Cashflow Blog

- Sandra Simmons

Does the current economic crisis have you worried? Are you wondering how achieve financial freedom so you can protect yourself and your family from the coming financial crash? Here is what you need to know.

The first thing you need to understand is what the word economics means in terms of thinking about your family, and how you can use what it means to your financial advantage.

Forget what the media says about economics when they talk about the roller coaster ride of the stock market, supply and demand, inflation, banking industry mortgage defaults and the unemployment rate. Those are ‘economic characteristics’ that measure an area much larger than you can control.

What you can control is your own household economics. The definition of economics I am using is the original one; meaning “the art or science of managing a household or business.” And that is something that you, as an individual, can control.

There is an art to managing a household. It takes having certain skills and abilities, like organizing things so they run smoothly. There is a science of managing a household, especially in the area involving money. Here is what you can do to make sure that the economics of your household are strong and stable, even though the economy of the country may be on the slippery slide to financial disaster.

1 - Spend Less Than You Make

Take a lesson from your parents or grandparents who made very little, but lived very well. Keep expenses down to a level below what you bring home in your paycheck after taxes. The fastest road to financial disaster is spending more than you make. It’s possible to maintain your quality of life while cutting optional spending. This can be done by doing something as simple as renting a movie and making popcorn at home instead of going to the theatre, to buying a new used car instead of a brand new car.

2 - Pay CASH

Every time you purchase something using credit cards that you cannot pay off as soon as the statement arrives, you are committing your future earnings to the credit company. Those future earnings will be needed to pay your regular household expenses, so you end up in economic slavery known as the credit trap. The exception is purchasing property that increases in value, such as buying a home or investing in a commercial building that puts more income in your pocket.

Tip: When paying with cash; negotiate a cash discount. When the economy is sliding down and credit is harder to get, the guy with the cash is king. In addition, find out how to buy wholesale instead of retail to further lower your cost.

3 - Make the Money BEFORE Spending It

If there is some large purchase you need to make or want to make in the future, start putting small amounts in a savings account towards that purchase and keep that up until you have the cash to pay for it. If you have 10 years before your child enters college, then find out what the tuition will be and figure out how much you have to put away every week to have the cash the year they graduate from high school. Plus apply for every student scholarship, grant or financial aid package you can locate.

4 - Stash Some Cash for Emergencies and Living Expenses

Nothing will make you sleep better at night than financial freedom of having some cash tucked away for emergencies like having to get the car repaired, needing some unexpected dental work or losing a job. When you have a cash cushion you can get your hands on immediately, then magically, you stop worrying about money, your attention goes back on living life and enjoying it, and making money suddenly gets easier.

The only thing you have to fear in an economic crisis is not having some cash reserves in a savings plan you can immediately get your hands on. Did you know that more millionaires were made during the Great Depression in the United States than during any other era in our history? How did that happen? In that time, the economy crashed, the stock market crashed, inflation took prices of everything through the roof, the unemployment rate went sky high as businesses closed, and people who lost their jobs also lost their homes.

The people who had cash stashed away were able to buy houses, property and whole companies for pennies on the dollar. They ended up being millionaires because they had enough cash to weather the storm called the Depression.

Out of every bit of income that comes in the door, immediately carve off 10% and put it in a savings account that you have designated for your cash cushion. Even if you have to work an extra job and cut expenses on top of that, JUST DO IT! As the weeks roll by you’ll find you sleep better at night and walk through life with a lot more confidence knowing you have achieved financial freedom and protected yourself from the economic crisis looming on the horizon.

Sandra Simmons, President of Money Management Solutions has years of experience helping business owners and individuals manage their money to reach their financial goals.

Originally posted here:
How to Protect Yourself in an Economic Crisis

 - By Roosevelt Cooper -

As we enter the 2nd year of the US Financial Economic Crisis that started in August of 2007 with the sub-prime lending meltdown, the impact on the economy and the average American has been devastating. Economy.com is predicting that by the end of 2008 over 2.8 million US households will either be in foreclosure, be forced to give their house over to their lender and move out or sell their home for an amount lower than their actual mortgage balance.

And Federal Reserve Chairman Ben Bernanke said that mortgage defaults wouldn’t harm the US economy!

So far besides foreclosures being at an all time high, we’ve had the collapse of practically every sub-prime lender out there including New Century Financial, which was the largest subprime leanding company in the United States. Even regular lenders like American Home Mortgage and Countrywide Financial Corporation were effected. AHM filed bankruptcy and CFC narrowly avoided it with a last minute loan.

If you brought a home in the last year or so, take a look at your property value. There’s a good chance it is lower than what your mortgage balance is. And to think all of the financial experts bashed Robert Kiyosaki ten years ago when he said your personal residence was a liability not an asset back in 1997 in his best selling book Rich Dad Poor Dad

We also saw the collapse of many of the largest companies in the world in the financial sector. In March of 2008, Bear Sterns, one of the largest investment banks in the world was forced to sell itself to JP Morgan and Chase for a fraction of what it traded for prior to its collapse. The source? Investing in a wide variety of high risk investments, many of which was tied to the sub prime lending crisis.

In September of 2008, the Federal Housing Finance Agency announced that it was taking over Fannie May and Freddie Mac. This was done because there were huge concerns that due to the two companies’ exposure to the mortgage market, increasing loan defaults could result in the companies failing to meet its obligations and commitments. Merrill Lynch was forced to sell to Bank of America due to its massive losses from the subprime lending market. Lehman Brothers was forced to file bankruptcy due to is losses from the mortgage crisis.

Then it was announced in the same month that AIG - American International Group, which was the 18th largest company in the world was at serious risk of going out of business as well. Despite the fact that most of the companies’ business units were healthy, one business unit that invested in debt security derivatives gone bad due to the subprime meltdown threatened to bankrupt the entire company. The company was saved by an emergency federal loan bailout in exchange for a huge stake in the company to the US government.

So what lessons can we as average investors can learn from this crisis? Here are 5 lessons for you.

1. Only buy a house you can afford. Robert Kiyosaki is right. A house is not an asset unless it is making you money. If you are not collecting more rent than you are paying in mortgage, (chances are in your personal residence you aren’t collecting any rent at all), your house is a liability. There is no guarantee a house will always appreciate in value, as we have all learned the hard way from this crisis.

2. There is no such thing as a guaranteed retirement. If your company files for bankruptcy you can kiss your pension goodbye. Think it can’t happen to you? Do a search for an article written in Time Magazine called The Great Retirement Ripoff What would you do if your pension check bounced? Are you prepared to have to go back to work in your 60’s, 70’s, or even 80’s?

3. Be wary of 401K plans. 6 months ago AIG traded for $43 a share. Today it trades for $2 a share. Your 401K plan mutual funds are investing in companies like AIG. If a market correction occurs, you can see your portfolio take a nosedive. In addition, although many companies offer to match your investment in a 401K plan up to a certain amount, their “match” is in the form of company stock. Imagine how all the poor souls at AIG whose 401K plans are loaded with $2 a share company stock are feeling right now.

4. There’s no such thing as a “safe secure job.” Many of the largest companies in the world are laying off people by the thousands. At my 2nd to last job literally a few months after I left, my entire business unit was laid off. At my last job again a few months after I left, my entire business unit was once again laid off.

5. You MUST have a Plan B. If you get laid off tomorrow and it takes 6 months to a year to find a job paying what you make right now, how long can you make it before you are out on the street? If your 401K takes a huge dip right before you are expected to retire, what are you going to do? If your pension gets wiped out how are you going to survive?

Hopefully you have learned these lessons and are doing something about them. Otherwise as the saying goes…”those who fail to learn the lessons from history are due to repeat them.”

If you lost your job, your 401K plan crashed or your pension check disappeared do you currently have the financial wherewithal to survive? If not, you need a Plan B. You need a business that can produce for you up front immediate income, leveraged income that is based on the efforts of others, not yourself and residual income that continues to come in based on work done years ago. To learn more about such a business visit http://www.createthelifestyle.info today and get started on your Plan B!

View post:
Lessons Learned From the US Financial Economic Crisis

By Lou Wallace

This seems to be a question a lot of small businesses are asking themselves these days.  The simple answer is yes.  While most of the Banks are obviously experiencing financial problems, others are not and there is money available for small businesses.  Most small businesses feel they need to deal with conventional Banks.  This does not present a problem in good times for most small businesses but is an absolute challenge in an economic atmosphere like we are experiencing today.  Banks tend to be fickle and swing the pendulum from loose credit to no credit very rapidly.  When times are good banks love small businesses but let times get rough or let the small business have any type of financial glitch and the Bank is no longer a friend.  They all preach relationship as long as it is one sided

Today small businesses need to look beyond conventional banks and seek out relationships with business lenders, sometimes referred to as Asset Based Lenders.  This group of lenders range from those operating across the entire country to locally owned companies operating in their own market area.

Performance Funding Group, LLC is a locally owned and privately funded asset based lender who has been providing several different loan products since 1997.  Lou Wallace has been working in commercial loans since 1971.  Lou Wallace can be reached at 602-912-0200.

See the original post here:
Can a Small Business still find money in today’s market?

BOSTON (MarketWatch) — Virginia S. lives in the Toledo, Ohio area and is nearing retirement as teacher at a religious school.

These days, she is having trouble with her faith.

That’s not a comment about her religion, but rather about maintaining her confidence in the stock market and economy, and hanging on to her belief that years of planning on a modest salary will pay off.
    
 ”I keep hearing experts say that consumer confidence is important, but I don’t see anything that could make me confident,” Virginia said via email. “I have time and I wouldn’t mind working longer, but I’m not sure I see it all paying off any more. Why, exactly, would anyone expect someone like me to be confident? What reason do I have to be confident?”

Virginia is far from alone in her flagging sense of trust in the market.  On Tuesday, Investor’s Business Daily released its August figures for the IBD/TIPP Economic Optimism Index — an indicator that typically does a good job of foreshadowing what to expect from more renowned consumer confidence benchmarks released later in the month — and it showed a nice pop in good feelings. That said, the 14.4% pick-up in August left the IBD index at 42.8, which is still deep in pessimistic territory.

Looking ahead

Between the housing bubble, credit crisis, inflation worries, concerns over the weak dollar, the potential for the economy to drop into a recession, a stock market that seems more anxious in falling than rebounding, and more, it’s hard to believe an investor could have any faith and confidence left.

Those flames of despair are fanned in chat rooms and message boards by market timers, who suggest that the best way to go is to be out of the market, or following some specialized system, the kind of thing an average investor like Virginia is not likely to do.

In times like these, it might seem as implausible as the existence of Santa Claus, but yes, Virginia, there are reasons to be confident.

Without sounding like a Pollyanna, here are six of them.

1. Market cycles have not been suspended.

While investors have internalized the idea that stocks return 10% annually, that’s an average figure, and no one should believe the stock market is a guaranteed payout machine.
But down cycles have invariably led to up cycles. While many market observers suggest that people should expect the market to deliver an average of 7.5%-8% on average for the next 25 years, it still won’t be a straight-line result.

“If the time you are buying into that average annual return is negative or zero or two, you can expect that somewhere during your investment life there will be a catch-up period,” says Kathy Kristof, author of “Investing 101.”

It would be great if you could avoid the pain and simply invest during the hotter catch-up time, but most people don’t have that kind of vision or timing.

2. The one place your dollar is going further, these days, is the stock market.

Americans are known for being great consumers and lousy savers, but they stink at buying stocks when they go on sale. The same people who would rush out to the mall the next time they hear about a sale on shoes would run away from high-quality companies that are likely to pay for their shoes five or 10 years down the road.

Great companies will survive bad markets; they won’t always be cheap.

3. Numbers don’t lie, but they can confuse the heck out of people.

If you want to view the glass as half-empty, you can produce market statistics that show the decline in 2008, or a time frame which shows a long stretch where the annualized average gain on the market was 0%.

If you want to show the glass half-full, you ignore the current pain in favor of five-year numbers which show gains of nearly 8% annualized over the last five years, despite the recent pain.
Find the numbers that are most important to you, the ones that act as a cornerstone to your philosophy and decisions. There are many ways to read the market, and more than one picture is correct, but what matters most is what you believe in.

Spend less time worrying about whether the glass is half-full or half-empty and more time worrying about what is in the glass. If you like the looks of the market long-term, then it’s like a glass of your favorite cocktail or brew, and it’s easy to see it as half-full; if you’re lacking confidence, it looks like a glass of mud, and you’re hoping it’s half-empty because you don’t want to choke it down.

4. Diversification is better than the alternative, even when it means that parts of your portfolio are hurting.

If you pull all of your money from the market, you avoid principle risk — the chance that you lose money in the market — but embrace purchasing-power risk, the chance that your money won’t keep up with inflation.

Since financial harm happens in many different ways, the best way to keep your cash out of harm’s way is to expose it to many different forms of danger.

5. Working a bit longer — and putting off Social Security — will do things for your retirement nest egg that regular savings didn’t get done.

Research released recently by T. Rowe Price Associates shows that postponing retirement and waiting longer to take Social Security will dramatically increase the staying power of your retirement savings. Christine Fahlund, senior financial planner for the T. Rowe Price Group, says that delaying retirement and Social Security from age 62 to age 70 can double a person’s income in retirement.

Working longer may not be anything to crow about, but it is possible to play catch-up, even in times when the market is not giving you much help.

6. It feels so bad, but it hurts so good.

Typically speaking, the best investment decisions are the ones that feel the worst when you are making them, the ones that try your faith and confidence.

For someone like Virginia, having confidence can be its own reward. In the words of Saint Augustine: “Faith is to believe what you do not see; the reward of this faith is to see what you believe.”

Chuck Jaffe is a senior MarketWatch columnist. His work appears in dozens of U.S. newspapers.

See original here:
Investors: Stand by your plan

CORE FOCUS OF THIS MAKEOVER:
Making your business an authentic expression of who you are.

This makeover is hard to summarize – you really need to read it to ‘get it’.

To read your free copy of Hayley’s 17 page Offer Makeover go to:
http://www.tadhargrave.com/backyard.pdf

Hayley came to a recent weekend workshop I did in Edmonton.

She had this idea of starting a clothing store – all second hand – but collecting the particular kind of clothes that she loved to wear. She wanted to create a collection of clothes that was wild, eclectic, colourful and fun. Clothes she usually had to spend hours searching for herself.

What became immediately clear was that Hayley had a great idea. Whenever I shared it with women their eyes widened. They just ‘got it’. And, in marketing, the most critical piece is the core concept. Is it a good idea? Sometimes you’ll hear an idea and, for some reason you just know it’s good.

But where could she sell them? How could she find a space?

In the end, she made the brilliant decision to sell out of her backyard in women’s only clothing events – and the name of her company was born. “The Backyard Clothing Company”. The name captures a lot of who she is. And it invites her story. It raises the question, “what’s the backyard piece about?” And that allows her – whether or not she continues to sell from her backyard – to tell her story of being a scrappy entrepreneur with a good idea but a shoestrong budget trying to make things happen.

The ‘backyard’ element also speaks to her desire to make shopping a fun, intimate, social experience for women – not just some sterile process in a chain store. She’d grown up in the markets of London and wanted to bring that experience – in some small way – here.

In marketing lingo – the ‘backyard’ is her USP. It’s the heart of her story. It speaks to her authentic self. And by bringing that to her business – it’s infinitely more attractive.

Before this name, she was playing with “Perfect Fit” (i.e. these clothes will fit your style perfectly). It’s a good name – but, ironically, it wasn’t a perfect fit for her.

Another issue raised by this makeover is really clarifying what people are buying. What’s the result they want?

Every business must identify this. And it’s always something simple like, “more money” or “live longer” or “better communication”. There’s always something simple at the core of it.

Consider these examples:

FEDEX – When it absolutely, positively has to be there overnight.
DOMINOES – Hot, fresh pizza to your door in 30 minutes or it’s free.
CLEARASIL – Visibly clearer skin in three days – guaranteed.

And I think we captured hers well in the headline below:

psssst - Eccentric Edmonton women - revealing one of Edmonton’s hidden gems:

“Everything on the rack screamed my name.”

How you can snag more fabulous, wild, eccentric, outrageously colourful and inspiring clothing in one hour than you did all last year (and at a fraction of the price you’d expect to pay).

To read your free copy of Hayley’s 17 page Offer Makeover go to:
http://www.tadhargrave.com/backyard.pdf

Candid feedback from Hayley on how the process was for her:

How valuable was the process from 1-10?
The process was a great big 10 that is how much I got out of it. The process gave me confidence to go for what I wanted with Tad standing on the other side of it cheering me on. If you have any doubts, contact me at: hayleyrothenberg@gmail.com or 780 819 4636.

What would it have taken to make it a 10?
An even bigger 10 would have been to understand the questions in more depth to begin with. This would have helped me a lot because I spent hours trying to understand what the questions meant! Although none of this was really a waste because it becomes part of the process in becoming clear, it was very time consuming within a very short time frame. I suggest having a guideline for the questions, a guideline to the offer, make it even clearer that it is a lengthy process to get it all clear. That there will be a lot of back and forth’s, which is a lot of work with amazing, results at the end.

Roughly how many hours did you invest?
Not sure, as we went back and forth for at least 2 weeks! Perhaps have time sheets available to note how long we spent on this process.

If money were no option - what would you like to have paid for this?
Wow what a question, the back and forth’s were worth their weight in gold, without that process I would have not got to where I am today so quickly. Tad deserves the going market rate for his consultations in the back and forth’s.

What was hardest?
The questions and defining those questions with my answers.

What was most valuable?
Becoming very clear that I had something to offer which I did not need to change to fit into what is considered normal for success. But most of all it was that Tad believed in me which helped me in moving forward and NOT holding back. Part of the back and forth’s is you get to really see where you could be resistant to moving on and I loved that Tad would stretch me by asking a bit more of me, which is ultimately what I wanted.

What did you think it would be like before and how does that?
Compare to how it actually was? I had no idea what it would be like, I had only the willingness to go for it , a vision and Tad’s enthusiasm. In reality what it is actually is, is a lot of good wholesome work and the more you put in the more you get out of it, to me that’s the key.

When you look at what you first sent me vs. what we created in the end - how do you feel?
Its great, I love it, when we first started it was all an idea which became a reality, one of the things that struck me the most in the process was the more I dived into tads back and forth’s the more I became clear and could define my vision. One of the things that also startled me the most is that I started to remember as a child being involved in a lot of bargain shopping experiences, going to Markets etc, I forgot most of this which is what gave me the natural ability that I have today in what I do!

Was there a good balance of loving encouragement and honest challenge?
Absolutely, that was the best part for me

To read your free copy of Hayley’s 17 page Offer Makeover go to:
http://www.tadhargrave.com/backyard.pdf

More here:
Offer Makeover – Case Study Summary #2 - Hayley Rothenberg - http://backyardclothingcompany.com/