Faith Based Investing

Like
a Hamster Stuck on a Wheel

Have you ever seen a hamster
running on a wheel inside a cage? Hamster wheels allow rodents to run even when
their space is confined. They keep running and running and make no progress.
Yes, they get exercise, but they do not travel any distance. For many, their
finances are like the hamster on the wheel. They keep chugging along, spinning their
wheels, and making little to no progress. Why is this?

Many are programmed to live
life by the rules of the world. Often I see people base their spending rules on
how much income they make. The more they make, the more they spend. The true
reality of wealth creation is that how much you earn has very little to do with
your ability to build wealth. How much you spend is far more critical.

Many falsely believe that the
key to getting out of their financial holes is to add more income. Why, then,
do people who add more income still live paycheck to paycheck? Why do most
lottery winners end up dead broke even after winning millions? If income was
the solution, why couldn’t everyone just find better jobs to make more money?
The reality is that unless there is a change in spending habits, these people will
remain trapped on the same financial wheel–spinning but going nowhere. You must
change your rules.

Change
the Rules

If you do not like the results,
change the rules. Following the same rules that got you in trouble in the first
place will only produce the same end result. Without a change, you are doomed
to repeat past mistakes. Look at things in a new way. Follow these rules and
you may find financial freedom is closer than you think. (Please note that the
following allocations would apply to those who have already paid down
substantial debt; otherwise, the percentage allocated to recreation could be
dramatically reduced and the remainder used to pay down debt.)

The rules are:

• Pay God first: 10 percent
  toward giving
• Pay yourself second: 10
  percent into long-term savings
• Pay for necessities: 60
  percent into a checking type account
• Pay for recreation: 10
  percent into your fun account
• Pay for freedom 10 percent
  into a financial freedom account

Though learning to live on 60
percent of your salary is a tough feat for anyone, it should be your ultimate
goal. If you control what you spend, you will find a way to live within your
means. Reduced spending may also allow you to give more than 10% and save more
for the future. If you have a burning passion to change, you will. Otherwise,
you will be afraid. Don’t let fear get the best of you. Fear may be present,
but work to overcome your fears. If you are willing to do only what is easy,
life will be hard. But if you’re willing to do what’s hard, life will be easy.
Training your own mind is the most important skill you could ever own in terms of
both happiness and success. You should recondition your mind with the knowledge
that spending keeps you trapped in a world of limited financial progress. It
impacts your ability to give and save more.

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COULD SMALL BUSINESSES COPE WITH MANDATORY HEALTH INSURANCE?

What would they have to do if health care reforms pass?

Provide employee health insurance, or pay a penalty?

Small business owners worry about having to face that choice. That possibility moved a step closer to reality in mid-July, as three of five Congressional committees approved new legislation to remake American health care – legislation that could expand health insurance coverage to 46 million uninsured Americans, with potentially harsh consequences for business owners.

Two variations of pay-or-play.

The House version of the bill would levy a fine on employers that don’t offer health coverage – a fine as large as 8% of a company’s annual payroll. However, some businesses could qualify for tax credits and some very small firms wouldn’t have to pay such penalties.

The Senate alternative would spare small companies (25 workers or less) from annual penalties. It would require a business with 25 or more employees to fork over $375-750 per worker annually if that business refused to offer health coverage or paid less than 60% of employees’ monthly health plan premiums.

Could businesses handle this?

After all, some companies have considered dropping health plans altogether. Health insurance premiums paid by businesses have increased more than 200% in the last ten years, according to a Kaiser Family Foundation report; in 2008, single coverage averaged $4,704 and family coverage $12,680. The report found that less than half of businesses with three to nine employees offered health plans at all last year.

The House version of the bill would require a small business with a payroll of $250,000 or more to provide coverage or be penalized. The penalty would actually be a sliding-scale payroll tax: it would be 2% of payroll at $250,000 and climb to 8% of payroll for companies with $400,000 payroll or greater.

What if you’re self-employed?

No break for you. In the Senate version of the bill, any self-employed individual would have to buy health insurance or pay a $750 penalty annually. However, insurers could not use past claims history or pre-existing medical conditions to deny you coverage. Individuals whose income is within four times the poverty level (i.e., $88,000 or lower for a family of four) could qualify for subsidies.

As for the House version, it asks self-employed individuals to buy coverage or pay a tax equivalent to 2.5% of the difference between their adjusted gross income and the tax filing threshold (which was about $9,000 in 2008). Sliding-scale subsidies would be offered to self-employed Americans so that they would not have to spend more than 11% of their income on health coverage. As in the Senate bill, insurers could not wiggle out of providing coverage by citing pre-existing medical conditions.

What would the long-term impact be?

In the bleakest scenario, businesses would be hard pressed to offer workers decent wages or decent health coverage. Nationally, fewer and fewer companies are offering health benefits in the first place. A 2008 National Small Business Association poll found that just 38% of small companies could afford health plans at all, compared to 67% of small businesses in 1995.

A sunnier outlook comes from the Small Business Majority, a nonprofit advocacy group founded by small business executives. Its report examined three scenarios using different levels of employer tax credits and employer payments. It concluded that the proposed health care reforms could save small businesses as much as $855 billion, and preserve as many as 128,000 jobs that would have been lost because of runaway health insurance costs.

Stay tuned.

Will Congress give business owners more of a break? Could penalties be reduced, or requirements eased? Will fewer businesses offer health plans, assuming that their employees could qualify for federal subsidies toward individual health insurance? At this point, there are more questions than answers – but with the median health insurance cost for U.S. businesses already at about 11% of payroll, any increase would be unkind.

Higher taxes, out of control spending, bailouts: defintely not the kind of change we can believe in!

Wealth comes to those who spend carefully, use debt wisely, and develop a regular savings program. There are some common threads that run throughout many areas of your financial life. When I look at where the typical family in America is financially, I am saddened. I believe that if each family lived with these rules, the world would be a much better place:

1. Live below your means.

2. Allocate time, energy, and money efficiently to build wealth.

3. Turn to God in times of need.

4. Question needs versus wants.

5. Financial freedom is more important than high social status.

The Bigger Questions

Whenever you consider purchasing something think, “Is It adding to or subtracting from my wealth?”

Assets are things that bring wealth. They have value and grow over time. They have the ability to provide you income today, tomorrow, or at some point in the future. Examples of assets include certificates of deposit (CDs), savings accounts, mutual funds, stocks, bonds, and investment real estate. Liabilities, on the other hand, are things that take away from your wealth. They require that you make payments at some point to reduce what you owe. Examples of liabilities include mortgages, loans, credit cards, and IOUs.

As you begin to work through this area of your life, evaluate:

* What is my monthly income? How can I increase it?

* What are my monthly expenses? How can I reduce these?

* What assets do I own? How can I get better returns?

* What liabilities do I owe? How can I pay these off as quickly as possible?

* What else do I own? Do I really need it or can I sell it to help with my goals?

Questions like these will help you get into the mind-set you need to succeed financially. Financial freedom should be the goal of every individual. If you are not planning ways to add to your wealth, chances are you will never end up accumulating any. There needs to be a process, a plan, and a strategy to overcome your weaknesses and add to your strengths. With God on your side, all is possible. The only thing holding you back is you!

For the last fourteen years,   I had the privilege to work with hundreds of millionaires, entrepreneurs, and investors.  After studying their behaviors for years, it was easy to determine why they were wealthy.  They had a set of beliefs and followed simple behaviors that most people never do. In fact the behavior of the average person is exactly opposite of what the wealthy do and that is exactly why most people are comparably poor.

There are simply ten ways to become rich:

#1: Start your own business:
Do you have a compelling vision?  How about entrepreneurial skills?  If you pick an up and coming or growing field, you could become rich.  However, you must choose an unfulfilled need or improve upon an existing need.   What part of the world will you change? Start small, but dream big!

#2: Become a CEO of a company:
Are you good at taking responsibility? Does leadership come natural to you?  Find a field you love and work your way up the corporate ladder.  It takes time, but you can become rich.  You must always lead and provide value.

#3: Marry up:
Want to marry someone for money?  I couldn’t do it, but many do! This can lead to instant wealth but at what price?

#4: Invest in real estate:
Good at finding real estate bargains?  Good at collecting rents?  Those who know how to leverage money and real estate know-how can become rich.  Finding a vibrant market and being a value savvy, long-term investor is a better formula than short-term flipping.

#5: Enter the legal field:
Like arguing?  Good at convincing people?  The legal filed is a way to become rich. Not just any lawyer, but most rich lawyers are plaintiff’s lawyers.  You need sympathetic clients and villains to pursue.  Class action lawsuits are riches waiting to happen…

#6: Save and invest wisely:
Good at saving and investing?  Have a disciplined, systematic approach?  This may lead you to riches.  Having a high-paying job, religiously saving 10-20% or more of your income, and getting your money to work hard for you by owning stocks is the surest path.

#7: Manage other people’s money:
Have an attitude toward numbers? Nerves of steel? Good money management skills?  Whether you are a money manager, banking mastermind, hedge fund pioneer, a brokerage or insurance expert, this is a road that often leads to wealth.  Check out how many became billionaires – managing other people’s money.  You have to be able to get clients, keep them happy, and grow your business.  `

#8: Be an athlete or entertainer:
Have extraordinary talents or skills? Don’t mind losing your privacy?  If you can out-sing, out-dance, out-act, out-write, or be more athletic than less 99.9% of the people in the world, you have a great shot at riches.  It still takes hard work, dedication, motivation, and a little of the “being in the right place at the right time” opportunity, but this is a path toward success.

#9: Invent ways to generate passive income:
Are you creative? Are you good at finding ways to keep getting paid time and time again?  If you are good at finding ways to monetize a product or service with value, this will make you wealthy.  The key is finding an unmet need and offering a way to capitalize time and time again (patents, merchandising, franchising).

#10:  Be part of someone else’s vision and be along for the ride:
Not quite head honcho material, but good at spotting winners?  Every Batman needs a Robin.  Riding along with a Donald Trump, Warren Buffett, or Bill Gates will lead you to riches.  Pick a company and person with a good track record and be a loyal, trustworthy companion and business leader and you will be successful.

Are there more ways? Of course, but the less common ways (inheriting money, winning the lottery, etc) are not as practical, nor predictable.  These ten ways cover how most of those on the Forbes list of the 400 richest people in the world gained their fortunes.

As striking as this list is, there is another list – a list of seven beliefs that will not only keep you from becoming rich, they will destroy your wealth potential.  Wasted potential is like a cancer that spreads to other areas of your life.

I created a seven day challenge at www.santafactor.com

LEARN THE 7 BELIEFS ABOUT MONEY THAT ARE KEEPING YOU FROM GETTING RICH!

Out of Work: Now What?

What can you do to help yourself after being laid off?

You just got the news… you’re being laid off. Maybe it’s no surprise. Maybe it comes as a shock. The question becomes: what now?

Basically, you have three quick to-dos: leaving work with as much money as possible, securing health insurance for the interim, and arranging unemployment benefits. Beyond these items, stay calm and stay in the hunt – or alternatively, work for yourself.

Negotiate your exit. While no law requires your employer to give you a severance package, some employers do provide them. Severance package or not, you may very well receive two weeks pay and perhaps compensation for unused vacation or sick days.

Don’t be meek here. If you’ve been a key employee or simply a good employee, make the case for your company to extend your health coverage a little longer or give you a true severance package. They may see the merit if you have proven yours.

In tax terms, it may be better to receive your severance pay in the form of recurring checks rather than a lump sum. If you get a lump sum, it’s quite possible you could have too much withheld.

If you know you are getting laid off in the next few months, you can request to reduce the amount of withholding taxes on your last few paychecks to give yourself more take-home pay. And if it looks like you are going to receive a lump sum severance before December 31, think about deferring that payment until 2010 so you don’t have to include it on your 2009 tax return.

Keep yourself insured. If you can sign up as a spouse for the plan offered by your spouse’s employer, it makes sense to do it as soon as you can. If that doesn’t describe your situation, then the options are extending coverage through COBRA or keeping up the payments on private life or disability insurance that your company provided.

If you sign up for COBRA at the moment, the federal government will subsidize 65% of the cost for nine months as a result of the federal stimulus. In COBRA, you will have to pay the entire premium on your health insurance plus a 2% administrative fee.

Sign up for unemployment benefits. As few of us have bank accounts equal to six months or a year of salary, it is wise (not demeaning) to sign up for these benefits. You will want to do so ASAP, because it may take a few weeks for that first check to arrive. In some states, you can receive unemployment checks even if you have been given a severance package – although you may have to wait until the entirety of the severance is issued to you before jobless benefits can follow.

Remember that the federal government is pulling out all the stops right now. Take advantage of the federal economic stimulus effort, which is directing $500 million toward helping the jobless find jobs. New search assistance, education, and retraining programs are available. The government is also boosting unemployment payments a bit and elongating parameters of eligibility. Currently, the average weekly unemployment check in America is about $300. Jobseekers can receive unemployment benefits for up to 46 weeks – up to 59 weeks in states where the unemployment rate tops 6% for more than three months in a row, which would be just about everywhere right now. Under the stimulus, weekly unemployment checks will increase by $20 – and the first $2,400 of unemployment payments will be tax-exempt.

Press flesh, not just keys. Despite the buzz surrounding job boards like Monster.com, Dice.com and CareerBuilder.com, an article this winter in the San Francisco Chronicle noted that only about 2-3% of new hires find their jobs through such resources. About 15% of new hires find work directly by applying at a company’s web site, and about 65% find new jobs through that old standby – networking.

Older employees may actually cope with layoffs better. That’s what a collaborative study coming from the Federal Reserve Bank of Chicago and Columbia University has just concluded. It found that laid-off workers younger than 55 experience a much greater increase in “mortality hazards” than their older counterparts – stress and health risks, addictions, and negative personal behaviors. Perhaps this is because workers over 55 are somewhat less likely to deal with making ends meet and the pressures of raising a family; they may have already thought about (and planned for) a retirement transition and they have the options of Medicare and Social Security now or in the near future.

Have you been given a gift? That’s one way to look at it: one door closes, another opens. If you have an entrepreneurial ambition, or just suspect that like many Americans you will one day have to be your own boss, then maybe now is the time to talk over your options with a potential mentor – a friend who owns a business or makes a living as an independent professional in your industry. If you are mature and want or need to keep working, you might even think about a life or career coach – someone who can help you see the full range of possibilities, including those that you may not have considered five or ten years ago.

“Choose a job you love and you will never have to work a day in your life” – Confucius

Time Off

Two factory workers were talking….

“I know how to get some time off from work,” said the man.

“How do you think you will do that?” asked the other one.

He proceeded to show her…by climbing up to the rafters, and hanging upside down.

The boss walked in, saw the worker hanging from the ceiling and asked him what on earth he was doing? “I’m a light bulb,” answered the guy. “I think you need some time off,” said the boss. So, the man jumped down and walked out of the factory.

The second worker began walking out too. The boss asked her where she thought she was going. “Home – I can’t work in the dark.”

What if we loved what we did? What if work and play were one in the same? Everything would just be living. Imagine a life where you get paid to do something you love and you do it to advance God’s kingdom. How could you not be satisfied? For most, it is a dream, but rarely if ever gets pursued. There is always tomorrow. Unfortunately tomorrow never comes.

I have a friend Roger who is a great guy. He has always wanted to be in the ministry field. He has been saying this for the last ten years. He just hasn’t found his calling. Well Roger has been with the same company for those ten years. He keeps get promoted and making more money. With each new raise, it becomes that much harder to not only walk away from the company he despises, but to pursue something that he enjoys and can directly impact the kingdom. The last time I talked to Roger he was interviewing for the next position up in hopes that he would “someday” find what he was looking for. I see these cases too often. It is not wrong for Roger to stay where he is at. He can glorify God in everything he does, but why not actively work toward a new rewarding career that would bring some new excitement to his life? We all need that spark, that drive, that fire in our bellies. Half of the battle is finding that passion deep within you and then exhorting the energy to make the dream happen. So many times God helps us lay out the vision, we just aren’t there to listen. Houston, I think we have a problem!

Take your job and love it!

Work should be something we love. Beside sleep, what else do we do me do more? There has to be a better way. There is. We need to take our jobs and love them. If you do not love your job and what you do, cut your losses and move on. Make a change, work toward change. Just do something. Settling for the ho-hum is not the answer. I make it sound so easy. I realize it is not. There are circumstances you cannot just quit and walk away. My point is: set goals, make plans, and work toward changing your life so that you find more passion. Sometimes we need to rebirth. Begin over, make a change. If you do not like the results, find a new course. The winds are blowing; the sea of change is wide open. Let your world come undone, to find the new beginning. If you are serious about change, a great resource is Dan Miller’s 48days @ www.48days.com.

People have many false misconceptions about investing. They read or hear something and assume it is true without any research. Others rely too much on research and suffer from information overload or “analysis paralysis.” Some common misconceptions:

1. Diversifying means buying lots and lots of investments.

2. I should always try to beat the markets.

3. I should never take risk.

When it comes to money, most people play it safe. They want to feel secure. They settle for mediocrity instead of excellence. Passion doesn’t di­rect; fear does. They let their emotions control their destiny. Fear keeps people in the same type of job, earning the same type of pay. The pay pro­gresses upward but so does the fear–there is now more to lose. The job is only a short-term solution to a long-term problem. They refuse to take any risk and seek better opportunities. If you master the power of money, you will not be afraid of change and will be able to take more risks. Who do you think is more likely to pursue his dreams and take a risk: the man with a million dollars in the bank or the guy living paycheck to paycheck?

Play the game to win, not to avoid losing. The greatest things in life are worth a risk: the risks of telling her you love her without knowing if you will hear it back; the risk of taking a new job opportunity not know­ing if it will be beneficial in the long-run; the risk of saving for retire­ment not knowing if you will ever get there. Financial risks appear to be a huge leap of faith. The biggest risks are the ones you never take. If you do not take a chance once in a while, you may never lose, but you will rarely win. Take chances. Know the stakes. Know the worst thing that could happen as a result of your decisions and take calculated risks.