There’s Money Everywhere – Part 1 of 3

Sam Walton once said, “Money isn’t scarce – Vision is!”

I have found that statement to be very true. We have money all around us. The problem is knowing where it is and accessing it.

The number one area people have money in but don’t see it as money is in their Home Equity. If you have a home with a mortgage of $100,000 but the home is valued on today’s market at $300,000 then you have equity of $200,000.

That equity is just sitting there doing nothing. It is earning no interest! It is not in compounding mode! Compounding by the way is the magical ingredient of wealth creation which is why Albert Einstein called Compound Interest the eighth wonder of the world. Yet your equity just sits there – dead – doing nothing.

With home prices falling in the USA what if next year your home was worth $250,000? You would’ve lost $50,000 in equity! You could have had that money sitting in an investment and earning something. Even if it was in a high risk – high return investment it would be a better gamble than just letting it sit there doing nothing.

However, I do know that to many people touching their home equity is sacred and not to be tampered with. If you are one of those people the only reason you feel that way is because you don’t understand that even by doing nothing you are taking a risk (read the example above).

On this subject as a Wealth Coach here is what I advise clients. If you have $100,000 in equity take out half of it. With that half divide it into 4 parts and invest as follows:

1- Something really safe like Money Market Mutual Funds or Certificates of Deposit. Typically these will pay around 2% to 4% if you are lucky. Still this is better than earning 0% leaving the equity in your home doing nothing.

2- Invest in higher yielding Mutual funds and Bonds. Typically these should yield 8% to 18% per year and therefore are riskier than # 1.

3- Invest in Real Estate, Real Estate Co-Ops, Real Estate shares.

4- Invest in high risk / high return investments. You need some of these crazy, mad investments in your portfolio if you are going to ever hit a home run. The secret is to find someone who has been successful with these and ride their coat tails.

In 3 to 5 years no matter what happens to home prices in your area you should have made some money with that equity you withdrew from your home.

The bottom line folks is either YOU are going to Work Hard For Your Money or you are Going To Let Your Money Work Hard For You. I prefer the latter!

Take Control Of Your Financial Future

My 24 year-old daughter does not drive and I see her constantly depend on others for a ride. She gets pretty sick and tired of depending on others, being late because of others and not being able to go wherever she wants to without it costing her a fortune in taxi fare. However, I guess she is not sick and tired enough yet because she still does not have her driver’s license.

I tell you all this because I want to ask you this:

Who is driving your Financial Car? By putting your financial life in the hands of others do you think you will ever get rich? Do you think they can care about your wealth as much as you could?

Just over two years ago I decided to get my financial drivers license. And all that means is that I started to read and study everything I could on money. I started with just 15 minutes a day and I have to tell you I was bored silly. But soon I got up to 20 minutes a day and then 25 and then 35. Within about 6 months I was spending 2 to 4 hours a day reading every financial website I could find. I bought magazines like Money Sense, Inc, Forbes and Fortune to name just a few and I would read them while waiting in the car while my wife went into Wal-Mart. Or I would read while taking the transit to an appointment.

Everyday, my affirmations were, “I am a Financial Genius” – “I am a Financial Guru” – “Everything I touch Financially Turns To Gold”. These words increased my appetite for financial information and I voraciously fed on all the free education available on the Internet. These words became a self-fulfilling prophecy as everything I seemed to touch turned to gold.

As 2006 comes to a close I hope that with it comes an end to financial mediocrity if that is where you are at.

In 2007 take control of your financial life by making financial information and education a cornerstone of your life. And you can start right here. If you have not done so already subscribe to this Blog. You can do that by entering your email in the space provided towards the upper right side of this Blog.

2007 can be your best year ever financially if you take charge. You don’t have to do it alone but you do have to Make A Decision to DO IT!