Building Wealth - Cutting Costs

OK Valentines day is a few days away and this is one in my opinion where men have it easy. Flowers, candy, jewelry and you are set as a guy. If you’re smart have them sent to your lady’s work place and you will have a very good Valentines day.

What about buying for men though? Most of us are not that worried about getting something for Valentines day but hey if we are going to be getting something give us something cool. So with Valentines bearing down and that thought on my mind when I was asked to take a look at a cool gift site called Vat 19 I was more then willing to do it.

One item that really caught my eye is this electronics charging valet station. The electronics Charging Station neatly hides cords while charging up to three devices at a time. The 5-plug surge protector is concealed and the small shelf and drawer store other items such as your keys and wallet.  Overall a cool and functional gift that I know most men and probably many women would really like.  Though guys if you get one for your lady, don’t skip the flowers, trust me.

A few days ago I posted my thoughts about the proposed “economic stimulus” where the government will be giving back about 300 dollars per tax payer in a retroactive tax cut from 2007’s tax year. You can read my thoughts about this tax rebate here. In short though I believe income tax is theft and I am for any and all cutting of income tax for anyone from the poorest to the most wealthy. On the other side though I think this rebate is bad for the country because there will be NO SPENDING CUTS on anything to fund it. All we are doing is going deeper in debt. Again read my full post on this to understand this better.

What I wanted to ask though today is what will you do with your 300-600 dollars in rebates?

Since I posted that orginal post I have been getting many visitors each day finding my blog from Google, they are all searching for things like

• “when do we get our tax rebates”
• “government giving out rebate checks”
• “will we get stimulate the economy checks?”
• “when will we get our government rebate checks”
• “800 dollar rebate checks government”
• and you have to love this one “government giving 300 dollars to everyone“

Now I am not here to criticize anyone but my guess is most of the people doing these searches are just itching to get that “free money” and blow it. Indeed that is “the plan”, yes indeed Uncle Scam (not a misspelling) wants you to spend every dime on consumer goods to “stimulate the economy”. The theory is more spending is good because more money is in circulation.

So please comment below after you read this post and tell me what you plan to do with your money. As many may suspect mine will be invested and many in the government want to not give the money to people like me that will save it. No they want “good Americans” to spend the money and “put it to work”.

So what are you doing with your refund?

• Taking a vacation
• Just blowing it
• Saving it
• Paying on debt
• Investing it
• Not sure yet?

Let us know because it is interesting what happens when you really ask yourself what you will do with extra money. Perhaps just perhaps thinking about this may make a few more of us think about saving this refund for a really rainy day. Trust me if you remember 1978 times are really not that bad right now.

Keep in mind this is not some government “entitlement” this is indeed your money, your tax dollars that you paid being returned to you. To do so your government has grow our debt by BILLIONS more. Again I am 100% for any rebate, any tax cut, any tax abolishment. Just realize that our elected officials did not think about how to fund this thing, they are just buying your votes from you with your own money and charging it along with interest to your children.

So knowing that how will you be spending your money, remember it is indeed yours it is not a gift from our exalted officials.

I was recently asked to have a look at a website for a company called, Willis Consulting Inc, they specialize in financial job placement and while the news reporters keep talking about gloom and doom now may be one of the best opportunities for top financial minds from an employment view point.    You see when money is tight, when profits are down and when recessions hit hard it is the financial expert that turns a company around or keeps it from entering decline in the first place.

Even during the worst economic times there are companies that thrive and excel.   In such times even while laying off parts of their workforce many companies still pay top dollar for bright financial minds because when the chips are down they are needed more then ever.

If I were ever to consider myself “employable” again I would certainly utilize an executive recruiting firm.    If you are really good at what you do emailing resumes and searching job boards is a total waste of time.    My career advice for anyone looking for new opportunities is find a good recruiter, someone you trust and who can do a good job and put them to work marketing you.    If you happen to be a top financial minds this may be one of the best times in recent history to do just that.

Part of building wealth is maximizing your income in the first place. Many times the difference between making good money and making great money comes down to some additional skill sets and a sheet of paper that proves you have them. No where is that more true then in the IT and Technology industries. Yet a lot of IT professionals work long hours so how do you take time for more training and make sure you get proper credentials to go along with it? One solution may be to take technology or Microsoft Training from QuickCert.

Right now the technology sector is hot and I mean red hot. Trust me I know in my businesses I have to hire people to fill various positions and the IT/Tech people are the hardest to find and attract. Many IT people don’t even take real “jobs” any more preferring the higher rates from contract positions and the flexibility and travel that come with them. I know a few that work 3 month projects, take a month or so off and then basically have their pick of the next assignment. Opportunities like this will only grow in the future.

So if you’re an IT pro that wants to build wealth by maximizing your income consider adding to your skills and certifications by visiting QuickCert.

Right now the mortgage industry seems to be in melt down but real estate investing has a proven track record of making great returns even during recessions, that is when properly leveraged. In short trust deed investing is basically when private investors loan money that has real estate offered as collateral against the loan. Trust Deed Investing is nothing new; banks and private individuals have been loaning money against hard assets like land and other real estate for centuries.

In essence trust deed investing is like taking the position of being the bank in a mortgage vs being the slep paying interest for 30 years.

I recently asked to review a website for Diamond Bay Investments who specialize in trust deed investing.   They are currently advertising returns of 12%.  Investments like these are not with out risks and you should of course consult with your financial advisers before investing with any company or investment.

That said trust deed investing has a high potential rate of return and it is protected by a hard asset (land, property, buildings) so it is worth considering.  It is not a place I would advise anyone to put all their money but it is one underutilized investment option that is a great part of a long term balanced investment portfolio.

My primary goal here at this blog is to help the average person learn simple ways to build above average wealth. As you begin to build wealth the key is to make sure you have the right wealth management team.  Northern Trust is a premier provider of banking, asset management and asset servicing to affluent families and individuals and leading institutions worldwide.

With a proven track record Norther Trust a company I can recommend with out any hesitation.  They also offer some exception free financial resources.  For more information visit their website and check out the Global Economic Research link.  You work hard for your money and it should be hard at work for you.  It should also be protected because as I have posted about before we have the potential to see a recession that could make 1978 look like the “good old days”.

Now I am no gloom and doom forecaster but it is more then probable right now that we are in for some tough times.  Many entrepreneurs are used to going it alone, I have been guilty of it myself.  Yet when it comes to investing, asset protection and preserving the future of your family’s future alone is a very bad choice.  Rely on professionals and that is what you will find at Northern Trust Banking & Asset Management.

In the future I will discuss many specific ways that you can make money online. Remember key to our philosophy here at cut that bill is not just reducing expenses but keeping more of your money, investing it wisely and most importantly increasing your cash flow in to your household or business. There is quite simply no easier or more passive way to earn some additional money today then to do it online.

Let me be clear though, “how to do it”, is irrelevant until you get your head around the why and until you grasp how a very “small success” can drastically change your future. Let’s take three very doable numbers and consider how they could impact your life to really grasp how powerful an additional income stream from the internet can be. These figures are

• $100
• $250
• $500

Now trust me making these types of additional monthly income figures is very doable for just about anyone with a willingness to do some investing, learning and work. You will have to work harder in the beginning but such is life. Again though for now let’s stick to why you should and what it can mean. What do each of these figures mean to you,

An extra $100 dollars a month can smash 1200 dollars of out standing additional debt a year which is a good start. Paying off 1200 dollars in additional credit card or other high interest debt actually saves about 5000 dollars of long term interest if it is applied on top of your existing payments. Add 100 dollars to a typical house payment on say a 120,000 dollar mortgage and it can shave GET THIS almost 5 years off a 30 year loan. Invested at 10% and just put away it will add a quarter million to your retirement in 30 years, do it for 40 years and it is now worth about 600K added to your golden years. Remember that is only 100 dollars a month more!

An extra $250 is a lot more powerful as you might imagine, with investing you don’t just get 2.5 times the effect as compounding creates an exponential increase. Invested over 40 years of your working life that 250 dollars a month turns into over 1.5 million at simple 10% interest. Of course you can do much better then that with some creativity and participation in your financial planning. Turn to debt and you can pay down an addition 3000 dollars in debt annually which can save many in credit card debt over 20,000 dollars over the live of debt!

Step up to an additional $500 in income into your monthly cash flow and you can begin to really make a massive impact. Try 6000 dollars in additional debt destroyed per year. This alone would destroy the average of 20K in consumer debt most middle income Americans are living under in just over three years. Get out of that type of debt in three years or less and you can save massive amounts of interest. Investing gets interesting, 30 years of 500 a month at 12% interest equals GET THIS over 5 million dollars. There is even more power though!

500 a month would allow you to buy a modest second home if you wanted for vacations in some beautiful part of rural America. Don’t believe me? Fine I own a beautiful modest second home in an somewhat tourist area of the South up in the beautiful Ozarks. The place sits on 5 acres, is 15 minutes to town, 20 minutes to a beautiful lake and only about 10 people live all the dead end road the place is located on. Everyone owns at least 5 acres so the houses are very spaced apart. My total payment? With taxes and insurance 523 dollars a month. How I just looked hard enough.

Now the real beauty here is what I call my “Plan B”. Let’s say that my companies all go bust, I can’t find a job and my wifes income all of the sudden can’t cover our bills at our primary residence. Now this is not to say that everyone should invest extra income in a second/vacation home, it just begins to open your mind to the types of things you can do to build and preserve wealth with just a few hundred extra dollars of income a month.

Here is the most painless way I know to cut your spending effectively. For the next 30 days just write down every dime you spend, every bill, etc should be in your check book already but write those down anyway too. Get a simple note book and record every single dime, read it every night before bed and just keep going. Write your required spending (bills you have to pay, light, heat, mortgage/rent, cable, weekly groceries, etc.) in one section of the book and all other expenditures in another section.

Don’t judge yourself much just record every penny. I mean if you give the kid a quarter for a gum machine write it down. That coffee at Starbucks, that bag of candy, what ever just record it. Do this religiously for 30 days, don’t cheat trust me you will benefit from this simple action.

Now try something I think might shock you. Take just the expenditures on things other then required bills and total them for each week. Make a graph of your weekly spend over 4 weeks. Odds are you will spend a lot less in week 4 then you did in week one. Remember no one told you to spend less, told you what to cut your spending on etc.

The simple act of being aware of what you spend, where and how you spend it will connect with your inner common sense. We all waste money, hell I do it! The key is to waste it consciously not unconsciously. Choose your play don’t just spend until it is gone.

Those of you who make middle to upper incomes will benefit the most with this technique. In fact the more you make the more you need to do this. This was the technique I used to reel myself back in as I went up in income. The more you have the more you tend to blow as you get to a point where you can pay all your bills easily and have good investments going on you get very complacent with what is left.

No matter your income be it 20K a year or 200K a year I challenge you to give this record keeping a try, most will be very shocked and pleased with the results over 30, 60 and 90 days. If you don’t do this all the time whenever you start to blow to much money, use it as a tune up. Remember you are your own boss and you need to be kicking your own ass once in a while.