(Business coaching training) The One Question to Consider Regarding Financial Freedom!
No commentsBy Quintin Whitfield
PREAMBLE: The only way to take control of your life, raise your standard of living and move beyond merely surviving is to create your own unique product or service that you offer to increasing numbers of people in exchange for the things of value that you desire. This simple formula applies to countries as well as people. A self-sufficient economy has its own products or services of value to export to the world. Similarly, a self-sufficient individual has something of value to exchange in the global marketplace. That thing of value is based on your natural talent, skill, or interest-in other words, your passion.
NOTE: The following article was originally written for the citizens of the island nation of Saipan. It therefore includes references of a nature unique to that nation’s economic situation.
When you think of what can help the you elevate yourself from your current economic situation, it’s important not to lose sight of a few important ideas and truths about money, value, and economics.
I. MONEY IS A MEANS OF EXCHANGE
No one ever gives you money except in exchange for something of value.
II. EXCHANGE IS THE REAL ISSUE
Don’t let anyone mislead you. The only reason we focus on money is simply because the world has agreed that money is the basis of exchange that we’re going to use. I have eggs. You have a cow. If you want what I have, and I want what you have, then we can exchange my eggs for your cow. But you may not want eggs. You may want something that I do not have. And I may not want a cow. I may want something you do not have, like a car. So we all agree that eggs are worth a certain amount of money, and that a car is worth a certain amount of money. I can now sell my eggs for money, and get the money to buy a car. But all I really did was trade eggs for a car, using money as the means of exchange. So it’s not the money that’s driving the economic engine, it’s the exchange.
Now, then, there are four ways that one can engage in the process of exchange:
1. You can accept money but give nothing in return (rip-off)
2. you can accept money and give a partial or corrupted version of what was expected. (short-changing)
3. you can accept money and give exactly what was ordered. (fair exchange)
4. you can accept money and give more than was expected. (exchange in abundance)
By the way, Exchange Method four, (accepting money and giving more than expected) is the only way to ensure one’s long-term survival and prosperity. But more on that in a future column.
III. PRODUCTS ARE THE BASIS OF EXCHANGE
“When a whole society demands a high
standard of living and yet doesn’t concentrate
on the personal production of exchangeable
products, it is finished.”-The Dynamics of Money
So how does one engage in exchange with the world? Simple. You need a product. A PRODUCT can be defined as “a high quality service or article in the hands of the consumer in exchange for a valuable. It is something that can be exchanged with other activities in return for support.”
IV. THE QUESTION IS…
So the single, most important question to be asked of those who steer the course of nations, its citizens, investors, business owners, and potential Saipanpreneurs is: WHAT ARE WE PRODUCING?
When someone suggests a solution to the economic situation, ask him, “Great idea, but what are we producing?”
When someone suggests an idea for how to get loans and federal assistance, ask her, “Great, but what are we producing?”
When someone suggests an idea for a business you can start, ask yourself, “What am I producing?”
If there is no production, there is no money-no real, long term money.
A FLAWED PLAN
I always tell my clients that any plan that relies too much on another person’s whim, good will or largess for its success is inherently a flawed plan. It may provide a short-term stop-gap measure, but there is no dependable future or control built in.
Selling someone the hope or possibility of doubling their money based on the internal programming of a slot machine is not exchanging something of value. It’s essentially giving nothing in return. It’s a rip-off.
Sure, you can call it entertainment if you wish, but at the end of the day, you’ve not improved your lot in life, because you’re not exchanging anything of real value that can grow, improve your reputation, bolster your self-esteem or raise your standard of living. Furthermore, since it is not based on anything over which you have any creative input or control, you cannot use it dependably to improve the welfare of the masses.
It’s not an industry into which any average person of entrepreneurial aspirations but meager means can venture. It’s a limited industry with power concentrated in the hands of the few.
Having people running around throwing their money into slot machines doesn’t automatically improve the lot of the general population. Sure, there may be some collateral spending in stores, new jobs in the hospitality/service sectors, but by far the biggest winners are the casino owners. From my own limited travel experience, I’ve been to Atlantic City, in New Jersey, and witnessed stark poverty just beyond the fences of prosperous casinos. There’s no guaranteed “trickle down.”
The danger in basing economic growth on simply providing a place for people to throw their money into slot machines is that the world doesn’t need another place to do that–least of all a place way out in the Pacific Ocean. Any place with better entertainment, a more convenient location or nicer hotels, will win the competition for tourist dollars.
And, it would be sad to think that the only thing this beautiful land and its people have to offer is a place for people to gamble money in search of an easy payoff. It’s a slap in the face of the traditional creativity, natural beauty, the spirit of self-sufficiency that have existed here for centuries.
A NEW DIALOGUE
If you continue to perpetuate the idea that we can be saved only by someone else’s money, then those presently without money are rendered powerless in the discussion. If, on the other hand, you change the dialogue to discussions of finding our “value” in the marketplace, then everyone can participate.
Without such a new dialogue, and the real, long-term solutions that come with it, we’ll perpetuate lowered expectations, and witness the downward spiral of self-esteem and hope that comes with the exclusive dependency on others for salvation. When a people subjugate themselves and their inherent value to the value of a dollar, there are things you cannot see that will be visible only in their absence. For a nation’s humanity, once lost can never be replaced.
IV. SUMMARY
Money is a means of exchange.
Exchange is the challenge to be solved.
Products and Services form the basis of Exchange
No production=No Money
The only real question, therefore, is: What Are YOU Producing?
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Don’t Cancel Your Endowment Policy Without Being Carefully Informed
By Quintin Whitfield
Back in the 1980s word went around that there was a wonderful new way to pay your mortgage. In those days the process of getting and running a mortgage was almost sacrosanct, and little variation was available. A fairly common route to take was to open an account at the Building Society of your choice, and to put in as much money as you could, the intention being to prove to said Building Society that you were prudent and could be trusted with their money.
When the time for a mortgage arrived, it was best suit on for an appointment with the branch manager to convince him of your dependability, and if you were successful you were given a (typically) 25 year repayment mortgage. Inflation was your friend because you usually started off committed to a monthly repayment which made yours eyes water, but as time went by the real value of this dwindled in significance.
When you had completed your 300 monthly repayments the property was yours. It was all very straightforward until the endowment mortgage arrived. With this you paid only the interest due, with a promise of lower monthly commitment. At the end of the term a sum would be handed to you which would be sufficient to pay off the capital sum of the mortgage and leave you with enough to enjoy a brief excursion into the wild life of regular meals and even exotic holidays, which in extreme cases may even have been outside the UK!
That was the dream which was eagerly taken up by many hardworking mortgage owners and unfortunately, also by some over eager salesmen. The sum necessary to pay off your mortgage was not guaranteed, and in the majority of cases it didn’t. Therein lies the formation of the mis-selling scandal; many building societies took great care to explain to their mortgage customers the modus operandi of the endowment system and the many pitfalls which could trap the unwary. Tragically many individual salesmen and some building societies omitted to adequately cover some of the less palatable facts.
This created great distress in some cases; figures produced for 2004 show that almost 7 million endowment mortgages were unlikely to provide sufficient funds to pay off the mortgage debts, leaving less than 2 million which should achieve their objective. Thus the flood tide of the 1980s which saw home owners clamouring for endowment mortgages suddenly became an ebb tide, with endowment holders looking for a way of getting back to the old system, or to one of the newer but more reliable alternatives. Great caution is necessary in this situation.
First of all you need to look carefully at your endowment mortgage to determine its value. If you are still in the early years of its operation, you will find that despite your monthly payments you have a document with very little value. This is because you have been paying the premium for the endowment agreement itself, the interest due on your mortgage loan and life insurance to cover repayment of the loan if you should die before completion.
A very important factor in an endowment is the terminal bonus. You will have received the benefit of annual bonuses along the way, but the terminal bonus is normally the very high value one; it could well provide more than half the final value of the payment which you will receive, but will be lost if you cancel. To make matters more difficult, the value of the terminal bonus is not guaranteed and will not be known until the endowment is fully paid up. It may be that you are in the situation where you will lose money whichever route you take.
If you do decide to proceed with the sale of the endowment, either because you need the money or because you are in the fortunate position where sale would be advantageous, you need to shop around. Certainly you should obtain a sale figure from the company who provided the endowment in the first place, but you are also free to go into the market place for these mortgages and see what offers you can get. It is very likely that the price which you will be offered in this way will be better than that which the original issuer is prepared to allow you.
You will find that different companies have different criteria relating to which endowments they would be interested in buying. For instance, some will not be interested if the sale value is below a certain figure, or may require the endowment to have been operational for a specific minimum period. Realistically you should seek professional help in reaching a decision; a company which has contacts within the Association of Policy Market Makers (which represents companies who deal in endowment trading) will be better placed to find you the best deal. There will be a charge for their expertise, but you should benefit from a better price and save yourself a lot of time, work and worry.
Remember that if you sell your endowment mortgage, you will fairly certainly also be cancelling your accompanying life cover and should ensure that you obtain a replacement policy, preferably before the cancellation takes effect. There is little harm in duplicating your cover for a short time, but there could be very unfortunate results from even the shortest period without cover.
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Business Coaching Information From A Professional Source
When Should You Refinance?
By Rich Bird
Homeowners who are considering re-financing their home may have a wealth of options available to them. However, these same homeowners may find themselves feeling overwhelmed by this wealth of options. This process doesn’t have to be so difficult though. Homeowners can greatly assist themselves in the process by taking a few simple steps. First the homeowner should determine his refinancing goals. Next the homeowner should consult with a re-financing expert and finally the homeowner should be aware that re-financing is not always the best solution.
Determine Your Goals for Re-Financing
The first step in any re-financing process should be for the homeowner to determine his goals and why he is considering re-financing. There are many different answers to this question and none of the answers are necessarily right or wrong. The most important thing is that the homeowner is making a decision which helps him achieve his financial goals. While there are no right or wrong answer to why re-financing should be considered there are, however, certain reasons for re-financing which are very common. These reasons include:
- Reducing monthly mortgage payments
- Consolidating existing debts
- Reducing the amount of interest paid over the course of the loan
- Repaying the loan quicker
- Gaining equity quicker
Although the reasons listed above are not the only reason homeowners might consider re-financing, they are some of the most popular reasons. They are included in this article for the purpose of getting the reader thinking. The reader may find their mortgage re-financing strategy fits into one of the above goals or they may have a completely different reason for wanting to re-finance. The reason for wanting to re-finance is not as important as determining this reason. This is because a homeowner, or even a financial advisor, will have a difficult time determining the best re-financing option for a homeowner if he does not know the goals of the homeowner.
Consult with a Re-Financing Expert
Once a homeowner has figured out why they want to re-finance, the homeowner should consider meeting with a re-financing expert to determine the best refinancing strategy. This will likely be a strategy which is financially sound but is also still geared to meeting the needs of the homeowner.
Homeowners who feel as though they are particularly well versed in the subject of re-financing might consider skipping the option of consulting with a re-financing expert. However, this is not recommended because even the most educated homeowner may not be aware of the newest re-financing options being offered by lenders.
While not understanding all the options may not seem like a big deal, it can have a significant impact. Homeowners may not even be aware of mistakes they are making but they may here of friends who re-financed under similar conditions and receive more favorable terms. Hearing these scenarios can be quite disheartening for some homeowners especially if they could have saved considerably more while re-financing.
Consider Not Re-Financing as a Viable Option
Homeowners who are considering re-financing may realize the importance of evaluating a number of different re-financing options to determine which option is best but these same homeowners may not realize they should also carefully consider not re-financing as an option. This is often referred to as the “do nothing” option because it refers to the conditions which will exist if the homeowner does not make a change in their mortgage situation.
For each re-financing option considered, the homeowner should determine the estimated monthly payment, amount of interest paid during the course of the loan, year in which the loan will be fully repaid and the amount of time the homeowner will have to remain in the home to recoup closing costs associated with re-financing. Homeowners should also determine these values for the current mortgage. This can be very helpful for comparison purposes. Homeowners can compare these results and often the best option is quite clear from these numeric calculations. However, if the analysis does not yield a clear cut answer, the homeowner may have to evaluate secondary characteristics to make the best possible decision.
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Monday, June 21st, 2010 at 7:25 am and is filed under business. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
