From my RE blog!
By now most of us have a decent understanding of how the subprime mortgage mess came to a meltdown.
Easy money caught up with us when borrowers could no longer afford their minimum payments, which were usually their mortgages, which had been refinanced(or leveraged with home-equity loans) to pay off unsecured credit cards which had been used to finance liabilities like cars, boats, college, home improvements etc.
But can you really blame someone for being handed easy money?
I mean think about it.. The media pushes the message because it is bought and paid for, just like the political parties and currency systems, and by the same people.
The message is to spend money you don’t have.
The government does that, why shouldn’t you?
And now, four years past Ground Zero of the recession, and easy money is still available. How can this be? And who can still qualify?
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Written by: Joshua Gayman
Yesterday I posted a status on my Facebook fan page stating, “For those between the ages of 18 and 24, the unemployment rate is at a staggering 46 percent according to a recent report by the Pew Center. That equals the highest unemployment rate for this demographic since reporting began in 1948.” A friend commented saying that she feels many people between the ages of 18 and 24 are lazy. Too some extent I can’t help but agree with this young lady(who is an educated young professional and works very hard). However, I have to agknowledge that there always has been, and always will be, lazy people. The difference is that right now there are too many people unemployed in this younger demographic to simply chalk it up to laziness.
The numbers can be deceiving, as the latest unemployment numbers have the rate down to 8.3%(Down from 9% one year ago). But things may not be as good as they seem, especially for those under 30.
If you are to account for people who have given up on looking for a job, unemployment soars from 8% up to 17%!(Source: Boston Globe) This number equals 5.4 Million lost-workers over the past 3 years and a huge loss in productivity for our nation. Losing this kind of productivity means that we will see a slower recovery, and have fewer people contributing to our nation’s output, less people buying goods and services, and less people paying taxes. These people are then much more likely to become poor, rely on government assistance, and develop mental health issues(too much stress). This means simply that 5 million people are now consuming and not producing, and are more likely to require money from a government that already spends nearly $1 Trillion more than it takes in every year.
For the future generation, unemployment is at an all time high(since they began reporting in 1948).
*Ages 18-24: 46% unemployment rate(source: Pew Center)
*Ages 18-34: more than 33% have gone back to school and taken on more debt because they can’t get a job.
*34% of those between the ages of 25-29 have moved back in with their parents, and almost 25% of those between 18-34 have!
*One in 5 have put off marriage or having kids because they don’t have the money 😦
TRANSLATION: Kids are not growing up, not producing, and not ready to take over for their aging parents or care for them when they retire.
Add college loans and entitlement programs like Social Security that transfer wealth from young to old, and you can see why kids are fleeing back to their parents’ houses and their childhood bedrooms.
Robert Kiyosaki(author of Rich Dad Poor Dad), puts it this way: “Rather than preparing the next generation to support our country, we’re taking their wealth, their jobs, and instead still taking care of them.”
2012 is an election year, so you can be sure the media and politicians will be serving the Kool Aid. Don’t drink it! Invest the time into yourself and increase your financial education! Invest to acquire assets that put money in your pocket before you buy liabilities that take money out!
My answer (of course) is it depends. It depends on your specific facts and circumstances.
Today, I’ll share some of the key factors to consider to help make this decision.
– When can you take distributions from your retirement plan without penalty?
– What is your expected return on investment inside of your retirement plan?
– What is your expected return on investment outside of your retirement plan?
– What will you do with the investment long term?
It’s important to not only understand the tax implication of using debt in your retirement plan, but also to understand how it can impact your investing. Many lenders are not willing to make a loan to a retirement plan without a personal guarantee. However, a personal guarantee, as noted above, could trigger tax. Lenders who are willing to lend to a retirement plan without a guarantee are usually not willing to lend as much as they would if there were a guarantee and the rate is usually higher.
It is extremely important to understand your leverage options inside and outside of your retirement plan before moving forward with your investment.
Another example is investments that create losses for tax purposes. Some investments, like rental real estate or oil and gas, often create losses for tax purposes even though they generate positive cash flow. Losses inside a retirement plan are typically lost because the retirement plan usually doesn’t have any tax for the losses to offset.
I’m constantly asked how to use leverage in different ways in a wealth strategy – and I’m glad people are asking because leverage plays a huge role in every successful wealth strategy.
Leverage is simply doing more with less.
Here are 3 of my favorite forms of leverage.
I think systems are one of the most important and powerful features of a wealth strategy.
Systems are simply the process or procedures to complete specific tasks. Systems provide the detail of the who, what, when, where and how something will be done.
Think about a franchise. One of the greatest values a franchise offers is its systems. The systems provide all the details about how to market, sell, fulfill and everything else involved in operating that franchise. A franchisee simply has to follow the systems.
Let’s say you invest in rental real estate. You should have systems for:
– Identifying the property to buy
– Purchasing / financing the property
– Renting the property
– Maintaining the property
– Reviewing the performance of the property
Systems don’t have to be complicated. They just need to document what needs to be done in a clear manner. Systems can be as simple as a checklist.
If you are just starting your wealth strategy, you may wonder why you need systems if you are doing everything.
Here’s 2 reasons why you need systems:
Your systems are the place to document the specific details of what needs to be done. They are also the place to document your best practices – your trade secrets. As you learn better ways to do things, document that in your systems.
Your systems enable you to leverage your time by making you more efficient while still getting the results you desire.
Many people start off doing everything themselves, but they usually have a goal to grow their wealth and hire others do the work. If you want to do this successfully, systems are imperative. Systems communicate your specific expectations without you having to be there.
Many people have wealth strategies that never reach their full potential because they are not able to give up control.
With systems, you don’t have to give up control. You’re giving up the specific tasks, but you are still in control. You control the systems.
When your systems are created, used and monitored properly, they will tell you when things are working and when they aren’t working. This allows you to focus your attention where it is most needed – this is a huge form of leverage in a wealth strategy.
#2: Your Wealth Team
Systems definitely take time to create. You don’t have do it all yourself though. This is where your wealth team comes in to play.
One of the best examples of leverage in a wealth strategy, and also one of my favorites, is a wealth team.
A wealth team is a group of advisors, coaches, mentors, employees, vendors and other contacts who assist you in building your wealth.
With a wealth team, you can leverage your time by hiring advisors, coaches, mentors, employees and/or vendors. But the leverage doesn’t stop there. This is just the beginning. You can also leverage your wealth team’s contacts, their resources, their knowledge – the list goes on and on.
Use your wealth team to help you create your systems. Leverage their resources and expertise to add value to your systems.
Once you’ve created your systems, share them with your team members so they can be part of the systems and contribute to the success of your wealth strategy.
Software is a wonderful form of leverage. Software allows us to do more with less every day.
Software can be an integral part of effective systems. When used properly, software can streamline many tasks while providing better information and results.
Software can be the driving force behind the systems. It can notify the who about the what, when, where and how. And, it can provide real time reports about how the systems are working. These reports are what help you stay in control.
How do you know what software to use?
Leverage your team’s knowledge – ask them what software you should be using. And, if you truly want to leverage your software with your systems, have a team member who is committed to integrating the two.
Using Leverage in Your Wealth Strategy
Think about how you use these 3 forms of leverage in your wealth strategy and identify ways that you can leverage them even more.
Focus on your wealth!
Founder & CEO
We chase misprinted lies
We face the path of time
And yet I fight
And yet I fight
This battle all alone
Thank God for NBA TV cuz they threw OT on LIVE of LA in Portland tonight here in Phoenix, AZ. Kobe is REDICULOUS! I am truly a Laker Hater these years and a huge Boston Celtics fan(RIVALRY), BUT, he’s Kobe Bryant.. And that play he called for himself to seal it coming around the whole half court, off 2 picks for a cur and then short jumper where he didn’t shoot, but “placed” it was, well, just Kobe bein’ Kobe..Which is really fun to watch…
Bad outcome tonight in Portland. I do love my hometown announcers tho, they crack me up.
Who’s got Heat tmrw who’s got CHI town? I’m goin with the Heat, how don’t you? Chicago is solid, but they are the #3 team for sure in the East. And comin’ right off of the All-Star break and now into the “stretch”(I hate how they call it the 2nd half of the season btw, there’s 26 games left of an 82 game season.. At least it was 82 last I checked, but it sure IS NOT 52…) Do you like how I used it as my title anyways?
Are there other fans out there that want to buy some Nicks gear now? NY got STAT and Melo, WOW! When you put them on paper, still don’t beat Miami or Boston, but that’s what they play for. And when you have a guy like Melo on the wing and a guy like Amare down low, with Chauny runnin the floor, it could get dirrty. That coach of theirs knows a thing or two also..
LA just doesn’t seem to me the team they have been the last 2 years. BUT, it’s still early when you put into perspective that it all comes down to a few 7 game series’, and they are the 2 time NBA Champs with (still) the best player in the game.
I still like my Celtics for the Championship. They took it 3 years ago over LA in the Finals, 2 seasons ago they got DEEP without their superstar Kevin Garnett, and last season were seconds away from the title again(if only it weren’t for that Black Mamba Kobe Bryant!!!)
Weird how the teams change and come back as you get older..
My Power Rankings 2 nights into the “Strech”
1. Boston Celtics – Rondo runs the offense like a vet, Ray Ray is literally the best shooter of all time, KG is the definition of a leader, and Paul Pierce is your man.
2. Los Angeles Lakers – Kobe.
3. Miami Heat – Lebron, D Wade, and Bosh are still just getting warmed up..
4. San Antonio Spurs – I hate em but they got the top records and they got mad experience, plus these guys have been playin together for years now.
5. Chicago Bulls – These guys are so good and are I don’t hear enought about them yet. They play amazing defense and crash the boards. Rose is legit and Noah gets it done, even tho I can’t stand him, or BOOzer for that matter..
6. New York Knicks – STAT AND MELO(and Chauncy Billups0 These guys will be moving up the list in the future.
7. Dallas Mavericks – Dirk still gets it done, gahh i love that guy. They’re playing great, just not getting as much love as they might be if they were playin in the East..
8. OKC – (I love that btw). Durant has led the NBA in scoring the last 2 years and this guy is going to be among the greatest to ever play some day.
9. Orlando Magic – these guys peaked. Dwight Howard is awesome, but he needs a Melo..
10. Alanta Hawks – They’re strong and they’re in the East. But They won’t go far in the East..
Honorable mention: Phoenix Suns
Born January 8, 2011 to Joshua Gayman and Alicia Tootle. Weighed in at 7 lbs 13 oz. 20.5 inches long.