1. Instead of choosing to pay bills first, Pay Yourself First by keeping a small percentage from each paycheck in a savings account. This money will be used for your emergency fund or investing fund ONLY.

2. Cut up your debit card to stop over-spending. This will force you to drive to the bank in order to withdraw money.

3. If you dine out often for lunch, avoid going to a sit-down restaurant. This allows you to prevent leaving tips and buying a soft drink that often costs a large percentage of your bill. Consider eating a low-cost, healthy lunch, such as Subway.

4. If you have a mortgage on your home, and your interest rate is significantly higher than the current market interest rate, consider re-financing your mortgage. Note: this may or may not be save you money, depending on terms of your new loan.

5. Consider switching to generic brands on most of your household goods, such as shampoo, laundry detergent, or kitchen cleaners. Most generic brands perform just as well as the brand names, but cost less.

6. Consider cutting expensive luxuries, such as premium cable television or a premium gym membership. Unless there is a sufficient need to have a premium-quality service, most people can function effectively with basic services.

7. Consider paying the entire balance of one credit card with the money in your savings account. Then replenishing your savings account immediately after your card is paid off. For example, if you have a credit card with a balance of $4,557 and your savings account has a balance of $5,000, you would payoff the credit card to avoid the future interest charges. You will then have $443 left in your saving, and now have the extra money each month to replenish your savings.

8. Contrary to popular belief, the highest interest rate credit card may not be the best to payoff first. Consider your options: if you can payoff a lower interest rate credit card within a short period of time (i.e. 6 months or less), go ahead and do so. Then you can contribute the amount of payment from the paid-off card toward any remaining credit card balances (and you will feel much more confident knowing that you are staying in control of your finances).

9. Instead of shopping at premium grocery stores where baggers bag groceries and employees chase carts in the parking lot, consider finding discounted grocery stores. Discounted grocery stores offer lower prices because of the money saved from hiring staff and national brand marketing.

10. The Internet provides a wealth of knowledge fast. Search and find local coupon or daily deal websites to find discounts on your favorite goods and services!

SillySaver.Com is a website dedicated to helping people save money with money saving deals and coupons. Please visit our homepage to view Today’s Featured Deal

During 2003 and 2004 I was a personal banker who, at that time, dealt with originating home equity loans on almost a daily basis.  I can remember accepting home equity loan applications that ranged anywhere from $50,000 to $200,000, depending on the home’s value.  Most of my customers wanted the loans to make improvements to their homes, but I did have occasional customers who used money for vacations, consolidating debt, or even buying a car.  In these cases I still underwrote the loan as “home improvements”, and underwriting would just approve the loan – underwriting typically didn’t ask any questions.  Accepting applications for these loans and getting them approved was not only extremely easy, but I was highly confident that even my “lower” credit score customers could get these loans too!  Of course I really didn’t care at the time because I was meeting my sales goals!

After being promoted to another lending position in 2005, the super-charged mortgage market continued.  Not only was loan money extremely easy to get, but the sub-prime market had emerged because everyone (even those who couldn’t afford it) could own a home with little or no money down.  The creative types of loan being offered by mortgage brokers became an addiction for the market.  The most insane was the “stated income” loan, which qualifies a borrower based on the income he/she states on the application form – as opposed to the income the borrower can document. With a stated income loan, the lender agrees not to attempt to verify the income the borrower states on the application.  Let’s not forget about cash-out refinances – on occasion I remember that appraisers and lenders (only the shady ones) worked as a team to inflate real estate values the lender needed to get a deal done! I’m sure glad that when I borrowed money during this time, it was to buy income producing assets, not to use my house as an ATM!

In Hindsight…

Although I’m doing great while going through a tough financial crisis, I do wish that I had more financial intelligence at the time so that I could have made even more money.  However, I don’t regret the investment choices I made.  By the time 2007 arrived (at the onset of the credit crunch), I had purchased 3 pieces of multi-family rental housing (although one of them didn’t produce profit cash flow because I bought it for too much).  Fortunately I was making a good corporate salary, and I used the inflated credit market to purchase those properties at attractive long-term fixed rates.  Then after leaving my banking job in December 2007, I immediately decided to purchase an additional 3 pieces of housing that would eventually allow me to leave work permanently.  It was really an interesting time because I can remember thinking to myself, “how can I be getting such great great deals on these houses even when they don’t need much work?”  The best part was that I really didn’t have much competition from other investors during that time.  Overall, I knew that I had a great opportunity and I seized it at the right time!  

Preparing For the Future

As of today there is strong evidence to support that an even greater depression could be on its way, considering whether or not the Fed continues to print money thus causing the devaluation of the U.S. Dollar.  As a result of this, and the transition of our world to working together as one, I believe it is important for all of us to increase our education across the board (especially financial education) to prepare for our future.

Presently, my top priority is to increase my financial intelligence.  I am currently striving to learn more so that I can make sense of what has happened during this financial crisis, and so that I can predict the future more accurately when change arises.  For instance, I have been loading up on books on the subject of personal finance, politics, the stock market, and the New World Order.  Although reading so much material in a short time is very tedious and time consuming, I am more confident that I understand what is happening at a time that seems very unpredictable to many other people.  I’m also finding that many of the things regarding the economy and the world have, at some time, happened to some degree in the history of our world.  I’m soaking it all up now so that I can forsee changes and feel more comfortable with changes as they come.     

The 2004 Fed Transcripts: A Methodical, Diabolical Destruction of America’s “Wealth”
By Frederick Sheehan

05/14/10 North Weymouth, Massachusetts – The Federal Reserve releases transcripts of the Federal Open Market Committee (FOMC) meetings with a five-year lag (as required by law, the Fed would like to burn them). Transcripts for 2004 meetings were released on April 30, 2010. The Dow Jones Industrial Average fell 998 points on May 6, 2010. The 2004 transcripts help explain why the Dow could have disappeared last week.

The Setting

To refresh memories, the Fed had cut the fed funds rate to 1.00% in June 2003. America leveraged up on free money (“free,” since inflation was higher). The mortgage boom etched itself on the national conscience. The 2004 FOMC meetings were filled with discussions of whether and when the Fed should tighten. (“Tighten,” meaning, raise the funds rate from 1.00%. Raising the rate should tighten, or restrict, access to credit.) The result of FOMC talk was to increase the funds rate after each of the FOMC meetings, starting in June through the end of the year. Each time it was raised by 0.25%. In practice, this is the Fed’s minimum rate change. The FOMC raised the funds rate to 1.25% in June 2004, to 1.50% in August, to 1.75% in September, to 2.00% in November, and to 2.25% in December. It would continue with a total of 17 consecutive 0.25% boosts, until the funds rate reached 5.25% in June 2006. This gave the impression the FOMC was walking on eggshells.

FOMC transcripts in 2004 confirm the Fed was afraid of markets. Its concerns about the economy were only a derivative function of how market volatility could disrupt consumer spending. (Over 100% of economic growth after the post-2001 recession had been consumer spending.) The Fed understood rising asset prices boosted consumer spending. As I discuss below, the FOMC was not simply fixing short-term interest rates. It was now interfering with long-term interest rates, the stock market, and the housing market. This distorted the entire structure of prices through the economy and we know how it ended – no better than the Politburo’s central planning.

In 2004, the FOMC knew that when it raised the funds rate, financial markets might exhibit any number of unintended consequences. In June, Chairman Greenspan stated a policy change to avoid such turmoil: “By committee desire, we have been changing the funds rate only at meetings. That was not the case in the past.” He wanted the markets to know it could rely on the Fed’s constancy.

The FOMC seemed most concerned that higher rates might interfere with the carry trade. In the sad tale of The Financialization of the United States, the carry trade deserves a chapter. It received one in [Panderer to Power: The Untold Story of How Alan Greenspan Enriched Wall Street and Left a Legacy of Recession.] Chapter 10: “Restoring the Economy: Greenspan Underwrites the Carry Trade, 1990-1994,” discusses the unique recovery from the 1990-1991 recession. Never before had the U.S. economy resurrected itself through finance rather than industry. To accomplish this amazing feat, finance flooded the banking system and hedge funds.

The Federal Reserve had cut the funds rate from 9.75% in 1989 to 3.0% in 1992. Quoting from Panderer to Power: “Speculators borrowed at a cheap rate – such as a Treasury bill, yielding 3%. They bought higher yielding securities, such as Japanese government bonds that yielded around 6%. They expected (or hoped) the borrowed asset would not rise in price. They leveraged the 3% spread at 10:1 or 100:1. Up to the present, the carry trade has funded fortunes in New York, London, Tokyo, and Shanghai.”

By 2004, the carry trade was a mammoth enterprise of hedge funds and banks. The too-big-to-fail banks were, by now, leveraging their own internally managed hedge funds, managing their own proprietary trading desks, and also lending to highly leveraged hedge funds. Leverage, and, the belief that access to rising levels of credit would never end, pushed up asset values on bank balance sheets – whether real estate, bonds, stocks, or private-equity. This increased the banks’ lending capacity which encouraged banks to lend more. Hedge funds and private-equity funds (that were leveraging their acquisitions into bankruptcy) could not, or would not, refuse free money. Rising asset prices boosted mortgage origination, refinancing, home-equity withdrawal, prices of mortgage securities and lines-of-credit from commercial and investment banks to unscrupulous mortgage lenders. Markets believed asset prices would only go up for many silly reasons. Belief in the Greenspan Put may have been the silliest but also the most influential. (The Bernanke Put today is even sillier.)

The FOMC’s Manipulation of Asset Prices

Federal Reserve Governor Donald Kohn stated the FOMC’s mission at the March, 2004 meeting: “Policy accommodation – and the expectation that it will persist – is distorting asset prices. Most of the distortion is deliberate and a desirable effect of the stance of policy. We have attempted to lower interest rates below long-term equilibrium rates and to boost asset prices….”

It is worth pausing here. Kohn told his confreres that Federal Reserve policy was to distort asset prices. He also said this was deliberate and desirable. In other words, distorted asset prices were not an unfortunate consequence of such-and-such Fed policy. The Fed’s goal was to distort asset prices.

Kohn went on: “It’s hard to escape the suspicion that at least around the margin some prices and price relationships have gone beyond an economically justified response to easy policy. House prices fall into this category [note: the Fed was deliberately overpricing houses], as do risk spreads in some markets and perhaps even the level of long-term rates themselves, which many in the market perceive as particularly depressed by the carry trade….” Summarizing, Kohn believed the Fed had deliberately set a policy that raised house and long-term bond prices beyond a “justifiable response” to the 1.00% fed funds rate. (One justifiable response to free money is a price of infinity, but Kohn was not of that persuasion.) Second, Kohn thought the carry trade was reducing yields on long-term Treasury bonds. (As follows: when a trader borrows $1 billion at 1% and buys $1 billion of 10-year Treasury bonds that yield 4%, prices of the 10-year bond go up as the yield goes down.)

At the January 27-28, 2004, FOMC meeting, Fed Governor Roger Ferguson voiced his own fears, about the state of financial markets: “During the intermeeting period [the prior meeting was on December 9, 2003], we saw quite a run-up in the prices of equities…. During the same period, interest rates dropped quite significantly. Risk spreads have come down…. This may indicate an underappreciation of the risks that may be imbedded. Frankly, to put it mildly, I think that the dollar carry trade has become extremely well entrenched and that the markets are looking to us perhaps more than they should be…. Perhaps we are anchoring the yield curve more than we’d like….I’m afraid the fixed income markets in particular are not in fact doing the appropriate job of pricing risks. We need in some sense to remove the anchor that we have placed on those markets.”

Greenspan did not agree. At the same January meeting, Governor Kohn said he did not think the FOMC should “second-guess asset price levels.” Kohn continued: “It’s something we didn’t do in the stock market run-up in the ’90s and I was pretty comfortable with how we handled that. So I’d be a little cautious about using monetary policy to try to damp asset price movements.” Greenspan replied to Kohn: “I certainly agree with that.” It is not clear if the chairman was agreeing to this obsequious compliment of Greenspan’s successful demolition of the stock market, but the chairman was affirming he wanted asset prices to move up and up and up.

As a more trivial matter, these conversations contradict Alan Greenspan’s recent attempts to rehabilitate himself at the Brookings Institute in March 2010, and before the Financial Crisis Inquiry Commission (FCIC), on April 7, 2010. According to the old humbug, the Greenspan Fed does not bear an iota of blame for “by far the greatest financial crisis globally ever” (Greenspan’s words). He claimed under oath before the FCIC that the Fed was blameless because the “house bubble, the most prominent global bubble in generations, was engendered by… long term mortgage rates” which “by 2002 and 2003… delinked from their historical tie to central bank overnight rates.” The italics were Greenspan’s. There are many pages in the 2004 FOMC transcripts where tactics to move or fix the 10-year Treasury yield are discussed. (For those who remember Greenspan’s “conundrum” – his inability to understand why long-term rates weren’t rising – this answers what most suspected. His protestations of bewilderment were a ruse.)

In 2004, the then-Fed chairman stated there was a direct link between Fed policy and long-term interest rates. At the September 2004 FOMC meeting, Greenspan said an issue on the table was “whether we should encourage lower ten-year interest rates….” He stated this would happen “if we do decide to pause later in the year, we will end up with lower long-term rates, higher bond prices, and presumably higher asset prices on the balance sheets of a number of financial institutions.” (A “pause,” in this case, would be to break from the established pattern of raising the funds rate at every meeting.) There was no question about it: “we will end up.” Yet, he told the FCIC this linkage no longer existed after 2003.

Dino Kos, Manager of the Fed’s System Open Market Account (at the New York Fed, which fixes the fed funds rate by trading with dealers), made an interesting observation at the March meeting: “If we talk to people who are active in, say, Treasuries, we hear a lot about the carry trade and about an expansion of risk and leverage.” It is not clear from reading the transcript, if Kos, or others, considered this to be good or bad. Speculative risk and leverage in the banking system would not normally be welcomed by the nation’s leading bank regulator (Greenspan), but neither was it desirable to slow down the mortgage carry trade. Such developments as Interest-Only and Negative-Amortization mortgages may have remained a niche market if not for speculators who were asking for more assets to buy with the money they had borrowed. (Dino Kos at the June 29-30, 2004 FOMC meeting: “Banks and hedge funds are still holding on to large positions in mortgage-backed securities.”) By 2004, Wall Street was funding and even buying subprime mortgage lenders to accelerate the flow of mortgage securities they sold, such as CDOs. In 2004, Lehman Brothers was the 11th largest subprime lender in the U.S. and the top issuer of subprime mortgage securities.

Greenspan: “We Created the Carry Trade”

At the September FOMC meeting, Federal Reserve Governor Susan Bies commented: “The whole process of reserve management has changed. This is a profit center in a bank….”

The Fed worked closely with the banks to help maximize these profits. According to Bies, this has “gotten a lot of credibility in the market and we need to be careful what we do…” Chairman Greenspan chimed in, drawing an analogy to another cooperative effort in which the Fed maximized profits of commercial banks: “For the same reasons we’ve created the carry trade, because if you lock in with some permanence one leg of it, that reduces the risk.”

There was never doubt that the Fed was aware, and possibly complicit, in the restructuring of America into a financial economy. It is noteworthy to discover that the Fed is so much more; such entrepreneurial spirit is unusual within government bureaucracies. Who guessed the pivotal role Alan Greenspan played in turning investment banks into proprietary trading desks; that the Fed created the carry trade? Certainly not the author of Panderer to Power. No wonder the man still commands six-figure fees for speaking engagements sponsored by banks and attended by hedge fund managers.

It is also interesting to read that this Public-Private Partnership “lock[s] in with some permanence one leg of [the carry trade], that reduces the risk.” This evolution of the Federal Reserve’s responsibility has escaped legislative approval. It does not seem sporting to eliminate risk to speculators who can make $100 million a year when the trade works. (Long-Term Capital Management is an example of 100-to-1 leverage that failed.) Rather than an investment, this looks more like a racket.

Greenspan’s motives are always a quagmire of probabilities. It is better to operate from certainties and, in this case, it is certain he was caught in a trap with no good way out. He entered a pact with the devil when he created the carry trade in the early 1990s. By not allowing nature to take its course, the “real” economy could not heal. Finance drove steel piles into the ground and established a new foundation for the financial economy. The real economy slowly rusted while finance rose to the sky. Greenspan perverted the nation’s economic discussion during the second half of the 1990s with his productivity fantasy. Wall Street spread the Greenspan gospel and made fortunes from the Internet bubble.

The stock market collapsed in 2000 and 2001, which is the inevitable conclusion of such hallucinations. The girders of the real economy were wobbly by then – manufacturing jobs were disappearing at the fastest rate since the Great Depression. From March 2001, the official starting date of the recession, through the end of 2004, employment in the private economy fell by 1,200,000. Greenspan looked for a financial solution – the housing bubble. It was, in the larger sense, a credit splurge. This Godzilla had to be much bigger than the stock market fiasco, and it was. (The farther the economy deviated from its traditional foundation, the more credit needed to be created to forestall a collapse.)

At the 2004 meetings Greenspan – and the FOMC – were setting Federal Reserve policy not only by fixing short-term interest rates, but also by calibrating the carry trade. Conversations show the Committee understood the danger of expanding the trade: if it grew too large, a financial earthquake would crash the rising skyscraper to the ground. At the January 2004 meeting, Dino Kos talked about “the already rather steep yield curve [nirvana to the carry trade], the 3 percent differential between the funds rate and the yield on the ten-year bond is historically wide, and further steepening probably would bring in new investors to take advantage of the carry.” The tone of Kos’ comment (measured by the direction of the meeting and questions being asked) seems to be that the 3% spread was about right. Less, and credit arteries might harden. More, and the Fed might not be able to contain the carry trade. The FOMC, interpreting Kos’ statement, should work towards holding the spread at 3%.

This was the same meeting at which Governor Ferguson had worried that “we are anchoring the yield curve more than we’d like.” The anchor was the short-term borrowing rate, the 3% spread to the long-term rate was the profit, after it was leveraged.

The FOMC was also tugging on long-term interest rates for reasons Chairman Greenspan discussed at the September meeting. He asked the question: “[Should] we should encourage lower ten-year interest rates, given how close they are to levels that would prompt a lot of mortgage financings and a significant drop in duration in the mortgage market…?” His interest in mortgage refinacings was to boost consumer spending.

Consumer spending exceeded consumer income. This had to continue. Greenspan described the importance of rising asset prices in fooling the consumer at the November FOMC meeting: “We have a very significant problem with private saving. The household saving rate has come down dramatically and now is close to zero….The idea of having a negative savings rate is not out of line with the way the world works. Remember…the average household looks at the market value …of its equity holdings…. We can have a negative saving rate with a significant part of the population believing that they are saving at a fairly pronounced rate.”

This strategy of fixing asset prices at an artificially high rate to fool the American people into spending money they did not have was diabolical. It was even more so, given what Greenspan told the public. Before Congress on July 15, 2003, he claimed: “The prospects for a resumption of strong economic growth have been enhanced by steps taken in the private sector over the past couple of years to restructure and strengthen balance sheets….Nowhere has this process of balance sheet adjustment been more evident than in the household sector.” The man will say anything.

Conclusion

Greenspan is gone and his successor is also a man not to be trusted filling your gas tank. In 2004, when then-Federal Reserve Governor Ben S. Bernanke was still an underling to Greenspan, he demonstrated the lack of truth, common sense, and intelligence needed to be selected Fed chairman: “Increases in home values, together with a stock-market recovery that began in 2003, have [aided]…the expansion of U.S. housing wealth, much of it easily accessible to households through cash-out refinancings and home-equity lines of credit.” This is not “wealth,” but it was a sales pitch that may have convinced a perplexed audience to buy houses. That was in public. At the December 2004 FOMC meeting, Simple Ben showed an appreciation for why he was bamboozling the public: “As a result of rising stock and house prices, over the past year U.S. net wealth… has increased about $3.3 trillion, or around 30% of GDP. That’s a number which, incidentally, goes some way to explaining the continued strength of consumer spending.”

He consistently misunderstands the current situation. On November 16, 2009, he told an audience: “It’s not obvious to me in any case that there’s any large misalignments currently in the U.S. financial system.” How on earth can anyone think an economy run on a zero-percent interest rate – a fantastical plan never before attempted in recorded history – is A-Okay?

The manipulation of markets and of the American people has grown worse under Bernanke’s chairmanship. In the fall of 2009, Governor Kohn spoke at a Federal Reserve conference. He made it clear that the Fed still wants to fool the people into a state of poverty: “Recently the improvement, in risk appetites and financial conditions, in part responding to actions by the Federal Reserve and other authorities, has been a critical factor in allowing the economy to begin to move higher after a very deep recession…. Low market interest rates should continue to induce savers to diversify into riskier assets, which would contribute to a further reversal in the flight to liquidity and safety that has characterized the past few years.”

On March 27, 2010, former Federal Reserve Chairman Alan Greenspan told Bloomberg TV if not for the stock market recovery, the economy would be shrinking faster than Zimbabwe’s. That is an exaggeration, but he was drifting in that direction. From the horse’s mouth: “Ordinarily, we think of the economy affecting stock prices. I think we miss a very crucial connection here in that this whole economic recovery, as best as I can judge, is to a very large extent, the consequence of the market’s bottoming last March, and coming all the way back-up. It is affecting the whole structure of the economy, as well as creating the usual wealth effect impact.”

The 998 point drop in the Dow on May 6 was a warning to those who still invest in and trust markets. The government has permitted sophisticated strategies among a handful of operations to run the stock market. Program trading, high-frequency trading, and investment bank proprietary trading have replaced the buy-low, sell-high investor. At the August, 2004 meeting, Dino Kos reported: “In the past several months, quite a few traders have bemoaned the low level of volatility across a range of asset markets and the absence of perceived trading opportunities.” It would take a strong imagination to not believe the FOMC is just as solicitous and equally willing to anchor the risk of institutional traders today.

The Financial Times reported in January 2010 that only 3% of trading is retail. The traditional relationships by which common stocks are measured such as price-to-earnings ratios are not that relevant anymore. IBM’s price is more likely a reflection of a computer programmed to trade the stock because of a phrase spoken on CNBC. It is difficult to retain the pretense of markets reflecting the distilled knowledge of a company’s value. Caveat Emptor.

More importantly to those with money invested in public markets is the possibility of a 5,000 point drop in the Dow that does not recover, but converges on zero. Traditional diversification strategies such as separating stocks among small, large, domestic and foreign companies neglect protection. The Bernanke Put will fail and with it the greatest bubble of all will crash. This is the reason investors need to devise a personnel put strategy.

Regards,

Frederick Sheehan,
for The Daily Reckoning

If you’re having problems getting through the turmoil that life stirs up, then consider if solving your problems is in line with your personal mission.  Also, ask yourself if you’re able to control the problems.  Tackling your problems is so much easier when you know they’re in line with your personal mission and it’s within your control.  If they’re not, YOU WILL LIKELY BE FRUSTRATED!!!  

I’ve found that sometimes we get tripped up on things that weren’t meant for us to do anyway.  For example, I recently spent 7 months of my time working at New York Life asking people to buy life insurance.  I knew that I wasn’t passionate about the job, but I wanted to improve my sales skills.  I was completely frustrated because I really tried hard and getting even small results was tough.  Then my contract expired and I didn’t meet my quota.  I started to criticize myself because I felt I “just didn’t get it.”  But I knew that I liked the part of my job where I set appointments and helped people.  It was only days later that my renewed passion for real estate and helping others came back to me!  

Instead of viewing New York Life as a failed opportunity, I found peace with myself and admitted that the New York Life job just wasn’t my passion.  Now I’m pursuing ways that I could help others learn how to build wealth through investing in real estate and businesses.

I urge you to think about your daily life and the turmoil that you encounter each day.  Are you selling yourself short on your potential because of problems outside of your personal mission?  Have you sacrificed your life to a cause that you’re not in tune with, simply for economic reasons?  If you are, then consider exploring your interests in your spare time.  Typically, your passion will find you when you’re relaxed and not worried about your daily routine. 

If you have a story about finding your passion in life, please don’t hesitate to share!!!

I’m really glad I didn’t get rid of my blog because now I’ve found the inspiration to begin writing again.  During the past two years I’ve been trying out all kinds of business ideas and now have finally found peace with myself! 

Since I’ve last written (about a year and a half ago, my big idea has been to start an e-coupon business, which you can go see at www.sillysaver.com.  However, it never did get off the ground because I spent most of my money on trying to get the site up and running. 

Some other ideas I have tried is working as a life insurance salesman for New York Life, selling products on Ebay (which I did find success), a handyman business, and a leasing agent business.  After trying out these ideas for about two years, I have learned a valuable lesson – trust your gut instinct.  I’m the type of person who had to try all kinds of different businesses that I didn’t like first in order to find out the ones I did like.  I could have saved tons of time if I would have trusted my instinct the first time, which was to help others learn about building wealth.  It took me two years to find out that mission, although I always knew that I loved it!

For those of you who feel like they’re stuck on several ideas and have no clue where to turn, I urge you to pursue just one idea that feels best at the moment.  Give yourself the opportunity to fail on that idea because your creative mind will know what to do next.  You have to trust that you won’t allow yourself to stay unhappy with an idea that doesn’t fit who you are as a person.  I guess this falls into that saying by Donald Trump: “You have to do what you love.”

As for me, I’m currrently pursuing my dream of teaching others how to build wealth.  I’m curently building a personal branding website at www.robmyrick.com that I believe looks great, although it’s not finished yet.  I’m considering working as a speaker with the Rich Dad Company, or even just going around the country speaking to groups of people as a mentor.  I’m also working on a book that will help people transition from financial dependence to independent wealth.  For any of you who have experience doing this, I would really appreciate you sharing your story.

ODesk: I don’t know how long this company has been around, but the website is extremely sophisticated.  The way it works: a buyer of services posts a job or project and within two or three days, numerous providers will bid on the project.  For example, I needed a web developer who specialized in Joomla 1.5 content management, and about 21 candidates posted their resume and cover letter for the project.  The point is that I had some of the best talent in the world at my fingertips by using the system.  ODesk has no front-end fees to use the service, which is great.  ODesk gets paid a percentage of the hourly wage that you pay the provider.  There are a multitude of providers who use the service.  Some of the services offered include web design/programming, administrative work, or article writing for blogs. 

The great part about ODesk is their ability to track the work progress of providers.  This gives a buyer the confidence that work is being completed to the buyer’s satisfaction.

Elance is another great service that links buyers and providers.  I have used the service very little, but it provides the same type of services as those of ODesk.  The buyers and providers are charged by the amount of “contacts” that each uses to communicate.  If a buyer wishes to contact a provider, he/she is required to buy “contacts” that allow that to happen.  Again, I have used this service on a limited basis as a provider, so I will not go into more detail. 

I would recommend checking out these websites to get familiar with them.  Here’s the links: www.odesk.com and www.elance.com.

I was speaking with an old banker friend today and we began to discuss new trends that we may see in the business world.  She mentioned that the economic downturn and thousands of layoffs would likely spawn new small businesses opportunities.  I agreed with her.  With so many layoffs and new home business opportunities out there, it’s possible that people will take the leap into owning a business. 

With that being said, I would like to provide information that could help you on your journey after leaving corporate America.  The information I’m providing is directed mostly toward those individuals who are unsure of the type of busines they want to start.  I speak to people in this category because it can be frustrating when you don’t know what to do with yourself, as I did one year ago. 

For starters, I would like to introduce the idea of multiple streams of income.  The idea of many sources of income is becoming more popular now, especially with the trend of home-based business depending on the Internet.  For example, an employee working as a sales manager could start a part-time business teaching sales skills to individuals, and/or write a book discussing the skills needed to be successful in sales.  The objective of multiple streams of income is diversification.  A stock broker recommends diversification in your investment portfolio.  Why not diversify your income sources?  With so many layoffs, having multiple income sources lowers your risk of losing the game of money.

During the first few months after leaving my job, I spent a lot of time thinking, which is what I recommend also.  Of course, this does not mean be lazy and do nothing.  Thinking helps clear the mind, which is often full of rubbish after you leave your job.  In fact, after I left my job I spent about a year thinking and processing information that I thought would help get a business off the ground.  After that year, I was starting to implement some of the ideas that I had developed.

For me, the hardest part of this process was finding a business that would utilize my skills, highlight my talents, and be marketable.  So I researched tons of business ideas that I liked.  I created a list and narrowed it down to five ideas.  I soon realized that out of those five, I had two or three that would be worthy of pursuing.  For example, I enjoy investing in real estate, building website, and writing about investing.  Therefore, my idea list looked something like this:

• Real estate leasing agent


• Write a book about investing


• Write articles for a business blog


• Buy and sell items on Ebay


• Build a website that offers some type of real estate service

Keep in mind that I have a skinny budget, so most of my ideas are small.  As I start to develop my ideas further, I can then take the extra money and begin focusing on bigger ideas.  Of course, I could find investors to fund a new big business, but it’s my choice not to do that.  If your budget is healthy, I would recommend taking your best idea and going for it!  However, never spend more than you can afford to lose.  There nothing wrong with starting small and failing.  Losing big is a much bigger lesson to swallow. 

If you’re considering leaving your job to start a business, make sure you’re financially prepared.  Don’t leave your job without a plan.  Although I had no plan after my job, I did have passive real estate income paying my bills (although I was still broke!).  Consider creating multiple sources of income while you have a full-time job.  Not only will you have more money to fund your ideas, but you will gain experience as a business owner. 

I wish the best of luck to your endeavors.

During these tough times, there are some ways to keep above water.  One way is to practice smart cash flow management.  This means curbing your spending—avoiding the temptation to buy luxuries like high-end designer suits, a big screen television, or remodeling your basement.  This requires willpower, and none of us want to deprive ourselves of having nice things.  However, good cash flow management requires us to sacrifice these luxuries at certain times.  There are many ways to curb spending.  Here a few ideas to that can help:

• Pay cash for purchases; use a credit card only for emergencies
• Switch to less expensive brands of everything from shampoo to cars
• Be patient and wait for a sale
• Shop at wholesale clubs and discount department stores
• Don’t take a vacation until you have the money to pay for it
• Cut back on meals out
• Curb your cell phone use
• Winterize your house to save on energy costs

 When you curb spending, you will soon find yourself keeping more of your income.  You may be thinking, “cut back on using my cell phone and save $2 by switching to generic brand names?  That’s not going to save much.”  However, these savings add up quickly over time.  For example, downgrading your cell phone plan from $100 to $50 adds up to $600 per year in savings!  By budgeting wisely and keeping more of your income, you can apply this extra money towards more productive goals, such as investing or paying debt.

As for managing debt, if you find yourself trapped you might want to consider creating a plan to stay in control.  First, you should be aware of the type of debt that you have.  There are two types of debt: secured and unsecured.  Secured debt is that which is backed by collateral, such as a car loan or home mortgage.  Unsecured debt, usually the most expensive, is debt that has no collateral behind it.  This typically includes your credit cards or student loans.  The reason this debt is more expensive to you is because the lender has nothing to take from you if you fail to make the payments.  Most unsecured debt is unnecessary and should be avoided if possible.  

Most experts will recommend paying off your unsecured debt first.  Because unsecured debt is more expensive, it will take more dollars over time to payoff.  One strategy with credit cards is to redirect the monthly payment on a paid-off card to the balance on the next card.  For example, let’s assume you have two credit cards.  If you payoff your first card that has a minimum payment of $112, you could take this additional amount and apply it towards your second card.  At the same time, you would continue paying the second card’s required minimum payment.  Using this strategy is one of the quickest ways to payoff your unsecured debt.  Once your unsecured debt is paid-off, you can then start to eliminate secured debt.

Managing your finances is a daunting task and it requires focus and patience.  If you find yourself getting frustrated, don’t give up.  Managing your cash flow is the true beginning of financial stability.  Once you put in the work, you will be in control and on your way to true financial freedom.  

Those were the words of Barack Obama that rang out loud and clear during Campaign 2008.  America demanded change, and change is what we got.  I’m glad to see that Obama was able to make such history.  I would have been equally happy if McCain had won the ticket.    

Now the time has come.  On January 20 Obama will be responsible for making tough decisions concerning taxes, war, gas prices, and the housing crisis.  More specifically, he will be responsible for structuring a bailout plan for large U.S. corporations whose top executives have greedy hands.  Here’s something to think about: Do you think all of us will get bailed out too?  I seriously doubt it.  Are you counting on Obama or the government to repair your credit score or fix your home loan? 

I’m not bashing Obama by any means.  Even if John McCain had won the election, the problems we face are enormous for one man to handle.    

The world has changed significantly during the past two decades.  We have entered an Information Age that is changing the way we think and communicate.  Thinking globally has become the norm.  Anyone who has a computer and few extra dollars can build a website and have customers across the globe.  Government is changing too.  The United States has firmly established its presence in the Middle East, and there is a theory that explains we need to remain there in order to retain global power.  This would require enormous defense spending (which it already has), and as a result, the government has dipped into Medicare and Social Security tax dollars to fund our wars.  Who will be losing out once the money is gone?

I wish Obama the best of luck during his first term.  I believe he will do a great job for the country, and he will make great changes to America.  As for your financial future, Obama (or anyone else for that matter) has no real control over your financial health.  It’s up to you to get educated and learn how to provide for yourself and family.  If you plan on waiting for the government to bail you out, be sure not to hold your breath. 

By the way, I’m Rob Myrick and I approved this message.

After 3 months of no writing activity, I’d like to give everyone something to read again.  

For those of you familiar with the writings of Robert Kiyosaki (also one of my favorite authors), you have learned that people can be classified into one or more of these quadrants: Employee, Self-Employed (Specialists), Investors, or Business.  Kiyosaki claims that people in the E or S quadrants (the left side) tend to seek security or control when it comes to their financial well-being.  In contrast, people in the B or I quadrants (the right side) tend to seek financial freedom by investing in assets such as real estate or businesses.

Most of us start out in the E or S quadrants and never make it to the other side.  We are raised by wonderful parents who only want the best for us, and therefore teach us to seek financial security through a full-time job.  Having a full-time job is wonderful, especially if you have a wonderful family that depends on it to survive.  Let’s face it, even if you really want to quit your job and start focusing on becoming an investor or business owner, leaving a paycheck is a daunting thought and can be discouraging.

If you are truly serious about switching sides and creating assets to support your financial well-being, there couldn’t be a better time than now to give it a shot.  The great thing is that you don’t have to quit your job in order to make the switch.  Considering the current state of the economy and the real estate market, making the choice to take action now is smart. 

For three years I have been investing in rental real estate and highly suggest buying a small single- or multi-family property.  I recommend this because a small property is relatively easy to manage, and it’s can be easy to come up with a small downpayment.  More important, real estate prices are low and foreclosures are still soaring, which means a great deal for you!  Why wait and go to the supermarket tomorrow when you can buy your groceries for 50% off today, right?

If real estate is not your cup of tea, then you may also consider starting a part-time business.  In fact, this is my current focus, along with continuing to find undervalued real estate deals.  The great thing about starting a part-time business is that you don’t even have to start the business yourself.  If you look on the Internet, there are business brokers who market businesses for sale.  This can be a great opportunity for those who don’t have the time or effort to start from scratch.  Who knows – you just may be the person to take an average business and make it turn to gold! 

Network marketing is also a great way to switch quadrants.  A good network marketing company is based on a solid business model that has proven success.  This is good news for you because all you have to do is follow the business model.  Also, other members in the network take you in under their wing and help you become successful, even if you have only a limited amount of time.  I recently joined a network marketing organization called Vector Marketing, a distributing company of the famous Cutco brand of kitchen knives.  It was a great experience in that I never had to go far in order to find help.  I would highly recommend a network marketing company if you have no experience in running your own business.

Whatever route you decide to take in life, just make sure you’re doing what YOU want.  The economy is rough, and employers who are in financial distress will take any action necessary to survive, even if it means laying you off!  Depending on your field of work, this may never happen to you, but it IS HAPPENING to a lot of people.  If you are in this situation, just keep in mind that it could be an opportunity to change your life.