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Showing posts with label debt. Show all posts
Showing posts with label debt. Show all posts

Tuesday, February 14, 2012

The New Economic Order

With the global economy going to hell in a hand basket (AGAIN), people are scared ...

You see it in the "Occupy Movement" demonstrations taking place in various centers around the world.

You see it in news reports about impending sovereign debt default in Greece, Spain, Portugal, Ireland, Italy and other European countries.

And you see it in the ongoing economic malaise in the United States, where despite one and a half TRILLION dollars in economic stimulus thousands of jobs continue to disappear each month.

What does it all mean?

And what should YOU be doing to protect your livelihood and the financial security of your family?

The First Thing To Realize Is That What We're Going Through Is NOT The End Of The World – Far From It...

It's simply the birthing pains of a bold new economic order... and the death spasms of an old way of doing things that's no longer workable.

You see, at one time it made sense for companies to try and dominate and control every aspect of the economic food chain – upstream through ownership of suppliers of raw materials and parts, for production... and downstream through ownership of the companies that distributed and sold their products to the consumer.

A car manufacturer, for example, gained much through the shrewd acquisition of a tire company, a glass company, and a metal company. Control of these entities smoothed away transactional friction.

No need to spend time researching suppliers. No need to negotiate the best deals. No need for manual paperwork and order processing. No intermediary commissions and sales fees. Less communication and travel costs and fewer legal expenses.

Having a financial interest in the dealer networks that sold the cars also reduced downstream friction in much the same ways.

So companies grew ever larger, employing more and more people. Not only did they seek to integrate vertically (both forwards and backwards) but horizontally as well, buying up competitors in a never-ending quest for "economies of scale".

Stock and bond markets grew to meet the insatiable demand for capital to fund endless consolidation. And governments grew in size too, creating massive social structures to support this model, running up astronomical debts in the process.

Educational systems were geared toward churning out the millions of employee drones needed to staff the global empires that were being built. Students were trained from an early age to fit into the predefined roles demanded by industry, commerce and government.

And people became very comfortable with the notion that their employers and governments were there to look after them. Strength in numbers insulated the little guy from the brutal self-responsibility, endless adaptation and uncertainty of entrepreneurship.

But gradually – unnoticed by most – the transactional friction that gave rise to all of this started to disappear ...

Just twenty years ago, if a New Yorker wanted to speak to a potential business partner in London England, a short ten-minute phone call cost $20 to $30.

If the potential partners wanted to meet face-to-face, one of them would have to spend thousand of dollars and several days in lost productivity to make the trip.

And if a deal was to be struck, it took millions of dollars in capital to bring together the necessary employees, buildings, machinery etc. to compete effectively in the marketplace.

Today, you can talk all day long between almost any two points on Earth, for free.

You can see the whites of a person's eyes across the ocean instantaneously and it won't cost you a red cent.

You can send money to somebody, share documents, or update database records on each other's computers in near real time for pennies.

And you can sell your products and services globally with nothing more than a laptop computer and a few inexpensive online tools and services.

There is no longer a need to integrate people, raw materials, information, and capital, under a large centralized command and control structure.

Now, independent individuals from all over the world can collaborate on an as-needed basis to get the same jobs done – for less.

A Lone Wolf Entrepreneur At Home In His or Her Pajamas Can Now Compete With Full-Fledged Corporations On A Level Playing Field In Many Areas Of The Economy...

Large companies MUST adapt to this by downsizing and outsourcing aggressively. Governments too. And this is why jobs continue to disappear.

This is not a nightmare to be afraid of. It's a miracle to rejoice in.

You now have the power to gain total control of how, when and where you do your work.

Your income, your lifestyle, and your focus can be entirely in your own hands.

And you no longer need depend on forces outside of your control for your livelihood.

Isn't It Time You Took Your Professional Skills And Turned Them Into A Thriving Full-Time Business Of Your Own?

It's way past time! And you know it.

So what's stopping you?

Well, if you're still putzing around at a JOB, chances are you're probably struggling with one or more of these three entrepreneurial blocks:

You Don't Like Selling – As an independent entrepreneur striking out on your own, you wear many hats. The most important hat you will ever wear is that of Chief Marketing Officer.

In business, NOTHING happens until something gets sold. So your first order of business is to become comfortable and skilled at selling yourself and your products and services.

Unless you are already in sales, chances are this frightens you, perhaps even repulses you. If you have a negative view of selling, it must be vigorously reframed, or you're setting yourself up for failure. The world WILL NOT beat a path to your door.

You're Easily Dazzled by Bright Shiny Objects – It's wonderful to be able to leverage web-based technology to engage with potential customers all over the world. You can and should be doing this.

But it's all too easy to become distracted and overwhelmed by the endless stream of whiz-bang communications options available, most of which you do not have the time or the resources to make profitable.

You can spend thousands of dollars building a fancy website, and hundreds if not thousands of hours plugging into a dozen different social media platforms. And not gain a single client for your trouble.

Or you can focus on mastering a simple blog platform and an inexpensive broadcast email service and make 7 figures.

You Lack Mental Toughness – This one goes back to the brainwashing you acquired while you were growing up. Part of the game was to make you feel small, inadequate and dependent on those with capital and resources.

Your parents pushed you to go to school, so you could find a safe, secure pigeonhole somewhere in the establishment. Much of the risk and uncertainty were removed from the equation, or so you were told.

And now, you find the self-responsibility and independence of thought necessary for entrepreneurial success terrifying. You fear rejection and failure, and find it hard to maintain the iron willed resolve you need to succeed in the face of inevitable set backs and adversity.

We all face the same challenges on our respective journeys to entrepreneurial independence. Your mission is to begin kicking them to the curb.

By Daniel Levis


[Ed Note: Daniel Levis is a top marketing consultant, direct response copywriter and publisher of the highly acclaimed home study course, How to Quit Your Job And Double Your Income – The Fastest Way to 6 Figures and Beyond, As an In-Demand Coach, Consultant or Freelancing Pro... Click here to register for a free web workshop. No Credit Card Required.]

Source : http://www.earlytorise.com/

Disclaimer...The comments, products and services are owned by the poster. We are not responsible for their contents.

Sunday, December 25, 2011

A Self-Made Millionaire's Guide to Dealing with Debt

I had my first serious run-in with debt when I was 30 years old.

My wife K and I were renting a condominium in Washington, D.C. Our landlady came to us with an exciting opportunity: We could buy the condo for $60,000 with no money down. For just $100 a month more than what we were already paying for rent, we would be paying a mortgage. It sounded like a great deal, so we took it.

What we bought was a negatively amortizing mortgage with a three-year term and an 11% interest rate. That meant, every three years we were paying $19,800 in debt service and another $3,000 in closing costs.

We didn't realize what was going on because our monthly payments were only $550. I was too foolish then to ever ask myself, "What is the cost of this debt?"

I tried to find another bank to take me out of this scam but none would. The mortgage we had signed was not backed by the government (Freddie Mac/Fannie Mae), which meant that no other bank would touch it.

I learned that when banks make it easy to borrow money, it's not because you are a nice, deserving person. I learned that if you can get a loan despite poor credit (as ours was at the time), there is usually a scam involved. It also taught me to always ask the two critical questions about debt, "How much will it cost?" and, "Can I afford it?" It was an expensive lesson.

Many of us view debt as a necessity. We buy homes with it. And cars. And boats, and toys, and vacations. Some use it to buy the basics: clothes, food, and furniture.

Debt is not necessary. It is a luxury. Sometimes debt is useful. Sometimes it is wasteful. But debt is always dangerous.

It is unnecessary because there are always less expensive ways of getting what you want. And it is dangerous because it can sometimes be very expensive.

Let me give you two examples.

Let's say that, like most Americans, you are in the habit of buying things with credit cards. After a while, you notice that you have accumulated $30,000 in total debt. You decide to cut up your cards and repay your debt. You can devote $400 a month to paying it back. How long will it take, and how much will it cost you?

The answer may surprise you. Assuming an interest rate of 10%, it will take you 10 years to pay off the credit card debt. And your total payments will be $47,275. Of that, $17,275 will have been in interest payments.

Or let's take a $150,000 home on which you take a $120,000 loan with a 6.5% interest rate over 20 years. The mortgage payments are $894 a month, which you can afford. But how much will that house really cost you? Including interest payments? You will end up paying $244,725 for that house. Almost 40% of that – $94,725 – will have been to interest payments.

The commercial community (bankers and manufacturers) doesn't want you to be afraid of debt. And neither does the government. These institutions want you to like debt. They want you to use it. They want you to go into debt because it is good for them.

When you take out a mortgage to buy a home, or sign a lease on a car, or use credit cards to pay for your lifestyle expenses, the commercial community profits. The manufacturers make money on products you may or may not need. And the banks make money on your debt.

The mainstream financial media rarely talks about the dangers of debt. That's because they make their profits from the financial institutions and manufacturers whose advertisements support their publications.

And the government actually encourages its citizens to take on debt. This was the recommended strategy for getting us out of the Great Recession that the (second) Bush administration (and the Federal Reserve) advocated and it's the same scheme that Obama's people are advocating today.

Here's what you should know about debt:

As a general rule, you should live without it. You should find less expensive ways to acquire the things you need.

Unless you are wealthy, don't lease your car. Buy it. Buy the car you can afford, not the car you believe will make you happy. Any non-appreciating asset (such as a car) will never make you happy if you have to pay its debt service. I didn't buy my first luxury car until I was a multimillionaire.

Don't buy anything with a credit card. Keep only one credit card for renting cars. Use a debit card to buy clothes and groceries. If you don't have enough money in your bank account to use your debit card on a purchase, don't buy it. If you don't have enough money in the bank to buy something, it means you can't afford it.

If you can't afford the debt on your house, sell it (if you can) and buy something cheaper. In any case, start paying off the principle balance of your house (the amount you owe, not the interest you will owe) as fast as you can. Make it a goal to own your house free and clear as soon as possible.

If you have debt, pay it off as fast as you can, but not before you have filled up your bucket for emergency savings. By emergency savings, I mean money you will need to pay your bills if you lose your job. Six months' income is what some financial advisors recommend. I'd recommend a year. It may take you that long to replace your lost income.

Pay off your debt even if the interest rate is low. In theory, you should put your extra money elsewhere if you can earn more on it than you are paying in interest. If, for example, you can get 4% in municipal bonds and you have a student loan at 2%, it makes more sense to buy municipals bonds and pay your student loan off slowly. But in reality, the extra 2% you are earning on the spread is not worth the risk in carrying the debt.

When I started earning money, the first thing I did was get rid of that terrible loan on the condominium I told you about earlier.

The next thing I did was pay off the mortgage I took on a home. I paid it off in two or three years, even though it was a 30-year mortgage. I loved the idea of owning my home free and clear. So I put every extra dollar I had toward paying down that mortgage. The bank didn't like it, but the day I tore up that mortgage... I felt like I had been emancipated from financial slavery.

Finally, if you are troubled by debt, know this: you can get out of it just as I did.

[Ed. Note. If you're not happy with your financial situation, you're in the perfect position to change it for the better – right now. At The Palm Beach Letter, we can show you how. For the equivalent of a tank of gas or a dinner out ($49)... you are getting a whole year of realistic investment and wealth-building advice. Click here for details.]

By Mark Ford, editor, The Palm Beach Letter

Source : http://www.earlytorise.com/

Disclaimer...The comments, products and services are owned by the poster. We are not responsible for their contents.

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