It clearly doesn't fall into the normal genre of this blog. I read it because someone told me I was becoming quite robotic last week and made me question whether this blog was being done out of habit or whether it was for some greater purpose. I have been thinking a lot about whether I have been getting robotic and I suppose it's becoming more and more true. So, I reflected on the reasoning behind this blog while reading this book... it was really fun.

My conclusion is that I created this blog to help people... I am passionate about helping people become solid leaders, get financially secure, and create a purpose in their lives. The name The Guide to Get Rich is not necessarily about getting loads of money, but about getting richness out of life. I think an effective path to getting richness out of life is having the three traits I mentioned earlier. With these things covered, you can focus on what is important to you... whether it is family, traveling the world, donating your time to a good cause, etc.

However, doing this blog is fun for me. I love helping people and teaching them about the things I have learned, and I have learned more in the last year and a half then I could have even thought I would. And the information is extremely interesting to me too.

So what is it that drives me? Well, I get asked this questions all the time. I am not one that lives an extravagant life. I have everything I need, and I don't need a lot in the terms of material possessions.  I create my goals and make myself more and more financially secure to give myself the ability to give my future family what they want. This book was about a billionaire that passed away and when he did his estate was divided among his family members. One member of the family who was kind of a selfish jerk was put through a year of lessons and at the end was able to get "The Ultimate Gift." I won't spoil what he got because its a fun part of the book. But while I was reading this I was thinking that I don't want to have to put my family through lessons in order to understand the value of the dollar and how to treat people. I want to have a billion dollars, so I can coach and train my descendants the value of those dollars and how to make the greatest impact on the world with them. I would love to create a change in the world using money, because it's not money that is the root of all evil, but the love of money. Money has the ability to do so much good if it is used right and my purpose is to show how true that statement can be.

If I was given a billion dollars today, what would I do? Probably keep doing what I am doing, still continue to sharpen my leadership abilities, the principles that I follow that keep me and my future family financially secure would still be followed, and my purpose would still be the same. A few key areas of my life would just be funded with more money... mostly investing and donating. I may buy a nice steak dinner and take my family on a nice vacation, but I wouldn't make any decisions without careful consideration and I wouldn't go wild on buying material objects. (I would probably start a few endowed charities though.)

After a week of reflecting I think I have a great purpose for this website and it is continually growing in readers. Hopefully, I will be able to touch more and more lives with the information I have to give each week. So, there we go. I filled you in with what The Guide to Get Rich is all about... maybe not what you expected. I do have a tendency to act quite robotic these days, but that's not all that bad. The book of the week was a fun, light read, that has pretty much nothing to do with investing, business, or leadership.... back to your regularly scheduled blog postings next week. As always, if you have any questions on the book don't hesitate to ask. I would be more than happy to help anyone that wants it.

Friday, August 6, 2010

Investing in Duplexes, Triplexes, and Quads...

The book of the week was Investing in Duplexes, Triplexes, and Quads by Larry B. Loftis. I am so excited to talk about this book. It is really great. It may be my favorite book on real estate. The title is really dull, so it makes you think that it isn't going to be anything spectacular, maybe even very textbookish. But that is not the case... the author is a very good writer and he does a great job of keeping you interested and giving just the right amount of information in each area.

I know I have found a great real estate book when I spend an hour each day checking out local investment properties. This book is a complete guide from start to finish on purchasing a property. Other books may leave out a few details like what to expect with closing costs, or what different tax implications might be with different properties, but this book has it all.

Residential (4 Units or Less) or Commercial Multifamily (5+ Units)

First off, the book makes a great argument toward invest in duplexes, triplexes, and quads (and it should). The debate for me has always come down to whether to invest in a smaller multifamily (4 or less units) or to invest in a larger complex. Loftis does a good job of explaining the pros and cons of each. And when you are starting out it makes excellent sense to invest is 4 or less units. Because if the property has 4 or less units it is still classified as residential (meaning to a lender that it looks no different than a single family home), however, anymore than 4 units it becomes classified as commercial multifamily. What makes residential more desirable and safer is the financing.- residential are much easier to get financed. You are more likely to get a 10% or less down payment, with commercial you are most likely to have to put down 20%. Also, with residential you are able to get a low interest 30 year fixed mortgage, but with commercial you are more likely to a higher interest ARM. And lastly, if you invest in a residential property and live in it, you are eligible for a homestead exemption, which reduces your property tax by up to 25%. All very compelling arguments!

Tips and Tricks

Throughout the books I had a several 'ah-hah' moments. Just little tips and tricks that I hadn't ever thought of before.

Close at the beginning of the month- If you close at the beginning of the month then your share of that month's rents are prorated based on days left in the month. So if you close on the 2nd of the month you get 29/30ths of that months rent and the seller gets 1/30th of the rent. It's a nice way to get an 'extra' couple thousand dollars at closing.

Forced Inflation- It's not really a new concept, but it's the first time I have heard the terminology. Forced inflation is forcibly inflating your rents by rehabbing/ improving the property. While doing this you have the ability to increase your rents a great deal with little costs in comparison to the enhancements. Say you put in some slightly used washers and dryers into each unit. It may cost a couple thousand dollars, but you have the ability to increase the rents of each unit $50-75. It will take you less than a year to get back your investment and then its all additional cashflow.

Hold your Property a Year or More- If you sell your property in less than a year then you are taxed as if it were ordinary income. However, if you wait more than a year then your are taxed as a capital-gain. This would be 15% versus 30%. Meaning on a net profit of $50,000... you would have $42,000 after taxes instead of $33,500. That is a nice chunk of change!

Fun Real Estate Resources

I expect every last one of you to at least glance at what is out there... Run some numbers and realize how awesome real estate is as a tool for cash flowing. For Multi-family click the advanced search and click the multi-family box. Fun way to compare your property to others in the area. You can see some properties out of this, but to get the whole deal you have to pay some money. If you have an IPhone, this is the best cash flow app out there... I highly recommend.

This book is really good. I will recommend it to anyone I know that is looking to start doing the investment property thing. As always, if you have any questions on the book don't hesitate to ask. I would be more than happy to help anyone that wants it.

Saturday, July 31, 2010

How to Find Hidden Real Estate Bargains...

The book of the week was How to Find Hidden Real Estate Bargains by Robert Irwin. I am a big fan of real estate, so it is not surprising that this book caught my eye. And up to this point every book that I have read about real estate has had me captivated, I cannot say that this book fell into that category.

This book does have fantastic information about real estate, without a doubt. However, it is written like a textbook. It didn't get me excited, in fact, it was almost like pulling teeth to read it all in one week. It is the same format for each chapter... very cookie cutter. So that being said, it's a good thing you came here because now you get some of the gems of information without the dryness.

A real estate bargain is any way to buy property for less than market value. This book explains the process on the heavy hitters: REO, Foreclosure, HUD, VA, Fannie and Freddie REOs, GSA and IRS Auctions, SBA, Treasury, and Army Corps. Lots of information! In looking for real estate bargains within any of these categories you need to consider 7 areas: Price, Terms, Rental and Resale Market, Location, Condition, Zoning, and Occupancy. Generally, you shouldn't buy a property until you have a good understanding of each of these categories.

1. Price- Is the property selling below market value? Check out the county records, most are online, and see what surrounding properties sold for recently.

2. Terms- Will you still make money off the property after you consider the following: Down Payment? Interest Rate? Is your financing matching the market? Are you doing any risky financing that will get you in trouble 5 or 7 years down the road?

3. Rental and Resale Market- How will you match up in these areas when the time comes? What are the local rental rates? Is real estate sales historically slowing?

4. Location- Is the location better than the seller realizes? Is is worse than you think?

5. Condition- This is the biggest category with bargain properties! Is it a distressed property that you can fix up or will you be spending beyond your bargain savings paying a contractor to fix it up? Do you know how it got to be distressed? How long will it take to make the property livable again?

6. Zoning- What possibilities does the property have for the future? Is it zoned for 3 units and there are only two on it currently?

7. Occupancy- Is the property vacant? Is is fully occupied? What are the terms of the current leases? Will you have grounds for evicting a problem tenant with the way the lease is written?

Seems simple enough, right? If this is your first time buying a property I encourage you to work with an agent. Do some interviews and find the best. They can teach you a ton! Plus it doesn't really cost you any money. Their paycheck comes from a percentage of the sale. And you won't be buying the property unless the price is right anyway.

There isn't a lot more that I want to expand on with this book. Work with an agent and they will show you what is out there and help you find a bargain. Do your due diligence on the property and buy it if all the criteria stacks up. As always, if you have any questions on the book don't hesitate to ask. I would be more than happy to help anyone that wants it.

Saturday, July 24, 2010

Coping With Difficult People...

The book of the week was Coping With Difficult People by Robert M. Bramson. I really like this book. I think that encountering difficult people is a daily occurrence for most people nowadays. The worst part about dealing with difficult people is they slow you down. They break down the decision making process by over analyzing, focusing on the negative, stalling, bulldozing, clamming up, the list goes on...

Since these encounters are becoming a daily occurrence, it is imperative that you learn to 'cope' with these people. That is where Bramson comes into play. He is an expert on organizational decision making. The book covers about 15 different personalities, but I am going to focus on just a few...


It drives me crazy when people clam up during a conversation. Especially when they alone hold the information that you are seeking to make a good decision. This personality is very difficult to deal with because it is natural for us to avoid silence. When you have someone clam up on you, you'll fill the silence with your own words. The trick to dealing with these people is asking open ended questions, so you avoid their "yes or no" responses. Additionally, when the Clam gets really tough, call them out on it. If you ask a questions and they are all the sudden mute, ask them again and address their silence. Say "I asked you a questions, is there a reason you are not talking? Are you afraid how I may react?" You may have to continue to chip away at their silence, but in time, they will start to converse.


It's really easy to be negative. You can pull a negative idea out of any situation. And it is good to understand the pros and cons of any situation to make the most effective decision. However, there are people out there that dwell on the negative and use them as prime reason to not do everything. This puts a stand-still to any new initiatives and depending on the source of your negative energy, they may suck everyone down with them. And the tricks to dealing with these people: Don't argue against them, they will start throwing a fit most of the time and it further defeats the goal of making a decision. Make optimistic but realistic statements about past successes, be alert to all the body languages of everyone at the table- including the negativist, and be ready to stand your ground and announce plans to take action without equivocation.

The Complainer

Like negativists, Complainers are a dime a dozen. Some people just love to complain... non-stop. They complain about policies and procedures, other employees, the tools they use, you name it, they will find a complaint for it. It is not at all conducive to a good working environment. Here is how you deal with these people... Listen, yes listen, to everything they are complaining about. Actively listen to them. Acknowledge their complaint by paraphrasing it back to them. Make sure you don't apologize or agree with what they are saying and then help them problem solve for the complaint. If they reject the problem solving at first, insist that complaining won't do any good and that your solution is a way to get it fixed. If all else fails ask the complainer, "How would you like this conversation to end?"

It is essential we learn to deal with difficult people if we intend to work as efficiently as possible. Books like this are a great source to ways to cope with them. Some of the techniques laid out in this book are extremely simple, and that is precisely why I like them so much. If the solution to cope with a difficult person is very complicated then you will never remember how to do it when the situation arises.

I recommend this book. I think it is very smart and easy to read. As always, if you have any questions on the book don't hesitate to ask. I would be more than happy to help anyone that wants it.

Saturday, July 17, 2010

Financial Peace...

The book of the week was Financial Peace by Dave Ramsey. I really enjoyed this book. I have no doubt in my mind that if someone is on board to change their dire financial situation, they can pick up this book and find the solution. The book is very similar to Total Money Makeover by Ramsey that I read almost a year ago. I think that Financial Peace is more of a workbook than Total Money Makeover, but ultimately they have the same road map outlined.

The books are so similar, and my post over Total Money Makeover was so long ago, I am going to repost the bulk of that posting. But before I do, let me lay some shocking facts on personal finance on you:

-Between 8 and 12% of Americans have a obsessive-compulsive shopping habit.
-72% of credit cards have a variable interest rates.
-In the book What is a Wife Worth, author, Michael Minton applied the national average wages for the amounts of time homemakers spend performing their daily tasks (purchasing, maintenance, housekeeping, bookkeeping, nurse, deititian, child psychologist etc.) and total costs for services provided = $108,048 a year.
-Only 37% of American workers say they have calculated how much money they will need to have saved by the time they retire.
-On average, Americans owe about $8,000 per household on credit cards. The average household with at least one credit card has 6.0 bank credit cards, 8.3 retail credit cards, and 2.4 debit cards for a total of 16.7 cards.
-Twenty-eight percent of students age 16-22 say they have a major credit card. Twenty-eight percent of those students with a major credit card say they roll over credit card debt each month. Forty percent of students are likely to buy a pair of jeans (or something similar) they really want even if they do not have the money to pay for it. Twenty-two percent would pay for it with a credit card.
-Only 40% of Americans have read a nonfiction book since their last year of formal education.

That last one is why I'm here... And now that I (should) have you interested in making some changes here is the post I did on Total Money Makeover:

"This book can help anyone who reads it. I feel like a lot of people have a immense amount of misguided pride about personal finance. People won't pick up a book like this one because they hate to think that there is anything wrong with the way they are spending their money. Well, I hate to break it to you, but if you are like 95% of Americans, you are using your money unwisely.

People don't learn about how to make the most of their personal finances in this world. And if they are one of the lucky ones that actually did get taught the basics of how to manage their money, they were most likely taught by someone who didn't have their own finances figured out.

Ramsey's book is a 7 step plan to provide "financial fitness." The basics of the 7 step program is to get rid of all your debt and live right. There is an incredibly powerful trend in this world to live beyond your means, finance your whole life, and live real close to paycheck to paycheck. It might be because someone is trying to keep up with the Jones' or because someone never told them that it was wrong, but there is a better life.

Ramsey's book has a lot of success stories of people who did the steps and turned their life around. I'm not one for sentiment, but the idea is that this program really works. The steps are: make a $1000 emergency fund, paying off ALL your debt, make your emergency fund larger (6 months of living), save towards retirement, save towards college, and finally, pay off your mortgage. Once you have that done you will be completely financially secure.

Most people can't imagine not having any debt because that is just not what they were taught. But it is possible and you will be so much better off if you get it done. The trick to getting rid of your debt- step 2- is to figure how to just get by for awhile (groceries, mortgage/rent, not a lot extra) and put all the money you have left towards your debts. Start with the credit card with the smallest balance and just keep going until every single one of your debts is gone. This includes student loans and car payments. From then on you will be paying cash for everything... your clothes, gas, and even your cars. It can be done, but it means living within your means.
Quick side note within the book - The average multi-millionaire doesn't buy a brand new car off the lot. They buy a 2 or 3 year old car that was previously used as a lease. It costs over 60% less and all the bugs have been worked out.

Now to the millionaire part! If you are living within your means with absolutely no debt you have the opportunity to invest in your retirement. There is nothing more powerful than the power of compound interest. The Standard and Poor 500 has had an average return of 12% for the last 70 years. We aren't talking about day trading here. If you are going to be in it for the big bucks you have to look long term. Find a good index fund and invest every month, as if its your new car payment, and you will see huge rewards. Let me illustrate this for you... If you invest in a Roth which grows tax free at 12% interest, with $3000 a year, starting when you are 30 years old. You will have $873,000 tax-free at the age of 60 years for retirement. Not to shabby! Or another example from the book if you invested $464 into a different index fund (Roth caps out at normally $5000 a year or $10k if you are married) from the age 25 to 65 you would have $5,448,854.45.

This book is not about getting rich quick and it's not about being adventurous and opening up a business. Anyone, seriously, anyone can do this... You just have to throw your pride away and really do it. It will probably be painful making the transition to living within your means and people will probably tease you because you aren't spending money as frivolously as they are. But I guarantee you if you read this book and take Ramsey's words to heart, you will change your life forever. You will have a wonderful retirement, your kid's college will be paid for, and you will have money to really have fun with."

There is so much good information in that post. Until you get your finances straightened out with eliminating debt and budgeting accordingly, you can't do the fun stuff like investing in real estate or trying out some other paper assets. More than anything, I encourage you to ask me or someone for help if you need it. Financial education is a very difficult subject to grasp if you have no formal education on the subject, which most people don't. Here is the tools page from Dave Ramsey's website, it has all kinds of great information to help out as well.  As always, if you have any questions on the book don't hesitate to ask. I would be more than happy to help anyone that wants it.

Saturday, July 10, 2010

The Present...

The book of the week was The Present by Spencer Johnson. This is another quick read written by Johnson... Fictitious stories conveying a great idea. This one is about maintaining a good mental focus on life and using it to stay happy.

The story was about a boy and an old man. The old man is a mentor to the boy and guides him through his life using his life philosophies. The story is just that simple... and the philosophies go like this:

Be Present- Focus on what is right now. Use your purpose to respond to what is important now.

Learn from the Past- Look at what happened in the past. Learn something valuable from it. Do things differently in the Present.

Plan for the Future- See what a wonderful future would look like. Make plans to help it happen. Put you plan into action in the Present.

All these things seem so simple, but sometimes the simplest idea is the one that we overlook. I have been thinking a lot about this subject lately. I had a big old master plan based on my current living situation and now my living situation is changing.  I would say the most disappointing thing is that I felt like I was unable to make long-term plans. Then this week I was hit with some wisdom from a friend when talking about this very subject. He said "Plan to depend." I have been thinking a lot about it... I am a religious man and I have been thinking about that phrase. I now have a newer outlook on planning.. I will now make plans to depend on God. I will still make plans, but I will make plans with more adaptability depending on where he needs me.

So how does this change the way I make my plans? In the future I will be making my plans with sub-plans. For instance, if I am living in Colorado and I make a few commercial real estate purchases I will make plans to cover me if I have to move to New York. This can be done by lining up property management companies if you are self-managing or having potential buyers in place in case you want to do a complete liquidation. This whole concept really makes the tie between both of Johnson's books; Who Moved My Cheese and The Present. Understand change will happen and then adapt to it... while at the same time living in the Present and learning from past experiences to do better in the future.

There is a lot of places I can go with this subject, but the most important thing to realize is to focus on today, this will keep you happy and less stressed. Today is the only thing you can control... You can't control the mistakes you've made in the past and you can't completely control where you'll be 5 years from now. Just do your best at everything you do today, in the Present. Now, I don't want to discourage anyone from planning because it might not happen precisely how you envision it... it's still very important to plan, but instead of having your plan be the end-all-be-all... "plan to depend."

This book is a quick and easy read, and I think it's worth while picking up. As always, if you have any questions on the book don't hesitate to ask. I would be more than happy to help anyone that wants it.

Saturday, July 3, 2010

Crucial Conversations...

The book of the week was Crucial Conversations by Kerry Patterson, Joseph Grenny, Ron McMillan, and Al Switzler. A very good book! There are all types of great tips and tricks to make communication happen and happen successfully.

It's not just a coincidence that the individuals that get the promotions are the individuals that are unanimously chosen by their peers and colleagues as fantastic communicators. If you can communicate effectively then you are able to get things done right while utilizing the least amount of time possible. And in any organization, time equals money. In addition to being able to get things done quickly, great communicators are also able to harness the creativity of everyone on their team. They bring the group together by keeping the focus on the goal and constantly have focus on the big picture outlook of the conversations to prod ideas.

This book was really interesting. There is a lot of information packed into its pages too.. However, I would like to focus on one area specifically- what makes conversations "difficult." This book had an interesting causation outlined at the beginning of the book and made many points to come back to it. The cause to conversations becoming difficult is that in those difficult conversations we are not able to use reason or logic. Bare with me.. When conversations get tense or if a person is passionate about an idea or if someone is nervous about the outcome of bringing up an idea our physiology changes. It all reverts back to the times of our ancestors, if they felt challenged they had two choices... run or fight. We still have the same base "caveman like" brain functions in certain events. When we get tense in a conversation the blood flows from the logic and reason portion of our brain to the fight or run side of our brain. Additionally, the little glands above the kidneys start pumping adrenalin into the blood stream, so our muscles tense up, our heart starts beating fast and you'll even notice some people have noticeable redness in their necks and faces. It is a very difficult thing to think with reason and logic when our body and brain can only focus on slugging someone to ground.

We have an incredible obstacle to overcome. But!... Now that you know what it is you can look upon yourself from the outside and notice these changes and focus on what is really happening. The most effective way of coming out of this aggression mode is to verbalize the goals of the conversation. Verbalizing things will change your physiology as well. When you tell yourself- "My goal is to ask my boss for a raise, and have a conversation about what I have to do and on what timeline I will be working on to reach my goal"- Your brain say "hold on, hold on... we aren't running or fighting, we are just trying to have a conversation about getting a raise. Call off the big guns" You'll still be nervous, sure, but you will be able to think more clearly and articulate yourself much better.

When it comes down to it, the best way to handle difficult conversations is to focus on whole picture as unbiased as possible. Who am I in this scenario?, Who is the other person?, What is the goal of this conversation?, Is it reasonable for us to talk about this?.... Ask yourself big questions and be honest with yourself and the other person. The more comfortable you are having crucial conversations, the more valuable you will be to your organization and the more successful you'll be in life.

This book is about a very important subject. Whether you read this book or use some other form of media to learn about communicating effectively, just make sure you do it. As always, if you have any questions on the book don't hesitate to ask. I would be more than happy to help anyone that wants it.