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Archive for April 2008

“They’re here!” Poltergeist, 1982

Writing a book is a daunting task, but publishing a book and getting it to market makes writing feel like a walk in the park on a warm, sunny spring day – like today in Colorado.

Money for Life

In April of 2008 I wrote…

2,000 copies of Money for Life…How to Thrive in Good Times and Bad will arrive at my front door within hours and will get carried to the processing stations we have built in our basement. Our first task will be to inform those who bought the e-book how they can get their promised paperback copy.

We’ll then be sitting on $60,000.00 of inventory, a reasonably well defined and practiced fulfillment process and only a glimmer of intelligence about how to sell those 2,000 books and realize the profit they hold. Not that we haven’t studied the “how to” of selling; we have. It’s just that the process is so convoluted and complex that implementing it becomes a frog-in-the-well exercise – move forward two hops and slide back one; and, the well is very deep.

We hope the thousands of visitors to this blog have found benefit from what’s written here almost daily and recognize that the content of the Money for Life Book addresses the same topics in greater depth and offers more guidance than is possible in a few hundred daily (almost) words.

Special Discount Offer

We encourage you to take advantage of a SPECIAL OFFER –>

The paperback version of  Money for Life…How to Thrive in Good Times and Bad is now available on this site for $19.95 – 33% off the Amazon price of $29.99

 

“Elementary, my dear Watson.” The Adventures of Sherlock Holmes, 1939

Nothing is more elementary than risk management when it comes to saving, investing and financial planning. If you, or your advisors, allow the focus to shift to the ever fickle “rate of return” you will soon find yourself out of money or in bankruptcy.

Gary Halbert is insightful. His perspective reflects the common sense that is often wanting in less mature pundits and advisors. I encourage you to read the excerpt from his recent newsletter. It is loaded with wisdom. Better still, take some time and link to the entire article and soak up some of the ideas and information that makes a successful saver and investor, and creates a successful personal economy.

Gary D. HalbertForecasts & Trends E-Letter

The Stock Market’s Decade-Long Drought

by Gary D. Halbert

April 22, 2008

IN THIS ISSUE:

  1. The Stock Market’s “Lost Decade”
  2. The Importance Of Risk Management
  3. Lesser-Known Investment Risks
  4. How To Determine Your Own Risk Tolerance

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The Importance Of Risk Management

Stock market volatility during the recovery phase of a sideways market is often significant, and the last couple of years have been no exception. This volatility is like riding a roller coaster for many investors. New interim highs make them feel that a market rally has taken hold, only to then experience yet another downhill run. Some who can’t stand the fluctuations in value get out of the market and sit on the sidelines, often without any plan for how to get back into the market later on.

 

 

 

No matter what the cause, the market’s recent action underscores the inherent risk of investing in the stock market. It also shows the danger of the buy-and-hold strategy, especially one that recommends investing in unmanaged “index” mutual funds. Sure, the markets will likely rebound eventually, but that will be of little consolation to investors who need their money now for retirement, or who may have bailed out of the markets at or near the bottom.

In past E-Letters, I have illustrated the relationship between losses and the amount of return you have to earn just to get back to where you started. Whenever I reprint this “break-even” table, I receive quite a response from readers indicating how this information opened their eyes to the risks they were taking. Because evaluating risks and avoiding large losses is so important, I have reproduced that break-even table below:

Amount of Loss
Incurred

Return Required
To Break Even

10%

11.1%

15%

17.7%

20%

25.0%

25%

33.3%

30%

42.9%

35%

53.9%

40%

66.7%

45%

81.8%

50%

100.0%

60%

150.0%

70%

233.3%

To demonstrate the point of this table, the S&P 500 Index plunged apprx. 45% from its high of 1527.46 during the bear market of 2000-2002. Buy-and-hold index fund investors who suffered that 45% decline had to earn a total cumulative return of over 81%, just to get back to where they were in March of 2000, and it took them over seven years to do so.

However, even though the S&P 500 Index hit a “new record” in May of 2007 (and eventually climbed as high as 1565.15 on October 9th), the subprime debacle and potential recession have taken buy-and-hold investors back under water again! The S&P 500 Index closed at 1390.33 last Friday, down 175 points from its 2007 record territory.

For Nasdaq investors, the situation is much worse. Those who rode the market all the way down, over 70%, will require a return of over 233% just to get back to even, and the Nasdaq Index is nowhere near that point now, some eight years later.

This further illustrates that it is critical to avoid incurring large losses in the first place. If you can keep losses to a minimum, then you spend less time having to make up for lost ground.

Read the entire article here –> http://www.investorsinsight.com/blogs/forecasts_trends/archive/2008/04/22/the-stock-market-s-decade-long-drought.aspx

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SPECIAL OFFER –> The paperback version of  Money for Life…in good times and bad – How to Thrive in the 21st Century will be released on May 1st, 2008. Everyone who buys the e-book version before May 1st will also recieve an autographed copy of the paperback when it is release. No special codes are needed. Thanks for making the purchase befor April 30th. Shipping and handling charges will still apply. –> www.TheMoneyForLifeBook.com

 

 

“Wait a minute. Wait a minute. You ain’t heard nothin’ yet!” The Jazz Singer, 1927

In our family lives, money moves pretty quickly. First, the government takes a large chunk before we even receive our spendable pay. Next, health care costs and “retirement” deductions reduce our take home pay even further. That money moves at electronic speed.

When we do get money into our checking accounts or our pockets, it flies out almost immediately to pay the rent or the mortgage, utilities, cable,  groceries, clothing, education, other necessities of living, and – most damaging – interest; on credit cards, car payments, store charge cards, payday loans, and on and on…

If you would like to get a handle on the velocity of your money, I encourage you to visit the Money for Life site below and order your FREE copy of Why Budgets Don’t Work. This brief white paper was written to benefit the regular subscribers to the Money for Life Newsletter and is the starting point for many who have gained control of the money that flows through their lives.

You will find the information and practices useful and reliable in every kind of economy – but especially in your personal economy.

Best wishes for success.

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SPECIAL OFFER –> The paperback version of  Money for Life…in good times and bad – How to Thrive in the 21st Century will be released on May 1st, 2008. Everyone who buys the e-book version before May 1st will also receive an autographed copy of the paperback when it is release. No special codes are needed. Thanks for making the purchase before April 30th. Shipping and handling charges will still apply. –> www.TheMoneyForLifeBook.com

Originally posted on February 17th, 2008

  • Comedians know about funny,
  • And beekeepers know about honey.
  • And chances are good
  • That both wish they could
  • Know more than they know about money.

Everything you do in life is affected by money and money affects everything you do.

Like the comedian and the beekeeper, you are an expert at what you do. You spend most of your time and energy knowing what you know so you can pursue the practice or career that you have chosen and increase the money that flows through your life. You , however, are not necessarily an expert with money. Like the comedian and the beekeeper, you’d probably like to know more about how to benefit from the money that enters your life when you do what you do.

Here’s a little exercise that might help. Make a list of the items you have purchased for about $30 during the past month: a couple of bottles of wine for dinner, lunch at an average restaurant, a shirt or blouse on sale, dry cleaning, a movie with a friend or spouse, music, a nosebleed seat at a ball game, a subscription to a magazine or newspaper, and on and on. Now, of all the items and events you have spent $30 on in the last 30 days, how many of them made some Behemoth wealthier instead of making you wealthier?

Well, here’s one more item that you can spend about $30 on  that lets you know more about money than you know now; that promises to make you wealthier; that reveals secrets that have been buried for decades by merchants of misinformation and financial snake oil sales reps; that lets YouBeTheBank

follow this link –> www.TheMoneyForLifeBook.com

You’ll never be sorry that you know more or own more and Money for Life…in good times and bad will help you with both.

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“Oh, Jerry, don’t let’s ask for the moon. We have the stars.” Now, Voyager 1942

This weekend my financial planner son-in-law and I are completing the renovation of a room addition that was made by former owners several decades ago. We are installing all new windows, doors, electric, lighting, plumbing, insulation, drywall, flooring and cabinets…whew! In other words, we are building a new room addition using only the basic framing from the old.

The cost of the project, including the cost of subcontractors, will be about 2% of the value of the house but will be creating about 8% more usable space, and that space will be fully updated 2008 space in a 1946 vintage house.

We Americans often overlook value in housing and opt for square footage or prestige. We sink lots of money into a residence that is more appearance than substance. We make improvements that satisfy personal wants and needs but don’t add true value. If you’re considering a home improvement, use a formula like the one above to determine the value the improvement will create.

A two dollar improvement that adds an eight dollar room is worth doing. An eight dollar improvement that adds a two dollar space is not.

Don’t ask for the moon when you already have the stars.

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SPECIAL OFFER –> The paperback version of  Money for Life…in good times and bad – How to Thrive in the 21st Century will be released on May 1st, 2008. Everyone who buys the e-book version before May 1st will also receive an autographed copy of the paperback when it is release. No special codes are needed. Don’t be an April fool; make the purchase before April 30th. Shipping and handling charges will still apply. –> www.TheMoneyForLifeBook.com

“Greed, for lack of a better word, is good.” Wall Street, 1987

Wes thought himself a pretty well informed financial advisor and planner. For years he’s told his clients to max out their 401(k) plans and put as much as possible into IRA’s and other tax sheltered programs. His premise is that taxes saved today are better than taxes paid later; that tax rates in retirement will be less than tax rates during one’s working career; that using the government’s money is always better than using one’s own money.

He followed his own advice in this regard and was now about to retire. To test the theory behind his 40+ year practice, Wes looked back over the strategies he used during his working life. He was shocked when he realized that the taxes he saved were nothing more than loans that the government was granting him and millions of other Americans. He finally sees that the taxes - also known as ”interest” – he would pay during retirement greatly exceeded the benefit he gained from the deductions – also known as “loans” – the government granted him earlier in life.

Wes had charts and graphs and hypothetical illustrations that “proved” his theories – theories promoted by the vast majority of financial advisors and planners. But, now Wes is faced with the reality that his successes are going to cost him much more in post retirement taxes than the taxes he saved.

But wait! The issue isn’t really about taxes. Isn’t the real issue net income after taxes?

Yes and no. Wes saw that his sophisticated planning and disciplined investing created a significant pool of money over the years and his retirement income would be more than adequate to his needs. He also saw, however, that had he followed a less sophisticated and less government dependent approach he could have had an equivalent or even better retirement income and pay few if any taxes, and he would be able to pay forward his money-wisdom and a much greater portion of his wealth to those he cared about.

“Greed, for lack of a better word, is blind.” Dr Agon Fly, 2008

Using other people’s money – even if it’s the government’s – is never ever a wise financial move. Learning to control the money that flows through your life in a way that let’s You Be The Bank is safer, steadier and more secure.

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SPECIAL OFFER –> The paperback version of  Money for Life…in good times and bad – How to Thrive in the 21st Century will be released on May 1st, 2008. Everyone who buys the e-book version before May 1st will also recieve an autographed copy of the paperback when it is release. No special codes are needed. Don’t be an April fool; make the purchase befor April 30th. Shipping and handling charges will still apply. –> www.TheMoneyForLifeBook.com

“Today, I consider myself the luckiest man on the face of the earth.” The Pride of the Yankees, 1942

The final proof of Money for Life,,,in good times and bad was sent to the printer today. Now the work of getting this amazing document that recalls the teachings of the world’s wisest financial minds from millennia past into the hands, minds and hearts of Americans begins in earnest
Thanks to all who read this blog for your support and encouragement.

I am exhausted today from the emotional and intellectual effort of proofing so I am ending this blog post early.

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Money for Life…in good times and bad – How to Thrive in the 21st Century will be released on May 1st, 2008. Everyone who buys the e-book version before May 1st will also receive an autographed copy of the paperback when it is release. No special codes are needed. Don’t be an April fool; make the purchase before April 30th. Shipping and handling charges will still apply. –> www.TheMoneyForLifeBook.com

“If you build it, he will come.” Field of Dreams, 1989

Bernice and Morrie were born poor. They want to escape the demands of a personal economy based on systematically acquiring wealth through saving, debt elimination and building equity in investments that are fully paid for. They are always looking for easy ways to get more money and more of the stuff that money can buy.

 

Bernice and Morrie are the perfect candidates for every scam that comes down the road. The scammers – even the ones with high visibility and having great reputations like Bear-Stearn – know that any product or investment that promises easy money attracts people who are looking for easy money.

 

Whether it’s a dishonest sales rep selling a product, a shady advisor selling an investment, one of the financial pundits on television or radio, an infomercial promising easy wealth in real estate investing, a book or seminar guaranteeing profit without risk or even the US Government promising a comfortable retirement based on current tax deductions (think about that for a minute) - the con artists know that if they build it, some will come.

 

Bernice and Morrie are trapped in a dysfunctional financial model that incessantly chants its mantra: “You can have everything you need and anything you want as long as you have enough credit!” You can have the sixty inch flat panel TV from the big box store, the new SUV, the dream vacation, the lavish “it-only-happens-once-in-a-lifetime” wedding, the upscale home in the hottest new neighborhood, a perfect retirement based on current tax deductions – a disguised form of credit.

 

To this way of thinking “I can afford it” really means you have enough income to make the payments – including huge amounts of interest and future taxes. It whispers that you only get to use the things you “buy”; that you really don’t own them. But, it shouts that just “having” them proves your wealth and worth. This model is called the Debt Paradigm.

The corollary of the debt paradigm mantra that glorifies credit is the one that says it’s easy to become wealthy; just follow the advice of the TV pundits, the financial media and the advertising of the Behemoths and you too can be a Donald or an Oprah.

BUNK!

This model is designed to make others wealthy at your expense. It makes bad decisions feel good.

Bernice and Morrie discovered the fallacy of this approach in 2001 and 2002 when the lost most of their wealth to the completely unpredictable stock market and then lost most of their home equity in 2006 by following the advice to mortgage their home to the max and “invest” – aka gamble – their equity.

Fortunately Bernice and Morrie are still relatively young; in their mid forties. They have restructured their personal economy;

  • they bought a smaller home
  • they are using an equity acceleration program to pay off the mortgage in 10 years or less
  • they are contributing to cash value life insurance policies on themselves to build their personal “banks”
  • they are committed to use only those banks to borrow for future consumer purchases so they can recapture all of the principal and interest that they would otherwise pay to credit grantors
  • they are adding money to their children’s “banks” and teaching them how to borrow and repay that money when they need it for education, auto-purchases and even their homes

Bernice and Morrie have abandoned the Debt Paradigm and adopted the Money for Life Model.

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SPECIAL OFFER! –> The paperback version of  Money for Life…in good times and bad – How to Thrive in the 21st Century will be released on May 1st, 2008. Everyone who buys the e-book version before May 1st will also receive an autographed copy of the paperback when it is release. No special codes are needed. Don’t be an April fool; make the purchase before April 30th. Shipping and handling charges will still apply. –> www.TheMoneyForLifeBook.com

 

 

 

Albert Einstein said, “The significant problems we have cannot be solved at the same level of thinking with which we created them.”

The 50 page leather bound financial plan that you receive from the well known company with the large advertising budget is at best a snapshot of a fantasy; it represents the “level of thinking” that has America in debt up to its eyeballs with a negative savings rate for the past three years. It is out of date when you receive it and out of touch with the reality of your life’s daily challenges.

The typical financial plan wants for wisdom.

Think about it. Do you rush to the bookshelf to pull out your neatly bound financial plan when your family faces a crisis and you need money?

Ask yourself how you’d feel if, instead of unfounded fantasies in a fancy leather binder…

  1. You were free from debt-to-others; no mortgage, no car payments, no credit card bills or store charge card balances, no home improvement balances at the home improvement center…no debt of any kind
  2. You had an income you didn’t have to work for, you couldn’t outlive, was protected from inflationary pressures, and wasn’t decimated by interest payments and taxes every month
  3. You had ready money to take care of yourself and your family when some planned or unplanned life event required it – job loss, college for the kids, illness or disability, a long awaited second honeymoon, long term nursing home expense
  4. You had a secure tax free legacy of your wisdom and your wealth that you could pay forward on your terms to those you care about.

These are the Four Pillars that are the framework of all stable financial structures because they rest on a foundation of money that you – and you alone – control.

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SPECIAL OFFER! –> The paperback version of  Money for Life…in good times and bad – How to Thrive in the 21st Century will be released on May 1st, 2008. Everyone who buys the e-book version before May 1st will also receive an autographed copy of the paperback when it is release. No special codes are needed. Don’t be an April fool; make the purchase before April 30th. Shipping and handling charges will still apply. –> www.TheMoneyForLifeBook.com

“Love means never having to say you’re sorry.” Love Story, 1970

The second question that came up about Flo, Many Jane and Vern was, “What happens to the relationship with the kids if Mom uses a Money for Life Guide instead of Vern, who is in a competitive position?”

Vern worked for a Behemoth – a large publicly held corporation or government agency. He was bound to a set of practices designed by his employer. The Behemoths and their minions generally have three goals built into whatever they do.

  1. Get as much of the customer’s money as possible into the Behemoth’s coffers
  2. Sell investment and insurance products that produce the highest income for the Behemoth
  3. Restrict the activity of its brokers to avoid law suits by disgruntled customers

The Money for Life Guide might have been able to explain the principles and practices that s/he used to create the foundation and framework for Flo to Mary Jane and Vern. It’s more likely that the peace of mind and security that accrued to Flo by following the Money for Life Guide’s advice would have been evident to the kids and caused them to learn more.

In any event, it is seldom wise and never the responsibility of parents to conduct business with children – especially when the future security of the parent is at stake, as it was with Flo. If Mary Jane and Vern were honestly concerned about Flo and her future they would recognize this themselves and accept Flo’s decision.

“Love means never having to say you’re sorry.”

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SPECIAL OFFER! -> The paperback version of  Money for Life…in good times and bad – How to Thrive in the 21st Century will be released on May 1st, 2008. If you buy the e-book version before May 1st, you’ll also receive an autographed copy of the paperback when it is released. No special codes are needed. Make the purchase before April 30th. Shipping and handling charges will still apply. -> http://www.themoneyforlifebook.com/

“You know how to whistle, don’t you, Steve? You just put your lips together and blow.” To Have and Have Not, 1944

Yesterday I talked about Jerry’s widow Flo. I described how her daughter Mary Jane and her son in law Vern failed her and left her in a state of near poverty. The blog got a couple of questions that motivate a follow-up.

The first question was, ”What would a Money for Life Guide have done for Flo?” Knowing how to deal with money and knowing how to whistle do not come naturally and Flo wouldn’t have a great deal of time to learn.

Jerry died at age 63. He left Flo, age 62, with $250,000.00 in life insurance, almost $200,000.00 in IRA money, a $190,000.00 home that was paid for and $90,000.00 in savings and bank CDs.

A Money for Life Guide would have diversified Flo’s investments. S/he would have placed the life insurance proceeds and IRA money into a variety of secure, guaranteed income annuities. These would deliver initial cash flow of about $2,250.00 per month without using any principal. Flo’s income could increase if the underlying investments performed well, but would never decrease.

Flo also qualified for $1,800.00 per month in Social Security benefits. This benefit also has an inflation hedge built in. In other words, Flo would be debt free – remember that her home was paid for – and have an income of over $4,000.00 per month that she didn’t have to work for but that she wouldn’t outlive.

Flo’s Money for Life Guide would also move much of the $90,000.00 that was in the bank into a cash value life insurance policy over a period of four or five years. This creates a death benefit legacy for her daughter and for her possible grandchildren.

The cash values in her life insurance policies are still accessible by Flo if she needed them for any reason. In addition, the principal amount in her annuities, along with the equity in her home serve as Flo’s hedge against future medical and long term care expenses.

To summarize: Flo has set the four pillars of a successful personal economy. She is

  1. debt free,
  2. has an income she doesn’t have to work for and she won’t outlive,
  3. have money to deal with life’s surprises and
  4. leaves a legacy of wisdom and wealth for those she cares about

Finally, Flo continues to work part time at her passion but does not earn enough to reduce her social security. This money is being deposited into another cash value life insurance policy – another “bank” – that Flo can access if and when she ever needs it and add to her legacy if she doesn’t.

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SPECIAL OFFER! –> The paperback version of  Money for Life…in good times and bad – How to Thrive in the 21st Century will be released on May 1st, 2008. If you buy the e-book version before May 1st, you’ll also receive an autographed copy of the paperback when it is released. No special codes are needed. Make the purchase before April 30th. Shipping and handling charges will still apply. –> www.TheMoneyForLifeBook.com

“We rob banks.” Bonnie and Clyde, 1967

Florence was a teen during WWII and one of a dozen children. She and her husband, Jerry, had only one child and lived a very comfortable life in one of the nicer neighborhoods of a medium sized mid-western town.

Flo, as she was known to her friends and family, was widowed a few years ago. Jerry had always managed their money, so Flo was not really ready when it came to taking charge of the families finances. In desperation but with confidence she turned to her daughter Mary Jane, an accountant, and her husband Vern, a broker for one of the Behemoths.

As it turns out, Mary Jane and Vern could have been named Bonnie and Clyde. What Vern didn’t lose of Flo’s money in the market, Mary Jane spent.

Today Flo is living on Social Security, income from a reverse mortgage, and a small pension; her credit card balances are also creeping upward. The six figure life insurance policy proceeds and substantial savings that Jerry left her are gone. Her daughter and not-too-bright-or-honest son in law Vern are promoting a program that has families taking all of the equity out of their homes and putting it into financial products that promise amazing returns but guarantee nothing.

Bonnie and Clyde, as reprehensible as they were, were at least honest about what they did; “We rob banks.” They didn’t want the peoples money. They wanted the banks’ money.

Money for Life…in good times and bad is a book that teaches you how to handle your money in a way that lets YouBeTheBank, and also teaches you how to keep your money safe from modern day Bonnies and Clydes.

If Flo had been advised by a Money for Life Guide, she would still have all of her money, no debt, a significant income she wouldn’t outlive, and a legacy to leave to her grandchildren – and perhaps to Mary Jane and Vern if they chose to follow and teach Money for Life instead of using every scheme that came along to put other people’s money into their pockets.

SPECIAL OFFER! –> The paperback version of  Money for Life…in good times and bad – How to Thrive in the 21st Century will be released on May 1st, 2008. Everyone who buys the e-book version before May 1st will also recieve an autographed copy of the paperback when it is release. No special codes are needed. Don’t be an April fool; make the purchase befor April 30th. Shipping and handling charges will still apply. –> www.TheMoneyForLifeBook.com

“I’ll get you my pretty, and your little dog too.” The Wizard of Oz, 1939

A commercial that is currently running on TV explains how easy it is for you to move your money from wherever it is now into “the investments you need” and the coffers of the company running the ad. It’s their way of saying “I’ll get you my pretty…”

The problem with this ad and so many others like it is that most Americans don’t need investments. Most Americans NEED:

  • ~ to get out of debt
  • ~ to save money so they can turn it into income they don’t have to work for and that they can’t outlive
  • ~ to insure that they can pay the bills when the unexpected happens – and it always does
  • ~ to teach those they care about how to stay out of debt, how to avoid the BS of the Behemoths about “needing” investments, and how to be their own bankers

I once asked a group of small business owners what they would call a person who accomplished these four goals. I got several answers but the one that garnered the most attention – and laughs - was made by a woman that owned a drapery company: “I’d call that person” she said, “a figment of your imagination.”

She was and is wrong. Many Americans have discovered that being one’s own banker is a safe and sure way to achieve these goals – a way that is possible for everyone who chooses it. You can do this and Money for Life…in good times and bad gives you the road-map, the tools and the guidance to do it.

SPECIAL OFFER! –> The paperback version of  Money for Life…in good times and bad – How to Thrive in the 21st Century will be released on May 1st, 2008. Everyone who buys the e-book version before May 1st will also receive an autographed copy of the paperback when it is release. No special codes are needed. Don’t be an April fool; make the purchase before April 30th. Shipping and handling charges will still apply. –> www.TheMoneyForLifeBook.com

“I’m mad as hell, and I’m not going to take this anymore!” Network, 1976

The economy is in a slump. The housing market is in a mess. The money markets are in confusion. The typical American family has been led into a dungeon of debt.

Not so with the members of the US Congress. They are getting richer and now they want to raise your taxes. They say it’s a tax increase for the richest Americans.

The truth is, increasing the current tax burden on Americans will not affect the richest in a significant way. If you are earning a million or two or more a year – and there are many earning more than that - your lifestyle will not be dramatically affected by a tax increase. Yeah, you’d be mad as hell but you wouldn’t end up at the soup kitchen.

But, if you are a typical American family, you could be driven to the poor house by the irresponsible tax and spend US Congress. Here’s what you can expect if the unconcerned and politically motivated Washington elite get their way:

“Why this large tax increase? The tax code changes enacted in 2001 and 2003 are scheduled to expire at the end of 2010. If they do, statutory marginal tax rates will rise across the board; ranging from a 13% increase for the highest income households to a 50% increase in tax rates faced by lower-income households. The marriage penalty will be reimposed and the child credit cut by $500 per child. The long-term capital gains tax rate will rise by one-third (to 20% from 15%) and the top tax rate on dividends will nearly triple (to 39.6% from 15%). The estate tax will roar back from extinction at the same time, with a top rate of 55% and an exempt amount of only $600,000. Finally, the Alternative Minimum Tax will reach far deeper into the middle class, ensnaring 25 million tax filers in its web.” The Coming Tax Bomb, The Wall Street Journal, 4/8/2008 (emphasis added by the blog)

We do not have much to say about the workings of the US Government other than our vote. As powerful as that is, when you have an entrenched aristocracy like the one in DC, even the right to vote does not allow for dramatic changes.

It is incumbent upon each American to develop individual financial programs and practices to protect him or her self from the wild and unpredictable misadventures of the Behemoths – the Federal Government being one of them. There is a way.

You can handle your money and your personal economy so that you can be your own banker and exercise much greater control of the money that flows through your life. This way is clearly defined in Money for Life…in good times and bad.

SPECIAL OFFER! –> The paperback version of  Money for Life…in good times and bad – How to Thrive in the 21st Century will be released on May 1st, 2008. Everyone who buys the e-book version before May 1st will also recieve an autographed copy of the paperback when it is release. No special codes are needed. Don’t be an April fool; make the purchase befor April 30th. Shipping and handling charges will still apply. –> www.TheMoneyForLifeBook.com

“You’re gonna need a bigger boat.” Jaws, 1975

I read and/or review dozens of articles dealing with economics, saving, investing, and other money related topics every day. The article below illustrates that many financial writers are blind to the fact that the Behemoths they rely on for information create complexity where simplicity is warranted in order to sell more of their investment products.

I could write a dozen blogs just from the brief excerpt below, but I want to focus on just one clause; “…determining types of investments to make and knowing how much they will need to retire…” First, make note that the author addresses two different topics in just a few words; “investments” and “how much they will need to retire” – that could be savings, income, or just plain money.

You can’t spend investments. They will not pay your post-retirement medical bills (estimated at over $200,000), nor your probable long term care expenses (estimate to be over $350,000). Investments are based on a risk-reward algorithm not on your need for money to pay your bills. The Behemoths sell investments for money; investments are not money.

Investments may or may not deliver dividend income to pay monthly expenses. Investments in companies like Enron, Global Crossing, Qwest, MCI and other “highly recommended” stocks produced poverty instead of wealth. Mutual funds rise and fall with the tides of the markets and, if you need money at low tide, you’re just out of luck.

Investment “returns” are a function of assumed appreciation in value and dividends paid. Returns may or may not occur and may not translate into money or income when you retire. Retirement planning is a shibboleth perpetuated by the Behemoths so they can sell you more investments.

What you really need is a system for managing the money that flows through your life; a system that works all the time instead of the robotic thinking that goes into “retirement planning” and assumes that the process is complete when you reach the magic moment of retirement.

The retirement planning model doesn’t work. You need “a bigger boat.” Money for Life as a better alternative to the myth that there is such a thing as retirement planning.

SPECIAL OFFER! –> The paperback version of  Money for Life…in good times and bad – How to Thrive in the 21st Century will be released on May 1st, 2008. Everyone who buys the e-book version before May 1st will also recieve an autographed copy of the paperback when it is release. No special codes are needed. Don’t be an April fool; make the purchase befor April 30th. Shipping and handling charges will still apply. –> www.TheMoneyForLifeBook.com

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“Affluent and Non-Affluent Find Similar Roadblocks in Retirement Planning

By Stacy Schultz
April 7, 2008

A quarter of Americans have not yet started planning for retirement, according to a new survey released by Bank of America.

The study of 1,000 interviews surveyed 750 nationally representative Americans and 250 affluent Americans (with $100,000 to $3 million in investable assets). Both groups identified two key areas of confusion about retirement planning: determining types of investments to make and knowing how much they will need to retire. However, non-affluent Americans also cited when to retire and how to start planning as difficulties.”
Read the rest here –> http://www.financial-planning.com/asset/article/563421/affluent-and-non-affluent-find-similar-roadblocks.html?pg

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“You’ve got to ask your self one question: ’Do I feel lucky?’ Well, do ya punk?” Dirty Harry, 1971

Jim and Janet have no children and they still struggle at age 40-something to save and invest enough to secure their financial future. They were presented with the opportunity to buy their first home three years ago by one of Jim’s friends who was in the mortgage business.

They were convinced that it was a deal that could not lose;

  • no money down
  • low monthly payments for two years
  • extra cash at closing to pay off some credit card debt and, most of all,
  • the assurance by the mortgage seller that the worst that could happen if the payments got too burdensome would be that the house would have appreciated in value and could be sold for a profit.

Jim and Janet were feeling lucky. They took the deal. Today the house is worth less than they paid for it, the payments are unaffordable, the credit cards are maxed out again and selling the house in a neighborhood where over 40% of the homes are already in foreclosure is nearly impossible.

Jim and Janet have an alternative that most don’t have. They have no children. Because of that Jim and Janet are both seeking part time work to supplement their income and to avoid foreclosure and probable bankruptcy. Not a pleasant situation.

The Behemoths and their minions have convinced millions of Americans that owning a home at any cost is worthwhile.

BUNK!

Had Jim and Janet adopted the principles and practices of Money for Life, they would not have prematurely bought the house. They would have started a “bank,” paid off their debt and saved money for a down payment. Had they done that, they could today buy a home in a solid neighborhood for a good price, with a low interest conventional mortgage, for payments they could afford now and into the future. Jim and Janet are not alone, however. The excerpt from US News and World Report below demonstrates this.

If you would like to avoid situations that can create financial difficulty for you and your family, I encourage you to take a look at www.TheMoneyForLifeBook.com and take advantage of the FREE white paper. Or better still the SPECIAL OFFER! –> The paperback version of  Money for Life…in good times and bad – How to Thrive in the 21st Century will be released on May 1st, 2008.

Everyone who buys the e-book version before May 1st will also receive an autographed copy of the paperback when it is release. No special codes are needed. Don’t be an April fool; make the purchase before April 30th. Shipping and handling charges will still apply. –> www.TheMoneyForLifeBook.com

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“Buyers are well-informed and rational. Investment vehicles might be remarkably innovative, but consumers seem to be as gullible as ever. It’s obvious now that some home buyers over the past few years took out loans far beyond what they could afford, with foreclosure probably inevitable even if house prices had continued to rise. But even people who consider themselves financially literate aren’t so shrewd. A 2007 study by the Federal Trade Commission, for instance, found that:

– 20 percent of borrowers looking at mortgage disclosure forms couldn’t identify the interest rate amount

– 24 percent couldn’t tell which loan was less expensive, when looking at two different applications

– 30 percent couldn’t tell if the loan included an expanded “balloon payment” at some point

– 44 percent couldn’t tell if there was a prepayment penalty for refinancing within two years.”

Excerpted from U.S.News & World Report
4 Sub-prime Myths That Could Derail Reform
Friday April 4, 1:56 pm ET
By Rick Newman

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“The stuff that dreams are made of.”  The Maltese Falcon, 1941

Jonathan and Stacey have an unconventional family. Stacey is a highly compensated executive and is rising rapidly in her profession. Jonathan is an innovative and creative artist. Jonathan stays at home with the couples two children, works on his art when he can and dabbles on eBay as a way of making a few extra dollars to feed his passion.

His eBay adventure didn’t start out as an avocation, however. Like many other easy money schemes such as multi-level-marketing programs, foriegn exchange trading, precious metals deals, or day trading on the stock exchanges, it began as a fantasy about a fortune. It wasn’t long, though, before Jonathan and Stacey both recognized that success was unlikely. When Stacey became pregnant with their second child – well, that sealed the deal on the role of eBay in their financial future.

Reality and common sense tell us that there is no such thing as “easy money.” There are ways of making money – like those mentioned above – that are particularly suited to certain individuals; that are fulfilling, fun and rewarding if you and that way of making money are compatible. If your personality, skills and psyche are not in synch with a particular profession or business opportunity, failure is assured.

You might make a lot of money, but it won’t be easy, you’ll not be happy, and eventually you’ll find a way out of that situation – drugs, infidelity, alcohol, eBay, fishing, golf or some other distraction. The same holds true for financial practices. We all have two professions; one is the career of our choosing; the second is being our own banker and managing the money that flows through our lives.

Many individuals and families ignore their second profession or see it as a nuisance. That’s because their personality, skills and psyche are out of synch with the way they deal with their money. Americans have been led to believe that their personal economies are best served by “plans” devised by Behemoths – large, publicly owned financial institutions. Those “plans” are the counterparts of the quick and easy money schemes.

It is no more valid to expect to succeed using the standardized robotic thinking that goes into such plans, than it would be to expect every American to succeed on eBay.

There is a better way for you to take control of the money that flows through your life, a much better way; one that is adaptable to every American and to every situation; one that is based on principles and practices that have been known to the money-wise for millennia and practiced by financially successful Americans from the days of the Founding Fathers until today.

You can learn about this amazingly simple and effective approach by following this blog for a year or two or you can spend $29.95 and buy a book that will tell you most of what you need to know to debunk the bull of the Behemoths and escape the Dungeon of Debt they have built for you.

The Book? Money for Life…in good times and bad – How to Thrive in the 21st Century

SPECIAL OFFER! –> The paperback version of  Money for Life…in good times and bad – How to Thrive in the 21st Century will be released on May 1st, 2008. Everyone who buys the e-book version before May 1st will also receive an autographed copy of the paperback when it is release. No special codes are needed. Don’t be an April fool; make the purchase before April 30th. Shipping and handling charges will still apply. –> www.TheMoneyForLifeBook.com

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The WordPress blog system that we use to publish this blog has been revised. The revisions are dramatic and extensive so it will take some time to figure out how to take advantage of all the new stuff.

In the meantime, if you’ve just found The Money for Life blog we encourage you to read some of the previous posts and the separate pages listed on the right to familiarize yourself with the wealth of information and insights about money, saving, spending, investing and other topics that can help you manage your personal economy.

You may also want to take a look at this SPECIAL OFFER! –>

The paperback version of  Money for Life…in good times and bad – How to Thrive in the 21st Century will be released on May 1st, 2008. Everyone who buys the e-book version before May 1st will also receive an autographed copy of the paperback when it is release. No special codes are needed. Don’t be an April fool; make the purchase before April 30th. Shipping and handling charges will still apply. –> www.TheMoneyForLifeBook.com

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“Fasten your seatbelts. It’s going to be a bumpy night.” All About Eve, 1950

John and Marion’s business is just beginning to pay off after two years of struggling to get started. Unfortunately, their business is not recession proof so making sure their personal economy is prepared for the negative effect a major slump might have on it – and them – is critical.

When the economy gets bumpy, there are two of the Four Pillars to which you need to pay close attention; freedom from debt and having ready cash to deal with the surprisingly unsurprising surprises that life sends your way. This is especially true for small business owners who rely on cash flow more than the employed worker.

John and Marion have decided to re-organize a few things to assure liquidity if a down-turn affects their personal economy to a greater extent than they anticipated.

  • ~ First, they refinanced their home at a significantly lower interest rate, so their monthly payments remained about the same.
  • ~ They also “harvested” an extra $20,000.00 of equity from the refinancing and used that money to eliminate all of their other debt – mostly credit card debt – freeing up several hundred dollars each month.
  • ~ That leaves them with just one other debt to repay; a loan they made to themselves from the cash values of their life insurance policies. This loan will be eliminated quickly using the extra cash flow. This will restore the cash values in their policies. These values are guaranteed to grow every year regardless of what happens in the general economy and become the family’s and the business’s first line of defense against life’s surprises.
  • ~ Their mortgage then becomes their only debt.
  • ~ They also obtained a $100,000 equity line of credit today that they may not be able to get later. Should the business encounter “a bumpy night,” and their business or their personal economy requires it, John and Marion can tap into their HELOC.

There is one aspect of John’s and Marion’s personal economy that would be troublesome in a severe recession; their investments. Most of the money they have invested is in mutual funds that could lose significant value in a recession. The couple has decided to watch their mutual funds and the market more carefully in the months ahead and to move the money into cash or cash equivalents if the values begin dropping a lot.

Their mutual fund sales rep suggests that they should ride out the “bumpy night” and that the market will rebound – eventually. John and Marion believe that they would rather lose the potential for an eventual gain in return for a smaller guaranteed one today.

Money for Life…in good times and bad taught John and Marion the strategy that armors them against recessions, depressions, inflation, deflation or stagflation. Ask yourself whether or not that strategy makes as much sense for you as it does for them. If so, then take advantage of this…

SPECIAL OFFER! –> The paperback version of  Money for Life…in good times and bad – How to Thrive in the 21st Century will be released on May 1st, 2008. Everyone who buys the e-book version before May 1st will also receive an autographed copy of the paperback when it is release. No special codes are needed. Don’t be an April fool; make the purchase before April 30th. Shipping and handling charges will still apply. –> www.TheMoneyForLifeBook.com E-Book Cover

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This blog has been operational for about three months. It has welcomed almost 3,000 visitors who have read one or more of the 160+ posts that have appeared on the screen during that period.

Thanks to all that have come to visit. Thanks to the many who have bought the amazingly groundbreaking e-book.

On May 1st the paperback Money for Life…in good times and bad (sorry about the fuzzy cover image) will be available on the blog and from the author at www.YouBeTheBank.com

If you have found value and perhaps a little entertainment here, tell a friend or two; ask them to visit and take advantage of the special offer made on April the 1st…see below.

E-Book Cover

SPECIAL OFFER! –> The paperback version of  Money for Life…in good times and bad – How to Thrive in the 21st Century will be released on May 1st, 2008. Everyone who buys the e-book version before May 1st will also receive an autographed copy of the paperback when it is release. No special codes are needed. Don’t be an April fool; make the purchase before April 30th. Shipping and handling charges will still apply. –> www.TheMoneyForLifeBook.com

  • Here lies the body of William Jay
  • He died maintaining his right of way –
  • He was right, dead right as he sped along,
  • But he’s just as dead as if he were wrong. Boston Transcript, date unknown

Kate and Ernie followed all of the financial rules that the media and their advisors gave them; max out the 401(k)’s, keep a large mortgage on the house and invest the equity elsewhere, three to six months emergency money is enough, the “market” is reliable, buy term insurance. Then, life delivered a knock out blow. First Ernie lost his job to a plant relocation and a month later Kate got laid off after a merger. OK, they had 6 months of expenses saved up and their severance and 401(k)’s were there if they needed them.

After a couple of months of no work and no income Kate was diagnosed with teminal cancer. Over the next year most of the assets that the couple had acquired went to treatments that were not covered by their insurance. They cashed in the investments that they bought with the equity in their home, got behind on the mortgage, lost the cars, spent the emergency money, dipped into the 401(k)’s and ran the credit cards to the limit. Kate died at the age of 29 and Ernie was broke and filed bankruptcy at the age of 30 – the term insurance was the first thing they dropped to control their spending when they first got laid off.

Blindly following rules about money is just as foolish as following the “rules of the road” when doing so puts you at risk. What if Kate and Ernie had chosen to think through their decisions about money instead of just doing what conventional wisdom dictated. What if they focused their energy on building a foundation of money that was entirely under their control and that supported the Four Pillars that are the framework of every successful personal economy.

I can’t give all the details in a blog post, but in summary, if they had paid their mortgage down over the seven years that they had it and even reduced it with the few bonuses and gifts they received, they would have had access to almost three years of living expenses with an equity line of credit. If they had put some of the money that they were contributing to their 401(k)’s into cash value life insurance they would have had an additional two years of living expenses and, more importantly, when Kate was diagnosed with cancer the policy’s waiver of premium benefit would have taken over her payments; when she died Ernie would have recieve a large tax free death benefit and repaid all of the money he had borrowed and recovered most of what he liquidated.

Money for Life can change the story of your life…in good times and bad. See yesterdays post for a great offer and go to www.TheMoneyForLifeBook.com to take advantage.

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“After all, tomorrow is another day!” Gone With the Wind, 1939

For some folks, every day is April Fools Day.

Don and Mary went to the auto show intending to learn about hybrid cars and SUV’s. They planned to buy a vehicle when the new 2009 model year created the opportunity to buy a low mileage 2008. They hoped that would help them keep their budget for both payments and fuel under control.

They left the auto show with a gas guzzling 2008 luxury SUV that they bought on a whim because it was being sold for less than the dealer’s cost. They thought that they could figure it all out in the days ahead; after all, tomorrow…

Every day American’s are overwhelmed with “opportunities” to buy the latest and greatest products – everything from the miracle sponge being hawked in the 60 second infomercial to the house with the price reduced to $1,000,000. Every day some American’s are fooled by the cacophony of claims in consumer products advertising  and the oft repeated but rarely accurate promises of financial success chanted by Wall Street’s merchants of misinformation.

Over 250 years ago- almost 100,000 tomorrows - Benjamin Franklin said “Many a man thinks he is buying pleasure, when he is really selling himself to it.” Every day creates new April fools of people who believe they can buy their way to wealth and well being.

Don’t let it happen to you. Learn how to manage the money that flows through your life. Don and Mary woke up the tomorrow after their folly, exercised their right of recision on the purchase of the SUV and breathed a sigh of relief. “After all, tomorrow is another day!” doesn’t have to be a fatalistic mantra. It can also mean that you can change your mind about money matters and change your behavior in positive ways.

SPECIAL OFFER! –> The paperback version of  Money for Life…in good times and bad – How to Thrive in the 21st Century will be released on May 1st, 2008. Everyone who buys the e-book version before May 1st will also receive an autographed copy of the paperback when it is release. No special codes are needed. Don’t be an April fool; make the purchase before April 30th. Shipping and handling charges will still apply. –> www.TheMoneyForLifeBook.com

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