Friday, September 21, 2012

Business and Life Goals

How to Set Creative Goals That Literally Draw You to Success

"If you do not change direction, you may end up where you are heading." Lao-Tzu

Viva La Difference

What life goals are you pursuing? Are you wanting to shed some pounds, or perhaps wanting to lower your blood pressure, or just have fewer and fewer headaches? Or, are you simply wanting to attain good health? Can you see a difference?

Look at another major area of challenge for many folks--finances. What financial goals are you going after? Are you wanting to get out from under all these bills that seem to come in so frequently, or are you wanting to reduce your large mortgage or monthly car payment? Or are you simply wanting to achieve financial freedom-whatever definition you put on that term? Can you see the difference?

Yes, the differences are subtle. They are small. To some they may seem trivial, largely semantical, and maybe even nonsensical. But I would like to propose that the differences are huge and will have a major impact on whether or not you ever attain your goal.

Running From or Running To?

You see in one case they are stated as what you are running from, trying to avoid, unsatisfied with, etc. In essence, they are stated from a rather negative point-of-view. On the other hand, the other goals are stated in a more positive manner, i.e., what it is that you are running toward, wanting to bring into reality.

Did you know that most people can't answer the simple question, "What do you want in life?" They can easily tell you what they don't want, but can't begin to tell you what they do want. Their response to the question will always be stated in terms of what they don't want. Isn't that sad? Where is their focus? Obviously, it's on what they're dissatisfied with. I'm sure you've heard that what you focus on multiplies and grows. Are you beginning to see the problem here?

When defining a goal, you want the focus to be on where you want to be rather than on where you are. Don't misunderstand me, both are important, and a little later we'll talk more about the importance of really getting a handle on where you currently are. But for the goal articulation step, the focus should always be on what it is that you are wanting to see.

Simple, Three-Step Approach

I recently was exposed to a new goal setting approach for business that made me realize that it's not only applicable to our network marketing business, but also to our coaching business, and to almost any other area of our personal lives where we want to move from our current reality to a desired future. The process is called the creative process and has been developed over the course of several years by Robert Fritz, widely recognized as an expert in the area of structural dynamics.

Step 1

It's an incredibly powerful process while being amazingly simple at the same time. You start by stating your goal or desired future. And of course, that's what we've been talking about up until now. It must be a goal stated in terms of what you want, not what you don't want anymore. I won't go into it in this article, but a goal should be a SMART goal to be effective (SMART = Specific, Measurable, Attainable, Relevant, and Time specific).

Step 2

Next, you need to articulate the current reality, or where you are now, at this moment. I believe you can see the necessity for this--for example, if your goal is to go to Chicago, it would be helpful to know whether you're in Virginia Beach or in Los Angeles. Otherwise you're feet might get pretty wet. It's in this step of articulating current reality that it's entirely appropriate to state what you want to move away from.

In actual point of fact, the more dissatisfied you are with your current reality, the more power (Fritz calls it "structural tension") you will have to move toward your goal. So there is an actual advantage in making what you don't want sound as unlikable as you can while still being truthful about it.

Step 3

Then finally, the last step in the creative process is to define a few action steps (along with dates) that will move you toward where you want to be. They don't have to be big, gargantuan steps...they could be quite simple and small steps. An amazing fact is that, over time, the even the smallest of steps will add up to that big gargantuan step. If you're not too sure about what steps to take, follow the Nike commercials, "Just Do It!" Just do something...anything. Action is the magic key to goal attainment. Of course the action has got to be moving you in the right direction.

Failure not Allowed

And that's the beauty of the creative process. What if you find your action steps have been taking you in the wrong direction? Simply stop doing those action items and replace them with ones that are going in the right direction. No failure! No condemnation! It's just a learning process. It's growth! You've learned that what you were doing is going in the wrong direction. Just make the change. No big deal. Isn't that simple? And empowering?

All you need to add is a little support in the form of accountability and you're off and running toward fulfillment of another goal.

Tuesday, September 18, 2012

How to Manage Your Personal Finances - Retirement Capital Requirements

Many articles have been written about the subject of retirement planning and there are many books published by experts on this very important issue. I have just recently joined the fold of the retired group and I have been through the mill (so to speak) of planning and executing my retirement plan in it's initial phase. It is this, the initial phase, which I would like to concentrate on in this article.

So, how do I plan my retirement date?

Most companies have contractual dates for retirement. For example, retirement ages could range from 55 years old for early retirement to 60 years old for Directors to 65 years old for operational staff. These dates are generally a guideline since companies do exercise some flexibility when applying these parameters. However, each individual should be using these parameters as a benchmark and then build a projected financial model to see if they are adequately provided for in retirement. Note: The use of a financial advisor is highly recommended in this planning process.

Despite the above guidelines, your retirement date is in fact flexible provided that you can satisfy the golden formula which is expressed as: " Accrued income plus passive income must exceed your current cost of living plus an adjustment ( up or down) for lifestyle choice in retirement plus inflation projections and sufficient liquid cash for emergencies".

Let's face it, the thought of early retirement is in the minds of all of us but if you cannot afford it, you are heading for suicide.

Let me expand the golden formula as follows:

Accrued income is the monthly pension or income that you can derive from your pension accumulation through your working life. This figure will be provided to you by your pension fund or your investment institution.
Passive income is income from investments that you made through your working life. Here you consider regular income from property investments, equity investments, dividends, savings interest, business partnerships and any other form of reliable income which you will derive on a monthly basis.
Current cost of living is the full annual cost of your current lifestyle. Be extravagant in estimating this figure and be sure to include everything that you incur as a cost.
Adjust your retirement requirements up or down depending on your circumstances and your intended lifestyle in retirement.
Make adequate provision for inflation during your retirement years. Your financial advisor should project your retirement capital adequacy over your expected lifespan.
Ensure that you have a 'nestegg" of cash available for emergencies such as buying a new car, unexpected medical bills, renovating your house, helping your kids, taking some holidays and anything else which is relevant to your situation.

I spent many hours pondering the above elements and I suppose it is only natural to be very conservative about whether you can actually go ahead and retire. Assuming that the criteria for the golden formula are met and in order to make the decision a little easier, the following points are highly recommended:

You should have no heavy debt burdens. Your mortgage should be paid off, your car hire purchase agreements should be settled and you should have no major debt commitments. In fact, you should be able to live from cash out of your wallet.
Your "wish list" for your activities in retirement must be catered for in your planned expenditure.
You must not have any plans that requires you to erode your capital base.
You need to be sure that your monthly income is pretty secure and you need to have alternative plans if for some reason, your monthly income drops.
You need to be able to save some of your retirement income monthly just to prove that you are coping.

In this planning exercise, you need to budget for everything that you want in retirement. Once you have taken the step, there is no turning back if you are serious about retiring. You also do not want to find out that you cannot afford some of the things which you had in your vision.

In conclusion, the most important factor in planning your retirement is to ensure that your life partner ( if appropriate) is fully informed and on board with the plan and that you create a mutual acceptance and excitement about your future in retirement.

The above article is created to stimulate thought on your own unique circumstances and you need to tailor your plan accordingly.

Wednesday, September 12, 2012

Try These Tips For Managing Your Personal Finance

Many people learn how to be financially responsible before they reach adulthood. Take these tips into consideration if you want to brush up or you missed the boat on how to take care of finances. It is never too late to improve your money management abilities. Here are a few tips to help you manage your money.

Check over your bank statement every month. Make sure that none of your rates or fees have increased. Your bank might raise your fees without notifying you and keep billing you for services you do not need. Scrutinize all of your statements to be aware of this.

Put your expenses into their own categories. Establish two categories-- one for the fixed expenses, such as your rent or your monthly car payments, and the other for your variable expenses. Doing so makes it easier to follow a household budget. It is a good idea to keep track of how much you have available for expenses if you are trying to improve your money situation.

Instead of having a debit card, you may want to think of getting a credit card. You can use your credit cards on daily purchases, like food or gas. Most of the time, you'll get rewards or cash back when you use a credit card to purchase these items.

Keep a record of your spending habits. Once you have this record in hand, create and follow a budget that takes your spending needs into account. See in what areas you are spending too much money. Not tracking your money and where you spend it is one of the main reasons people end up in debt and with no savings. One good way to track your spending is with software or online tools. Any money that remains should be allocated to reducing debt or increasing your savings.

Simply said, spend less, earn more, is the best financial advice out there. People who spend 100% of their income each pay period, or worse, 110% of their income, never increase their net worth since they are spending everything that comes in. Determine how much money you have coming in every month, and make sure your expenditures don't exceed this amount.

Control the flow of cash in your account. Look at your expenses compared to your income, this is a good indicator of your spending habits. Be sure you have a firm property budget established to refer to as a guideline.

Create a savings account that can be used for emergencies. Saving for specific goals, like college, is the best way to prepare for expenses that you know will be in the future.

You might want to try working from home to save money. It's probably costing you a lot to go to the office. After you pay for gas, parking and lunch, you may spend half your business checks!

You have to get out of debt before you can rebuild your credit score. You'll need to pay off what you owe first. Consider cooking your own food or limit hanging out on weekends. The only way to save and repair your credit is to spend less. Going out to eat is one of the simplest things you can cut back on.

Get rid of the debt on your credit cards as soon as you're able to. You may only owe a small amount, but rolling it over would still accrue you interest charges from the bank every month. That's a complete waste of money! Try not to have a credit card balance at the beginning of each new month.

You could give homemade presents for Christmas to save money. Not only could you save lots of money, you could also avoid the hassle of holiday-time shopping. You can be sure that creativity can really keep your wallet full.

Instead of using one credit card and almost maxing it out, try to have 2 or 3 cards with lower balances on them. If you go over your limit, you will be paying a larger amount in charges than the fees on smaller amounts on two or more cards. In most cases, this won't do much damage to your credit scores, and, if you manage your cards wisely, it may even help you improve the state of your credit.

Whether is seems believable or otherwise, buying a home saves you a lot of money in the long run. Owning a home does involve paying a mortgage and home maintenance costs, but the key difference between owning and renting is that when you own, you are building equity. When you rent your home, you are simply pouring money into another person's pocket.

As you probably have already seen and experienced, it can be difficult to save money. The different voices that urge one to spend money only make it harder for one to hang onto it. Having a big amount of helpful finance tips like the ones in this article can really go a long way towards saving you plenty of money.

Tuesday, September 4, 2012

Personal Finance and Money Management 25 - How to Reduce Your Taxes

Paying income tax out of your income is a federal law. Understand your personal situation and the basic of the income tax laws will help you to reduce the risk of overpaying. We all want to be fair, but we don't want to pay when we do not need to. In this article, we will discuss how to reduce your income taxes.

I. Reduce your taxable income
1) Employment income.
a) Contribute maximum amounts to your 401K or registered retirement saving plan, borrow them, if necessary depending on your affordability.
b) Keep track of all child care expenses. The Canadian government allows you to deduct up to 2/3 of your working income for lower income spouse.
c) Keep track of all learning programs spending for children, such as hockey lessons.
d) Keep track of all medical expense,such as group insurance, you can deduct from your taxable income for any amount over 3% of your income.

2. If you are self employed
a) Keep track of all business expense receipts
b) If your spouse and children help in your business, pay them, according to the amount allowed.
c) If you manage your rental home, you can pay yourself for managing service, according to the amount allowed.
d) Keep your car miles and gasoline paid receipts.
e) Keep track of your business lunch and entertainment for your customers.
f) Business home expenses, if your business requires you to work at home sometimes.
g) Gift for your customers for your business.
h) Other business office expenses such as stamps, rent, etc.
i) All of 1) if applicable

II. Reduce your effective tax rate
a) Adjusting your portfolio so you receive more dividend income than interest income (dividend income is not taxed until it is taken out of your portfolio and they have tax preferred status)
b) Establish an educational trust for your children, or a spousal RRSP for income-splitting.

III. Defer your taxable incomes
a) Unrealized capital gains are not taxable until assets are sold.
b) Contribute to your 401K or registered retirement saving plan until retirement or when you have no income.