Archive for the 'Questions for MoneyMinding' Category
Tuesday, February 23rd, 2010
Any tips on how to pay off your back taxes before the new ones come in? I already work 2 jobs and I don’t buy lattés. It’s discouraging… it seems to need to have money to save money. How do I get there? How do I pay off what I already owe so that I can start saving and investing, and paying for my son’s braces (!) especially when my spouse works sporadically and I am never sure how much money we’re going to have every month.
It’s pretty hard not to get bummed sometimes. I do like your newsletter, though. It’s ten times better than the Smart Cookies.
JM
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Friday, June 26th, 2009
I had a conversation with a man who exemplified how deceitful and gimmicky marketing messages, when disguised as good financial advice, can have harmful effects on someone that does not have the financial education to know the difference. I have these conversations all the time. The situation is so common it could easily be called a pandemic.
With this economy, it’s just as bad to have savings sitting idle, as it is to have a lot of debt. While the savings account may seem not to be ‘losing’ money, in reality it might be a major problem. In Canada, the government retirement savings program for personal savings is set up so that when you put money into the plan, you get a tax deduction for the amount you put in. This is a good thing because it means you save taxes right away. The money that you put in the plan gets invested and your investment earnings are not taxed as long as the money stays in the plan. However, in the future, you will start taking out the money which will then become fully taxable at whatever your tax bracket is at the time. In other words, if you start to save at young age, and you take money out years later after you have your career set and making good income, you actually lose more money because the money you are taking out is at a higher tax bracket than when you were first saving when you were younger– yikes!
So here’s the problem: If you think you’re doing all the right things saving money by keeping it in a ‘low risk’ plan, or are doing other seemingly solid financial strategies such as not ever paying interest on your credit cards or paying off your mortgage early, think again. You may in fact not know these strategies are costing you thousands of dollars.
Your ‘savings’ are actually NOT set up to be tax efficient at a time when you need it to be most. The money you put into savings hasn’t lost any market value however, because it also hasn’t done anything more than simply be ‘saved’, it has indeed many times gone backwards compared to the purchasing power of your money.
Likewise, the no interest you pay on your credit cards can in fact be a detriment to your credit score and because the only aspect of credit you see as being valuable is the free points, you miss the opportunity to use your credit to leverage your current assets and income to create more wealth, to get your money working for you, and to earn more income – like for example what happens when your mortgage is eventually paid off - there is a lot of equity sitting idle that requires an income to maintain. Also, the extra money that was previously going to pay the mortgage is now going to additional savings which is also not tax friendly, or income efficient and so you work harder and harder and longer and longer just to seemingly stay ahead of the game when in fact you are getting further and further behind.
The secret is to use your current income to get your money working for you by using powerful tools like access to credit to create more income and wealth which creates even more income to go to work for you to create more wealth and so on and so on…
If you like what you have read and want to learn more about money as it relates to you personally, please go to the moneyminding.com website and subscribe to our mailing list for more tips.
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Wednesday, June 17th, 2009
I received a very relevant question today from a young woman asking me if I had any suggestions in regards to setting an action plan to own a house one day. Her situation is that she is working in a temporary position within a company, waiting to get fulltime hours, with very little savings at the moment. Here is my response:
Oh yes I do have suggestions. This is a fun one. I love helping people buy a home because that was my biggest goal a few years ago. Beginning today, take a pen and paper and write a date for when you’d like this house. Describe what it will look like in minute detail including the location. Studies have proven that physically writing down a goal ensures a 95% higher success rate in achieving it compared to storing it in your head. Next, pick up the real estate guides to see how much it will cost. From there you have the basis of some good questions to ask such as “What will the mortgage payment be” and “How and where will you earn the money” and “Who should you talk to for help”?
MoneyMinding has re-introduced a program called Simple Steps to Lifelong Financial Security that will walk you through these simple steps along with any other area of personal finance. To get started, just call the office or visit the website. Mention this email to our team who can process your order and get you started.
Looking forward to helping - and to seeing you in that new house -
Tracy
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Tuesday, July 22nd, 2008
Question: How many credit cards can you leverage for investing before it damages your credit?
Answer: If only the answer were as simple as a number! I could say, well, 9 - and you’d be on your way! In reality, the credit card companies and credit bureaus don’t care whether you are using your cards to buy stereo equipment, or to invest. But they do care about how you manage your credit.
Here are the areas to be aware of:
- The effect on your credit score when you fill out a credit application. Each time a company or financial institution makes an inquiry, it can adversely affect your credit rating. If you fill out a credit application, be reasonably sure that you will qualify for it.
- The relationship between your outstanding balance and your limit - you should use only 1/3 of your available credit at any time. Leave lots of room!
- Your frequency of use - it’s better to use a card regularly, which can be as little as once a year. Keep it somewhat active.
- Overall history of the card and the length of time you’ve had it. A long credit history with a couple of bumps and snags is better than a short history where you are an unknown quantity.
- Your total debt-to-service ratio; in other words, your debt payments compared to your income. Again, keep this to a maximum of 30%.
If you keep within these guidelines, you can use the credit available to you to fund wonderful income-generating projects, or to take advantage of a terrific opportunity and have a terrific credit score.
Posted in MoneyMinding Makeover Magic, Questions for MoneyMinding, Uncategorized | 2 Comments »
Friday, May 2nd, 2008
What happens when you have an investment that has been bringing in income, but then stops? Like a real estate property that the tenant does not renew and you are having trouble finding another tenant. And can’t, or don’t want to, sell the property. Or after buying a real estate property as an investment, but can’t find a tenant?
Answer: It’s always difficult when our investment dreams don’t go exactly as planned, but as in any undertaking you are going to have some losses as well as some wins. The issue is how do you take your “lemon” and make lemonade?
First, take a look at your property and see what value there is in it. Rental income is only one way of making a return on your real estate investment. Right now, the United States is going through a downturn in the real estate market. If you bought “high”, you may be wiser to hold on to your property, at least in part, right now. The interest you pay on your mortgage is still tax deductible (in the US) so you continue to benefit from that advantage, whether or not you have tenants. You may have some equity in the property that you can use to make an alternate investment such as a different property or a different kind of investment altogether.
Another option is to lessen your exposure to short-term loss by bringing in a partner. This isn’t as impossible as it sounds - with the market downturn, there are people looking for opportunities to buy in at a good price. Their “bargain” might be just the financial inflow you need to take that money and look for a brighter option somewhere else.
With your current investment, and with all future investments, go into it with an “exit plan” in mind. There’s more information on this in MoneyMinding Step 10 on Building Wealth: The Foundation. Basically, it’s up to you to decide in advance how much money you are willing to lose - and when you reach that point, follow through with your decision, tracking your loss and using it against your gains in other areas.
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Friday, April 18th, 2008
Every Monday, MoneyMinding Members get together on the phone to learn from our advisors, brainstorm with each other and fuel their money mastery fires. This past Monday, the conversation steered to a couple of different opportunities that people could look into as they make money and lifestyle goals. That led to these questions and comments from the participants - I’ve included the answers from two of the MoneyMinding advisors who also participated in the conversation.
Do you have a question for a MoneyMinding Advisor? You can look them up at www.moneyminding.com/mm/find_an_advisor.php
Comment: “Wayne you are totally on- we are doing a great disservice to our youth in not educating them.”
MM Advisor Wayne Nash: “Thank you. Unfortunately, the needed curriculum is unlikely to be offered in the school system any time soon. This is where the MoneyMinding Foundation has a role to play. It is also the need that is being filled by the MoneyMinding Advisors. The more MoneyMinding Advisors out there the more educated the general population will become.”
Question: “Is it feasible to rent your Canadian property in a high end district to live in a place like Costa Rica?”
MoneyMinding Advisor Grant Simpson: ”To live in Costa Rica you have to be aware of the rules of maintaining your residency in your home country. The laws in Canada is that you can not live outside of Canada for more than 180 days without giving up your residency. If this is a decision one is looking at, you have to talk to someone that specializes in residency and non residency laws.”
MoneyMinding Advisor Wayne Nash: “If you mean rent out a home in a high end district in Canada and then live in Costa Rica on the income, why not? For many people living in paradise would cost them HALF of what they already have passively flowing in right now while they need TWICE what they have flowing in to ‘get by’ in North America. Many people work to amass some fortune to ‘retire’ in a place like Costa Rica. What they don’t realize is that they CAN do it now! For more information on offshore living you can contact me at admin@offshoreprofessional.com for a list of resources. I am putting up a website with many links to useful offshore living information and resources soon as well.”
Question: “With regards to Mutual Funds. Is there a good mix at present or are Mutual Funds a lost cause?”
MoneyMinding Advisor Grant Simpson: “Mutual funds are a good investment vehicle, but you have to take the time to learn about which funds to own. Of the more than 5000 funds out there, you can probably say that there are about 100-150 good quality funds , with seasoned managers. The rest of the funds you can throw a dart at them because they are all pretty much the same.
A good portfolio of mutual funds should be 3-5 funds with 10 year track records. Always remember, there are good mutual funds and bad mutual funds.”
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Friday, April 11th, 2008
We’ve been thinking of getting a large ($80,000) leverage loan with deductible insurance and we just pay the interest (while the money supposedly grows) and invest it in mutual funds. We have 6 years to retirement and about $300,000 invested.
Thank you for asking – this is a great question with lots of variables. My initial response though is really a question. I read your question and wondered what deductible insurance was. Then read it several more times and realized you must mean deductible interest. If that’s the case, then my response shifts to the same as it does every time I hear people doing things financially that are obviously above their level of understanding. I have picked up the pieces from more people who have done this very strategy without having a complete picture and the knowledge to do it confidently and safely that I’ve totally lost track of how many. What you are describing is a very good wealth building strategy but in terms of when it makes sense to do it is one of the reasons we have a 12 step process and decision making hierarchy is because youu are considering a step 9 and 11 strategy without having the financial foundation to make this a peaceful and successful plan.
The best thing you have done is to ask. I would be happy to help you develop the knowledge and implement the safety nets to make sure this was appropriate and successful for you – but at this point from your 2 sentences it wouldn’t matter how much you had invested or how many years until retirement – it would not be advisable to do leverage investing – yet.
Congratulations for asking and for taking control. You might consider our new Free 7 day make a difference program to give you some ideas on where to start. Part of that program includes an opportunity to participate in our momentum program to get more detailed answers for you personal situation and the start of the Money Minding Makeover course. You can access it by re-registering at www.moneyminding.com. I hope this helps and I wish you all the peaceful abundance you will deserve.
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Monday, March 10th, 2008
How does one get past the fear of leaving a steady income to pursue other dreams?
First the reason to move forward towards the dream must be stronger than the fear of giving up the steady income.
Second, there is an interesting question that needs to be answered about the steady income: where does that steady income come from? Is it from a job or is it from an investiment you have mede in establishing an ongoing stream of income that will give you financial independence? If the steady income is from a job that someone else pays you to do, then the think you are holding on to is not really financial security as you might think it is. The ultimate goal is financial independence where you receive your income from sources that do not require you to work for them. This is also financial security.
Too many people believe they have security in their job, which is really dependent on them showing up for work and the employer continuing to provide regular pay. This is very different than learning how to creat your own income in whatever situation you find yourself in.
Each person who asks your question could get a different answer, depending on their personal situation today, their goals, and the resources they have available to provide the necessary income to live their life. And if the dreams you refer to are of income-producing activities, then a business plan including a cash flow that provides an income for you will also help.
These are all activities and exercises that the MoneyMinding Makeover presents in sequence. You start at Step One which identifies your priorities and non-financial resources as well as your attitude toward making a change. Then in Step Two you analyze the goal both from a financial and emotional perspective. In Step Three, you organize your current finances so you can make decisions and get professional expertise on what change you might make and how you would approach it. Step Four is about system to move you forward; Step Five is reinforcing wealthy habits; Step Six is about creating the income you need to reach your goals; Step Seven is finding and working with professional advisors; Eight is identifying and minimizing risk; Nine is effective use of credit; then Ten, Eleven and Twelve are building wealth.
The entire program is delivered in sequence to minimize the overwhelm and to allow you to implement strategies at whatever speed is appropriate for you. As a member you can ask questions (anonymously if you like) on our live teleconferences regarding your unique personal situation, and get answers from MoneyMinding advisors. You hear how others approach similar situations and you get access to teaching on specific strategies, resource and opportunities to accelerate wealth-building habits, which move you towards your dream easier and more efficiently.
This is a long answer, but MoneyMinding puts you on a life-long journey!
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Monday, March 3rd, 2008
Now that we’ve added a new category to The MoneyMinding Monitor just for the questions we receive, expect to see more entries from the people who contact us! Due to the personal nature of many of these questions, I won’t be including any names or addresses, but the concerns are all from real people with genuine issues around money.
Dear MoneyMinding,
How does one get out of a poverty mindset?
A: That is an amazing question, and my challenge in answering it is because I’m not sure how to approach it without sounding like a sales pitch for the MoneyMinding Makeover.
Your question really is at the core of all the teaching, all the exercises, and all the support MoneyMinding offers. I have so many tips, tricks and strategies that are presented in sequence to not only break the mindset of poverty, but also to build a “wealth muscle” all within the context of day-to-day financial activities.
Let me give you some examples, then encourage you to review the Membership offer and the contents of the MoneyMinding Makeover course.
MoneyMinding Makeover Contents
MoneyMinding Makeover Course
1. It sounds like you have recognized that you have a poverty mindset as opposed to a wealthy one - that can be good because you need to be aware of a self-defeating thought process or activity in order to change it. However, I’d like to turn the tables and ask, “What is a poverty mindset to you?” I ask this because often people think they “should” be doing something different with their money because they are comparing themselves to someone else or trying to live up to an expectation that maybe isn’t really what they want or who they are.
2. Using cash for all your transactions is the most powerful and immediate way I know to take control of your money and to build and reinforce abundance. It’s simple, but not easy - I’ll warn you now!
3. Creating an environment where you are experiencing the lifestyle you think you might like to live if money were no object is also an extremely powerful and fun way to expand possibilities. That means if you think you’d like to live somewhere different, then go visit homes where you’d like to live. Do the same with cars, clothes, charities, entertainment - actually put yourself inside the lifestyle you think you as a wealthy person would be living.
Hope that helps. We enjoy answering these kinds of questions for members every week as well as brainstorming specific strategies for specific people and particular situations, so I’ll leave you to ponder the membership again. It’s $79 a month or $1299 for a lifetime membership which includes the MoneyMinding Makeover course and updates and new editions as they come available. Plus you get access to live support and training and the ability to ask personal questions for as long as you want.
Thank you for your questions and for your awareness that perhaps things could be different! We’d love to hear more of your story.
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