Tag Archives: credit cards

Thinking and Doing

Have you ever started a project then found out you were missing a key piece of information, a required tool, or important ingredient? Typically when you set out to build something you organize your plans, set aside the time, gather your materials and with eager anticipation you begin. I’m sure we’ve all experienced that sinking feeling when you reach for something you’re sure you have, or that you know was working a minute ago – and – at the moment you’re ready to move forward – nothing. It won’t start, it’s missing, it just can’t be found.

Financially, this situation can occur in many ways, often when you’re looking for a receipt to return something to the store or at tax time. It might also show up when you’re sure you transferred money, paid a bill or sent a notice to change something in your financial portfolio, and based on your belief that that transaction had been completed, you set out to do something else only to discover that there wasn’t sufficient funds, or the bill didn’t get paid and you were charged fees, or your transaction wasn’t completed.

Whatever the situation is, the result is lost time, lost money, lost opportunity and stress. Unfortunately, these situations occur regularly and because our lives are bombarded with increasing amounts of information and ‘to do’s’ the day-to-day stress of handling even basic financial transactions can leave you overwhelmed, exhausted and intimidated to take on anything different.

Think about it: finding someone to talk to, making an appointment, completing the paperwork, filing the paperwork, getting set up to access, monitor and track the new account, strategy, or system, making sure there is proper paper and electronic bookkeeping for tax purposes, passwords, yearly accounting, perhaps record keeping for estate purposes, plus ongoing marketing information that comes in the statements and by email, and making sure you have proper security because it seems that someone, somehow will find a way to try to defraud you of your identity and your money. All this and that doesn’t include the overwhelming volume of choices to make in the first place

Let me tell you a story before you jump to conclusions that this message is just going to be another one of those pieces of information strategically designed to add to your stress, or full of empty promises.

A few weeks ago the newly launched MoneyMinding Foundation finally has its online programs ready to go live. Maybe you were one of the people who got excited about our mVillage and Project M home study program. Well, it turns out we (and about a dozen other companies) fell through a ‘corporate crack’ with 2 of the companies who were key ‘ingredients’ to our launch suddenly not supporting each other. We are a start up non-profit so didn’t have a lot of options except to find other solutions. Unfortunately those solutions don’t happen over night. This means our program launch has been more or less ‘on hold’ while we respond to your questions by email and phone and set up new systems.

All this is an important principle that has been put into practice during these past few weeks. That principle involves both thinking and doing. Actually, it’s more accurate to say it involves ‘not thinking’, and doing because of the significant connection between our thoughts and our actions which ultimately determine our outcome. This is likely not new information for anyone reading today, but perhaps the concept of ‘not thinking’ might be.

Our situation occurred after plans and strategies and resources were put in place and tested. This is different, than jumping out of the gate before preparing. Sometimes moving forward happens before all the specific plans and strategies are in place and that is part of the overall plan. Sometimes certain pieces are required and you will put a lot of time and energy and money into getting them ready before you move forward. Having a plan and rolling it out, to come up against an unexpected ‘curve ball’ is one thing. Not having a plan or strategy and jumping ahead and running into unexpected challenges is another thing. The latter situation will likely require you to go back to planning and strategizing. The former requires faith, patience and perseverance.

When you’re hit with a ‘curve ball’ in your plans, especially when you’re already cramming a lot of activity into a short period of time and you have expectations for a certain result to happen a certain way, at a certain time, your stress response is triggered by your thoughts being upset at the unexpected ‘problem’ that has to be resolved. The natural instinct is to immediately turn our thoughts towards finding a solution. When this happens it creates a distraction from all the enthusiasm, peace, hope, and enjoyment that the original plan or activity held.

This diversion away from the excitement will unfortunately create a pattern of thought that determines a pattern of behaviour and ultimately the results we experience. The original positive experience has now been turned into a problem solving process where we are taken out of the good while you work to regain control of the situation. The problem with problem solving like this is that ultimately you are constantly thinking while under stress which means that the solutions you come up with will be influenced by your need to remove the stress and regain control, not necessarily to achieve the original outcome.

Back to my story: our situation had obvious financial consequences in terms of time and money. The immediate response is to ‘solve the problem fast’. However, that thought process led to a full array of possibilities each with a variety of consequences and outcomes. This in turn led to overwhelm, which led to a state best described as analysis paralysis. I’m sure you know what I mean: too many options, not enough time, big consequences of making a “wrong” choice.

The answer ultimately is to STOP, breathe, pray, write, and wait, yet keep moving. The ultimate solution is to do what you can, when you can, with what you can – essentially to stop thinking, yet keep doing. Because the process of pushing through and searching endlessly for a ‘quick fix’ to get you back on track to get the results means you’re reinforcing thought patterns that ultimately are not conducive to experiencing those results we’re all looking for – financial or otherwise.

With all this actually still going on in the life of The MoneyMinding Foundation, I thought it valuable to share the situation with you. This is a real life situation that will show up in one way or another for all of us that can easily send us into a downward spiral of stress and keep us stuck if we don’t STOP the cycle of trying to control all the circumstances instead of staying calm and staying the course.

Useful or Useless Debt – new MoneyMinding Minute

Debt isn’t good or bad.  It just is.  And when you learn to understand its capacity to either increase or decrease your financial well-being you will understand that it can be an incredibly powerful wealth building tool.  The flip side of that of course, is that it can also work the opposite and negatively impact your ability to earn, manage and maintain wealth.  You can watch the latest MoneyMinding video here

 

Efficient Use of Financial Resources Creates Unlimited Financial Possibilities

The definition of financial planning is ‘efficient use of resources’.  Unfortunately the concept of resources seems to be commonly accepted to be a scarce resource that needs to be controlled so you don’t lose it.  An underlying values system that generally accepts money as something that is risky is indicative of a fear of losing this ‘scarce resource’.  On the other hand, a view of money that understands its unlimited potential will approach day-to-day spending, investing, and financing decisions in a completely different way.  Interestingly, either view will usually result in reinforcement of the initial belief making it extremely difficult to recognize the missed opportunities that could have been if a balanced and integrated perspective had been implemented instead.

The fear based, scarcity decision approach is indicative of the lack of foundational financial knowledge of our adult population. Unfortunately financial basics like we received in reading, writing and arithmetic were not part of a school curriculum because it wasn’t necessary 30-50 years ago.  This lack of training also unfortunately means a lack of respect and a misguided belief that the ad-hoc, trial and error, and hearsay learning is all that’s necessary.  This belief is especially unsettling when it is combined with an assumption that if someone has achieved a certain level of wealth that those people are the best teachers in the area of money.  Perhaps, but not necessarily.

Every situation is different and what someone else did to create wealth is not necessarily going to be applicable for everyone else.  Wealth creation is a very personal, emotional and situational subject, particularly when the financial marketplace is changing so dramatically and so quickly.  Experiential learning is obviously extremely valuable and can result in seemingly solid financial situations, but more often than not it can also result in misguided strategies and result in missed opportunities, often that the unsuspecting person doesn’t even realize where they could have done better.  The missing key is the basic knowledge to know what questions to ask of the professionals who will be providing the specific financial products and strategies for each unique and personal situation.

This means that within our families, organizations, and communities, we have to realize that the world or money has changed; that it is a very complex technical industry requiring specialized knowledge, training and expertise and that the average person has a responsibility to know what’s important to them so they can communicate their needs effectively to financial professionals to get answers.  It is certainly not prudent to expect a financial advisor to do it all for you, nor is it prudent to think you can do it all yourself.  Financial decisions, like medical decisions, are very personal and emotional and require a lot of understanding of a multitude of variables which require individual attention and often multiple financial experts.  The personal competence and confidence when making decisions are what financial experts are not trained in or compensated to provide for you.

This also means that to benefit from a balanced and therefore efficient use of financial resources an awareness of personal beliefs and priorities is the most important step.  This will help you find and communicate effectively with the professionals who have the technical ability to implement strategies and plans for you to experience goals beyond what you might have originally thought possible.  It’s also critical to recognize that money is not a scarce resource and that risk (or loss) is something that can be managed.  This again requires appropriate knowledge and skills to work with the professionals to earn, manage and maintain your finances efficiently.

Here are a couple examples of how knowledge (or lack of it) can potentially limit opportunities that on the surface might have previously appeared prudent, or risky:  

1.   Assume you have $10,000 in cash and you have a $10,000 balance on a credit card.  One strategy for these 2 resources would be to take the cash and pay off the credit card. This certainly makes sense because likely the interest charged on the credit card will be higher than what you’re getting on savings.  Another strategy would be to invest the $10,000 to try to grow it into more money because ‘it’s nice to have money in the bank.’

However, how many people would consider using the $10,000 cash to pay off the credit card, then taking the $10,000 available credit and investing it into a wealth creating opportunity such as a business, investment, real estate project?  There are potential tax benefits to doing this as well as the potential flexibility built into your financial situation.  Plus, if the wealth creating opportunity generated ongoing income which would cover the credit card payments and provide additional income for the investor now your money is working to create more wealth.  Not to mention that you would still get to experience the ‘money in the bank’.

What if the $10,000 available credit was used as an investment along with others and meant that your pooled money could access even more potential because collectively your funds were able to purchase a larger investment, property, business program?

In either of these 2 scenarios, your use of the $10,000 could enable continued growth and wealth building that was efficiently using resources in a useful way where not only your situation could benefit but potentially others as well.  Obviously there are some critical skills and knowledge and loss protection strategies that would be considered in using your financial resources in this way, so this is certainly not to advocate that this is the right situation for everyone.  It’s an example of how viewing money from an unlimited perspective requires development of additional foundational skills and knowledge in order to confidently and effectively take advantage of an integrated strategy such as this.

2.   Now consider an example of what a situation could look like if you have enhanced your skills, knowledge and confidence and now have $1,000,000 available cash.  One thing you could certainly do with the money would be to invest it into businesses (through stocks), or into real estate.  If you bought real estate for yourself with the money you could then own your home which is certainly a high priority for most people.  However, if you were considering an investment, you could purchase a property and receive rental income.  This is now good for you and for others.  However there is a considerable amount of missed opportunity and flexibility and therefore added risk with these all-or-nothing approach.

If you instead combined various financial resources, and pulled together proper legal, lending, investing, insurance, tax and loss protection strategies, your situation could effectively provide a more stable and abundant financial plan for earning, managing and maintaining your wealth plus providing opportunities for others.

You could potentially take a percentage of your $1,000,000 (say $250,000) and purchase a property worth $1,000,000 by taking a $750,000 mortgage.  You could receive rental or lease revenue as cash flow plus you would still have the $750,000 additional cash to invest and be available for other opportunities or situations that might come up if the market or in your personal situation.  You don’t have this flexibility or security with the ‘all-or-nothing’ approach.

Taking this one step further like we did with the $10,000 being pooled with others, if you took $250,000 cash and a mortgage for $750,000 to acquire a $1,000,000 property, you could potentially provide an opportunity of others as well by developing or expanding your property.  This means, that with a smaller amount of money you provide diversification, opportunity, flexibility, security, and an overall efficient plan to create wealth not just yourself, but for others as well.

This is obviously not to say, that everyone should go jump into highly leveraged, creative investment concepts.  Financial planning is about the efficient use of ALL resources, including careful review and planning of your personal circumstances, your knowledge, skills, and the professional advisors on your team.  All these resources will either come together effectively to expand wealth and provide opportunities, or limit potential depending on your underlying belief.  When money is viewed as a scarce resource it is typically from missing knowledge and skills or inappropriate application of partial knowledge.  Either way, not taking advantage of all the resources available to you, or applying them in an inappropriate is usually because of a fear of not having enough, or fear of running out, or losing out.  This means that even some seemingly good financial strategies can on the surface seem to be prudent, when in reality they are sacrificing future opportunities or exposing you to different risks.  Flexibility and consideration of changing circumstances are important factors.

The critical consideration is to be aware that decisions based on fear of loss, or from an underlying belief that money is a scarce resource, are really pointing to a need for the development of financial skills and knowledge.  With increased financial knowledge there is an ability to take advantage of opportunities through competent and confident decisions.   There are infinite possibilities, and million dollar decisions start with the realization that we all have million dollar opportunities.  Million dollar opportunities start by learning to ask different questions to fully understand the benefit of skills such as financial math, financial forecasting, loss protection strategies, integrative planning, values, community, and more. And when we do, the benefits will be experienced within your own family, your organization, your community and our society as a whole!

To read more like this and to uncover the proven system and strategies to evaluate opportunities to make decisions that are right for you, visit www.deathbymoney.com to read The Death by Money Report and to access my private members area, mVillage.