Perhaps at this point in your financial life you have become convinced that everything you think you know about creating and preserving wealth is incomplete at best and at worst, absolutely wrong.
So, what can you do to find balance, prosperity, and hope amidst the chaos? What are some things you can do, right now, to stop your financial life from bleeding out?
1. Fire your banker . Avoid using banks at all, for ANY reason.Don't use them for convenience or because you know the people who work there, or you like their cute commercials. Do not use banks for loans or financial transactions of any kind. NEVER get your financial advice from bank salespeople. Switch to a credit union if at all possible.
Disabuse yourself of any notification that banks are your friends. It has become increasingly attractive that banks are responsible for a lot of the economic turmoil we are currently experiencing if you do not believe me, just check out any financial magazine or website and you are bound to come across a banking scandal (or two or or three.)
2. Real wealth means LESS DEBT . Eliminate debt, starting with consumer debt. Pay off credit cards and small loans and do not take out any new ones. Debt iswhat keeps people in wage slave purgatory. Find your freedom and your true self by following as little as possible.
3. Cash rules! Shore your financial foundation by building and keeping cash reserves. Cash management is at the heart of what I do as a financial advisor. Master your cash flow and you create numerous possibilities for growth.
4. Improve your financial IQ. Read good financial books. Learn from people you know who are doing what works and are willing to share it with you. Finding a great financial mentor is priceless.
5. Get insured. Buy the right kind and the right amounts. Buy a policy like the specially-designed policies I use with Bank on Yourself. Review all your insurance and determine whether you can eliminate certain coverages that you do not need.
6. Stay off the Street. Ignore the hype dialed out by slick Wall Street marketing firms whose goal is to get you to buy more stuff that siphons off your wealth. Greed, fear and hope drive the markets- not rational thinking.
7. Live within your means. When you take a break from accumulating stuff, you might be able to see the real value money can bring, namely freedom and peace of mind.
8. Stop watching those financial entertainment shows . Most of the advice they give is wrong and they are foisting their own agendas on you. Instead, turn to financial advisors that you have spent time vetting and who have great reputations both online and offline.
9. Stop thinking of your home as an “investment.” The housing bubble, which began in 1998 and is only now just beginning to burst shown us the insanity of the idea that owning a home is a path to easy street.
If you're going to invest in real estate at all, it needs to be in income-producing property and you need to buy the right way, which is at a deep discount at the right terms from motivated sellers.
10. Start a business or businesses. Staying away from the trendy and technical whenever possible, provide practical goods and services that people need and which can not be bought from an offshore vendor. Avoid businesses that have costly barriers to entry and lots of startup costs. Asphalt paving is no one's dream when they're a kid, but a business like that is not going out of style anytime soon and can not be exported to China.
11. Do not give away your money. I'm not talking about giving to charity here. I am talking about giving away large sums of money needlessly in interest, fees, penalties and taxes. These small fees add up over time. My clients are always astonished when I show them how much they save in interest and fees simply by becoming their own source of financing. They are also astonished at how much tax they are paying, often simply have not bothered to check with a qualified tax professional to ensure they get as much back as possible.
These are just a few of the guidelines I share with my clients to help them survive and thrive in an uncertain world. There are many traps in personal finance and you want to avoid as many of them as possible.