creative impulses, that stifle the enjoyment of life and that keep you from reaching your personal and financial goals.
We are our own worst enemies. We put roadblocks of negative thinking in our life path. Let’s resolve in 2007 to change our way of thinking… if our way of thinking is keeping us from achieving our goals and experiencing abundance. Let’s resolve to give ourselves a different set of rules… if our rules prohibit us from seeing and capitalizing on opportunities and possibilities.
Here is the question that you should be posing to yourself:
“Given my present set of circumstances, what can I do this year to increase my net worth, live better each day and get a retirement plan on a solid foundation?
As a roundabout way of answering that question, I would like to offer you some unsolicited financial counseling. I will try to teach you the basics of financial counseling, at least as I see them and as they have worked so splendidly for me. Perhaps once you have learned them, you will be better prepared for preparing for your financial future.
What we are going to discuss are conceptuals, not the specifics, of getting started. The specifics are covered in great detail in our series of mini-seminars beginning in January of this New Year.
There are four distinct steps to getting your financial planning under way:
STEP # 1: DETERMINE WHAT YOU ARE TRYING TO ACCOMPLISH
On the continuum of wealth, you may be one of the many that have no assets to speak of (except that great smile) or one of the few who can draw upon a bulging bank account and plentiful equities. But let me stress something with you right away:
It does not matter how much you have to begin with – if you don’t have it…somebody else does!
There is nothing wrong with starting from scratch. Creating a substantial net worth and sustainable assets may take a little longer and require a bit more commitment and endurance, but you can still get to where you want to go right from where you are.
The first principle to follow is this:
Knowing where you are going is initially much more important than how much you have to start with.
What do I mean by “knowing where you are going”? People want wealth for a host of different reasons, but underlying every reason is the need or desire for financial security. The first step I recommend is sit down and do a little introspective thinking, and clearly define to yourself what you want to accomplish. Don’t be vague, be specific.
Rather than saying “I want to be filthy rich by the time I am 45 years old.” be specific by saying “By the time I am 45 years old, I want to be either retired or semi-retired. I want to have a minimum of $2 million dollars invested in various stocks and funds. I want an independent stream of income coming to me, regardless of whether I am working or not, that will pay my bills and allow me to live well. I want my house and car(s) paid for and I want NO consumer debt in amounts more than I can pay of each month.
You will eventually need to take your head out of the clouds and think about where you are starting from and what type of efforts you will need to put forth to make your goals become reality. But first, let’s try to figure out why you are where you are financially.
Is it a result of the way you think about money?
Is it a result of what you know about money?
Or- is it a result of the fact that what you DO know about money just isn’t so!
Regardless, it brings us to our next principle:
You cannot solve a problem until you know what it is and you cannot solve a problem with the same mindset that created it.
The most neglected part of our decision-making process is spending the time necessary to determine what the problem or objective is. Most of our time is usually spent coming up with obvious solutions to the wrong problems.
Here’s a little oxymoronica: “ What is obviously the problem usually is not obviously the problem!” If that premise is valid, which indeed it is, then it can be assumed that “What is obviously the solution to the problem is not obviously the solution to the problem!”
In other words, before you run off in all direction to start making your fortune, it would be wise to be sure that you have chosen the correct solution to the correct problem. Once you can gain perspective on your problem, the solution is usually quite easy.
My definition of a fanatic is “a person who, once having lost sight of his goals, redoubles his efforts!” I often feel as though we live in a country of fanatics, living from day to day without the rudder of goals to guide us, chasing after solutions to problems we do not understand.
STEP # 2: FOCUS ALL OF YOUR RESOURCES TO ACCOMPLISH YOUR OBJECTIVE
Your resources will be both financial and non-financial. Sit down and list them according to these following guidelines:
Financial Resources:
- Cash and “near cash. How much cash could you raise within thirty days without borrowing?
- Credit. How much could you borrow on a short-term basis? How much could you borrow on a long-term basis?
- Financial statement. What is your net worth? How many borrow-able equities do you have?
- Cash flow. How much cash could you divert from your monthly income to apply toward your financial goals?
Non-financial Resources
- Time. How much time per week could you devote to accomplishing your financial goals?
- Knowledge. Do you possess the specialized knowledge required for success in your chosen field of investment? Or – do you know someone who possesses this knowledge and could be persuaded to share it with you?
- People. Do you know the right people? (Often, it’s not WHAT you know, but WHO you know.) If you are lacking in either financial or non-financial assets, do you know someone who will provide them for you at a reasonable cost?
- Courage. Are you ready to swim upstream to get what you want? If not, quit daydreaming and get a hobby!
STEP #3: LIST ALL OF THE ALTERNATIVES TO YOUR GOALS USING YOUR RESOURCES
Obviously, whether your goals are modest, ambitious or super-ambitious, your success depends on how you use your resources. For example, anyone with a net worth less than $50,000.00 should be able to achieve a modest net worth of $500,000.00 (a tenfold increase) in 10 years by following the practices and guidelines found in Quadreal’s Wealth Builder’s Seminar.
On the other hand, the same person reaching for the magical $1,000,000.00 mark (a twenty-fold increase) has a much more ambitious goal requiring significantly more time and effort. And achieving a super-ambitious goal of $2,000,000.00 (a forty-fold increase) in less than 10 years would require a maximum use of his or her resources.
In a perfect world, we would have plenty of cash, great credit, exceptional investment insight, and a bottomless pool of experts and professionals to draw upon for advice and guidance. We would have all the free time necessary to work on and accomplish our financial goals and see them come to fruition right on time, allowing us to retire at an early age and enjoy life to the fullest. But we all know better than this.
A wise wealth builder will devise an alternative route(s) to achieving his or her goals, so when your cash flow is limited, or when spare time in your week to work on your goals can’t be found or when the investment market you have chosen changes and becomes more treacherous, your investment train does not become derailed.
If you do not have a source of personal cash available to you, find a solution that will establish that source.
If your credit is poor or lacking, devote your initial time to repairing or establishing your credit.
If your net worth is low or non-existent, take the steps to increase it.
If your divert-able cash flow is non-existent, get another job or find ways of working smarter..not harder.
If you are not knowledgeable about money or investing or buying and selling real estate, buy books, go to seminars, network with the proper people and learn what you need to know.
If you lack the courage to get started and stay the course, immerse yourself in self-improvement mindsets that will help you develop the self-confidence you will need.
If you are starting from scratch, the going will be slow and the rewards will few and far between in the beginning. Learn to be a long range thinker and satisfied with small successes.
So far, the first three steps in financial planning are:
- Determining your objective and the problem(s) that exist that may keep you from your goals;
- Listing your resources and how they can be used; and,
- Finding alternative solutions to the problem.
This of course brings us to the last step.
STEP #4: DECDE ON THE ALTERNATIVE COURSES AND GET STARTED
Deciding what to do will be easy if you have followed through on the first three steps. Putting your decisions into practice is another story. But it is the story of our lives – the doers versus the dreamers.
Which are you? |
