May 10, 2016

http://www.investopedia.com/financial-edge/1212/ways-to-destroy-your-net-worth.aspx

Net worth is no trivial matter, as it is ultimately the only meaningful measure of personal wealth. There are many good ways to build individual net worth, including earning more, saving more and improving the return on savings and investments, but it’s equally important to play a good defense. There are five ways to destroy your net worth: uncontrolled spending, bad debt, no savings/retirement plan, open-ended risk, and failure to maximize peak earnings. You build your net worth by making more than you spend, and you may have to build that net worth over time. Because building net worth takes time, it is why the 4th step of the Process is so important. Manage how much you spend and retain the rest. Disciplined budgets are usually a good preventative measure for uncontrolled spending, as most people are loathe to actually budget for items that they know they really do not need. There are different types of debt. There’s good debt and there’s bad debt. Accumulating even moderate amounts of credit card debt can quickly grow out of control due to the very high interest rates that debt carries. Likewise, taking on debt to buy a car (a depreciating asset that also demands maintenance and operational spending) is not a good financial move. It’s important to understand that even debt is neutral. Having a financial education is important in understanding the difference between both. While keeping spending lower than earnings is critical to accumulating savings, it is likewise very important to have a savings and retirement plan. Spending less can increase your savings, but also finding ways to create another stream of income can also help in accumulating savings. You should put mechanisms in place that will help you set aside your surplus out of your sight and mind or you will run the risk of spending it.
“The wise store up choice food and olive oil, but fools gulp theirs down.” Proverbs 21:20 NIV. Not maintaining adequate insurance is an excellent example of an open-ended risk. While young people may believe that they have many years of good health ahead of them, a torn knee ligament or car accident can lead to huge medical bills and serious financial difficulties. One of the prime causes of personal bankruptcy in the United States is medical costs, and going without health insurance represents a sizable risk to a person’s net worth. I recommend that if you don’t have adequate insurance coverage then find an independent insurance agent as soon as possible and get a quote. Even if you do have coverage, I recommend you get a check-up. When a tragic life event happens you want to be prepared. For most people with college educations, the peak earnings period runs from their early 40s into their mid-50s (peak years for those without college degrees tend to start, and end, earlier in life). As such, it is important to maximize that earnings opportunity. Unless you hit the lottery, you’re an entertainer, or a professional athlete, you’re going to have to put time and work into your career in order to maximize your earnings. Job hopping can hurt your ability to exploit the peak earnings years, because a person runs the risk of not gaining an adequate level of experience and it could damage a person’s ultimate net worth. In other words, don’t stay in a career path you hate, but be willing to honor the principle of seed, time, and harvest. The time aspect is the most frustrating but also the most rewarding part of hard work.

http://www.bankrate.com/finance/loans/what-lenders-look-for-in-personal-loan-borrower.aspx

Whether you apply for a personal loan at a bank, credit union or a financial-technology firm, there’s much about the process that’s similar from one lender to another. There are three basic things that lenders will ask: proof of income, ability to repay, and what do you plan to use the money for. A review by the credit bureau TransUnion of 54 million unsecured personal loans issued between 2010 and 2014 found 2 big differences among lenders:

  • Banks are more picky about who they lend to.
  • Banks, on average, issue bigger loans.

Credit unions, meanwhile, issued 53% of their personal loans to non-prime customers, while finance companies made 77% of their loans to customers with low credit scores. A number of marketplace lenders cater to below-prime customers. San Francisco-based LendUp, for instance, will issue loans to borrowers with a credit score as low as 450. As a result of the stronger higher credit score criteria, banks are willing to make larger loans to borrowers. The average bank loan was $6,050, while credit unions and finance companies lent significantly smaller sums. I believe you should have a line of credit or a loan when you don’t need it, because when you do it may be too late. Something you should consider is turning your savings account into a personal line of credit. Why let the bank, credit union, private lender, credit card company, or federal government charge you interest, when you can charge yourself interest and become the bank. For more information on this technique contact me in the contact me section.

http://www.marketwatch.com/video/a-bartender-explains-liquid-assets/4AD0E892-FBFE-4FD9-AD69-CDCA093F1DC9.html

Enjoy this video explanation of liquid assets. When you have liquid assets. Getting what you need is easy. Cash is the ultimate liquid assets.
Liquid assets are cash, a checking account, stocks, bonds, and mutual funds.
Basically If you sell something for cash quickly and it doesn’t lose value when sell it, that is a liquid asset. Illiquid assets are assets that are hard to find buyers for. An easy example is trying to sell your house when no one is willing to buy at the price you’re trying to sell it for. Liquidity is very important in your finances. Think of liquidity as the blood of your finances. “… for the blood is the life…” (Deuteronomy 12:23 NKJV). I believe you should be liquid enough to be able to move on an opportunity to be generous without it hurting your day to day living. The best way to reach that level of generosity is to have a budget in place, little to no bad debt, and multiple streams of income.

http://www.investopedia.com/articles/entrepreneurship-small-business/050416/why-small-businesses-fail-grow.asp

Running a small business requires superior problem-solving and an ability to look at the bigger picture. Aside from ensuring that your business turns a profit on a regular basis, you also need to be concerned with your own financial health over the long term. That includes having a strategy in place for building wealth, so you can enjoy a comfortable retirement once the time comes to hand over the reins of your business to someone else. There are four obstacles that can hinder you from creating wealth: too much business debt, an inefficient tax strategy, lack of diversification, and external risks. Debt can be used to help start a business if you don’t have the initial start-up capital saved up or investors. Debt can be used to remedy the time gap in between accounts payable and accounts receivable. At some point you may need a working capital line of credit, and in my opinion that is the best use for debt, however if a substantial part of your business’ revenue is going toward repaying its debts, that leaves less income to devote to growth. It also leaves you, as the business owner, less money to funnel into a solo 401(k), SEP IRA or similar qualified retirement plan to ensure your own future. Business is personal. A person doesn’t go into business to sell an object just to sell an object. There is a personal reason or plan for a person being in business. The purpose may be for a greater good, but often times that business will one day allow the person to retire. As an employee it’s important to remember this truth. If you’re not taking advantage of every available tax break, you may be shortchanging your wealth without even realizing it. There are a number of tax credits and deductions that you can claim on your business or personal tax return. To qualify as tax deductible, an expense must be deemed both ordinary and necessary. This means the expense must be something that’s commonly associated with the type of business you own and directly connected to its operation. When you don’t take the time to maximize every possible tax advantage, the result is an overly large tax payment. Hiring an accountant to manage your filing may increase your business expenses slightly, but it can also help to minimize your tax liability. In terms of building wealth, the long-term benefit can easily outweigh the cost.

Being a business owner requires a certain amount of juggling, and you simply may not have time to pay as much attention to your investments as you’d like. The size of your assets affects your overall financial standing, including how banks see you, especially if you’re a sole proprietor. Investing in mutual funds or exchange-traded funds (ETFs) eliminates the hassle of trying to put together a well-rounded portfolio, but it can be problematic if the funds you’re purchasing hold the same underlying securities. Business owners can also run into issues if they’re not rebalancing periodically. This is vital to ensure that you’re maintaining the right asset allocation, based on your investment goals and risk tolerance. If you don’t rebalance regularly, you could end up with a portfolio that’s either too aggressive or too conservative. As a business owner, you have to understand that are other types of asset classes. Each asset class requires a higher level of financial education, work, and faith. It’s risky to rely too heavily on one asset class, and to dive into an asset class thinking that the same rules apply. Also it’s important to attempt to prepare for unforeseen risks that may occur. Choosing the appropriate business structure is an important step in minimizing liability, but you should also be proactive in reviewing your business and personal insurance coverage to ensure that you’re protected against every possibility.
A successful small business can put you on the right path toward building wealth, but you can stumble if you’re not thinking ahead. Keeping your eyes open for these and other challenges that may pop up along the way is the best defense when your wealth-building plans are threatened. In this article, I quoted the author more than usual, and it’s because I agree with her points. The bottom line is that your small business will fail to grow because of the factors above, but what it is really fundamental is that your business like your personal life has a vision. Where there is no vision, the people perish….” (Proverbs 29:18 KJV)

If you have need agreement in prayer, or if you’re in need of a financial checkup you can reach me in the contact me section.

“But those who want the best for me, Let them have the last word—a glad shout!— and say, over and over and over, ” GOD is great—everything works together for good for his servant.” I’ll tell the world how great and good you are, I’ll shout Hallelujah all day, every day.”

Psalm 35:27-28 MSG

http://www.investopedia.com/financial-edge/1212/ways-to-destroy-your-net-worth.aspx

Net worth is no trivial matter, as it is ultimately the only meaningful measure of personal wealth. There are many good ways to build individual net worth, including earning more, saving more and improving the return on savings and investments, but it’s equally important to play a good defense. There are five ways to destroy your net worth: uncontrolled spending, bad debt, no savings/retirement plan, open-ended risk, and failure to maximize peak earnings. You build your net worth by making more than you spend, and you may have to build that net worth over time. Because building net worth takes time, it is why the 4th step of the Process is so important. Manage how much you spend and retain the rest. Disciplined budgets are usually a good preventative measure for uncontrolled spending, as most people are loathe to actually budget for items that they know they really do not need. There are different types of debt. There’s good debt and there’s bad debt. Accumulating even moderate amounts of credit card debt can quickly grow out of control due to the very high interest rates that debt carries. Likewise, taking on debt to buy a car (a depreciating asset that also demands maintenance and operational spending) is not a good financial move. It’s important to understand that even debt is neutral. Having a financial education is important in understanding the difference between both. While keeping spending lower than earnings is critical to accumulating savings, it is likewise very important to have a savings and retirement plan. Spending less can increase your savings, but also finding ways to create another stream of income can also help in accumulating savings. You should put mechanisms in place that will help you set aside your surplus out of your sight and mind or you will run the risk of spending it.
“The wise store up choice food and olive oil, but fools gulp theirs down.” Proverbs 21:20 NIV. Not maintaining adequate insurance is an excellent example of an open-ended risk. While young people may believe that they have many years of good health ahead of them, a torn knee ligament or car accident can lead to huge medical bills and serious financial difficulties. One of the prime causes of personal bankruptcy in the United States is medical costs, and going without health insurance represents a sizable risk to a person’s net worth. I recommend that if you don’t have adequate insurance coverage then find an independent insurance agent as soon as possible and get a quote. Even if you do have coverage, I recommend you get a check-up. When a tragic life event happens you want to be prepared. For most people with college educations, the peak earnings period runs from their early 40s into their mid-50s (peak years for those without college degrees tend to start, and end, earlier in life). As such, it is important to maximize that earnings opportunity. Unless you hit the lottery, you’re an entertainer, or a professional athlete, you’re going to have to put time and work into your career in order to maximize your earnings. Job hopping can hurt your ability to exploit the peak earnings years, because a person runs the risk of not gaining an adequate level of experience and it could damage a person’s ultimate net worth. In other words, don’t stay in a career path you hate, but be willing to honor the principle of seed, time, and harvest. The time aspect is the most frustrating but also the most rewarding part of hard work.

http://www.bankrate.com/finance/loans/what-lenders-look-for-in-personal-loan-borrower.aspx

Whether you apply for a personal loan at a bank, credit union or a financial-technology firm, there’s much about the process that’s similar from one lender to another. There are three basic things that lenders will ask: proof of income, ability to repay, and what do you plan to use the money for. A review by the credit bureau TransUnion of 54 million unsecured personal loans issued between 2010 and 2014 found 2 big differences among lenders:

  • Banks are more picky about who they lend to.
  • Banks, on average, issue bigger loans.

Credit unions, meanwhile, issued 53% of their personal loans to non-prime customers, while finance companies made 77% of their loans to customers with low credit scores. A number of marketplace lenders cater to below-prime customers. San Francisco-based LendUp, for instance, will issue loans to borrowers with a credit score as low as 450. As a result of the stronger higher credit score criteria, banks are willing to make larger loans to borrowers. The average bank loan was $6,050, while credit unions and finance companies lent significantly smaller sums. I believe you should have a line of credit or a loan when you don’t need it, because when you do it may be too late. Something you should consider is turning your savings account into a personal line of credit. Why let the bank, credit union, private lender, credit card company, or federal government charge you interest, when you can charge yourself interest and become the bank. For more information on this technique contact me in the contact me section.

http://www.marketwatch.com/video/a-bartender-explains-liquid-assets/4AD0E892-FBFE-4FD9-AD69-CDCA093F1DC9.html

Enjoy this video explanation of liquid assets. When you have liquid assets. Getting what you need is easy. Cash is the ultimate liquid assets.
Liquid assets are cash, a checking account, stocks, bonds, and mutual funds.
Basically If you sell something for cash quickly and it doesn’t lose value when sell it, that is a liquid asset. Illiquid assets are assets that are hard to find buyers for. An easy example is trying to sell your house when no one is willing to buy at the price you’re trying to sell it for. Liquidity is very important in your finances. Think of liquidity as the blood of your finances. “… for the blood is the life…” (Deuteronomy 12:23 NKJV). I believe you should be liquid enough to be able to move on an opportunity to be generous without it hurting your day to day living. The best way to reach that level of generosity is to have a budget in place, little to no bad debt, and multiple streams of income.

http://www.investopedia.com/articles/entrepreneurship-small-business/050416/why-small-businesses-fail-grow.asp

Running a small business requires superior problem-solving and an ability to look at the bigger picture. Aside from ensuring that your business turns a profit on a regular basis, you also need to be concerned with your own financial health over the long term. That includes having a strategy in place for building wealth, so you can enjoy a comfortable retirement once the time comes to hand over the reins of your business to someone else. There are four obstacles that can hinder you from creating wealth: too much business debt, an inefficient tax strategy, lack of diversification, and external risks. Debt can be used to help start a business if you don’t have the initial start-up capital saved up or investors. Debt can be used to remedy the time gap in between accounts payable and accounts receivable. At some point you may need a working capital line of credit, and in my opinion that is the best use for debt, however if a substantial part of your business’ revenue is going toward repaying its debts, that leaves less income to devote to growth. It also leaves you, as the business owner, less money to funnel into a solo 401(k), SEP IRA or similar qualified retirement plan to ensure your own future. Business is personal. A person doesn’t go into business to sell an object just to sell an object. There is a personal reason or plan for a person being in business. The purpose may be for a greater good, but often times that business will one day allow the person to retire. As an employee it’s important to remember this truth. If you’re not taking advantage of every available tax break, you may be shortchanging your wealth without even realizing it. There are a number of tax credits and deductions that you can claim on your business or personal tax return. To qualify as tax deductible, an expense must be deemed both ordinary and necessary. This means the expense must be something that’s commonly associated with the type of business you own and directly connected to its operation. When you don’t take the time to maximize every possible tax advantage, the result is an overly large tax payment. Hiring an accountant to manage your filing may increase your business expenses slightly, but it can also help to minimize your tax liability. In terms of building wealth, the long-term benefit can easily outweigh the cost.

Being a business owner requires a certain amount of juggling, and you simply may not have time to pay as much attention to your investments as you’d like. The size of your assets affects your overall financial standing, including how banks see you, especially if you’re a sole proprietor. Investing in mutual funds or exchange-traded funds (ETFs) eliminates the hassle of trying to put together a well-rounded portfolio, but it can be problematic if the funds you’re purchasing hold the same underlying securities. Business owners can also run into issues if they’re not rebalancing periodically. This is vital to ensure that you’re maintaining the right asset allocation, based on your investment goals and risk tolerance. If you don’t rebalance regularly, you could end up with a portfolio that’s either too aggressive or too conservative. As a business owner, you have to understand that are other types of asset classes. Each asset class requires a higher level of financial education, work, and faith. It’s risky to rely too heavily on one asset class, and to dive into an asset class thinking that the same rules apply. Also it’s important to attempt to prepare for unforeseen risks that may occur. Choosing the appropriate business structure is an important step in minimizing liability, but you should also be proactive in reviewing your business and personal insurance coverage to ensure that you’re protected against every possibility.
A successful small business can put you on the right path toward building wealth, but you can stumble if you’re not thinking ahead. Keeping your eyes open for these and other challenges that may pop up along the way is the best defense when your wealth-building plans are threatened. In this article, I quoted the author more than usual, and it’s because I agree with her points. The bottom line is that your small business will fail to grow because of the factors above, but what it is really fundamental is that your business like your personal life has a vision. Where there is no vision, the people perish….” (Proverbs 29:18 KJV)

If you need agreement in prayer, or if you’re in need of a financial checkup you can reach me in the contact me section.

“But those who want the best for me, Let them have the last word—a glad shout!— and say, over and over and over, ” GOD is great—everything works together for good for his servant.” I’ll tell the world how great and good you are, I’ll shout Hallelujah all day, every day.”

Psalm 35:27-28 MSG

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