Thanks to Lakehouse @ Going Global - Good time to repost this...Please keep in mind this does not just apply to financial planners...bankers, trusts, etc.


Friday, July 22, 2011

Your Dream of a Lifetime ...

Your dream of a lifetime .. if handled correctly, could be your children's dream and their children's dream .. right on down the line ...

Everyday another site offering investment opportunities of a lifetime are popping up. It seems that anyone these days can pass themselves off as a certified financial advisor. And .. although they may claim to have credentials, it is up to you, the investor, to ask the hard questions. Don't assume because they tell you they have a series 1,2,or 3 license, that they are qualified to invest your hard earned money. Never, ever, feel like you are the ignorant one when they start throwing around terms that you never heard before. The scammer wants you to believe that they know more than you and they want you to believe that Your money will be safe in Their hands.

Don't be too sure about that. Take a look at the following pdf file. http://www.nfa.futures.org/NFA-investor-information/publication-library/scams-and-swindles.pdf

Also, if you do sit down, or correspond over the internet, with one of these fly-by-night "investment advisors", make sure you have a pen and paper handy and ask the questions that you need answered. Believe me, you do not give yourselves enough credit when it comes to trusting your own judgment. You Should! You are in the drivers seat. Remember that. This is not a popularity contest .. this is your money and hopefully your children's money and their children's money. Take your time. Do your homework and seek the advice of a professional that is close to you. It should be someone in close proximity (town, city) where you can talk face to face. The internet may be convenient but it's a dangerous place and it's hard to track someone down if things go terribly wrong. Also, Do not rely on what others have to say as far as references. Remember, references could be part of the "financial advisor's" Team .. Bernie Madoff had a "Team" .. watch/read - Link ~ More Wealth .. Means More Responsibility .. Be Smart .. Be Cautious .. Don't Let History Repeat Itself ...

good luck ... Kel ...
Scams AND Swindles
An Educational Guide to Avoiding Investment Fraud
http://www.nfa.futures.org/NFA-investor-information/publication-library/scams-and-swindles.pdf


SOURCE

ITS SIMPLE ITS A LANGUAGE PROBLEM!
   - by Anonymous


Well hello friends, it clearly appears from all of the absolutely GREAT news articles that have come out in the past week and even these last few days that our IQD journey is coming to an end very soon! 

Were you aware that based on statistics of people who have won State Lotteries that an average of 70% will squander or lose all their winnings within a short couple of years! 

I encourage you to learn more about this and enter the following keywords into your favorite search engine (i.e. Bing, Google, Yahoo):  "lottery winners statistics" -- you will find many websites that deal with this issue!  It is also known as "Sudden Wealth Syndrome" or SWS.  If you don't have a computer to do this, then please use a free computer at your local Library.

One of the main reasons people who win a Lottery Jackpot, lose all their money in a short time is.... (the obvious) "Bad decision making skills"!!!  

That's really as simple as it is!  But, if it truly were that "simple" then why don't more people just make better decisions with their money???

Its Simple - Its a Language Problem...

To put it in simple terms that you and I can easily relate to - think about it this way - Why in America do we predominately all speak English and not Chinese?  

Silly question right?  The reason is because we have always spoke "English" as a whole nation!  Right!!!  If we grew up in China, we would speak "Chinese" - Right!!!  

Okay, but what in the heck does speaking English and Chinese have to do with Financial decision making???  

Money is a "language" poor people speak "poor"; middle class people speak "middle class"; rich people speak "rich" and the top 1% Wealthy class speak... you guessed it - "Wealthy Class" language!  

If you speak "poor" then your decision making process will be much different than that of a person who speaks "wealthy"!

You need to learn to speak a new 2nd Language!

Is it no surprise that the poor stay "poor" and the middle class stay "middle class" and the Rich stay "rich"???  Just like if we were born in China we would still speak "Chinese"!!!

And, please do yourself a favor and don't start with the propaganda of well the "rich" oppress the "poor" and hold us down!!!  That is horse-hockey!  Not here in America!  Not even true anymore in China!  China today is producing more $Millionaires than America is!!!  So, don't fall for that - that is part of the language of "poor" and you need to erase it from your vocabulary.  People who teach you that either are "poor" also, or they have an agenda to sell you something!  

Need an example?  

Here are a few examples in American that you can easily recognize: Sports Stars, Music Stars, Movie Stars, Authors, TV Stars, Top 10% of Sales People!  

All these people busted their butt in their profession to become successful, and they have made themselves $Millionaires from nothing!  We can also include Small Business Owners / Franchise Owners!  IT IS A MENTALITY which starts with BELIEF and HARD WORK!!!  

Will every person who tries out for the football team in High School or College going to end up as this years SuperBowl winning Quarterback???  NO!  

But, on that team Peyton Manning was surrounded by $Millionaires!  In fact, I would be willing to bet you a donut that all those guys were not from "rich" families when they grew up!  They applied themselves to their craft and became the top 5%, 10%, 20% and are all self-made, because they learned the language of "success" and "wealth"!!!

To Speak The Right Language - Here is where I am going with all of this...  

Imagine one day that you hail a Taxi and the driver is Chinese and he really doesn't speak any English, just only a couple of words, really not even enough English to have a conversation with you.  He only speaks enough English to get you to the Airport where you are going.  

So, you are riding in this Chinese Guy's Taxi and he has on the radio a Chinese language radio program that he is enjoying.  Suddenly he starts to laugh out loud!  Why didn't you laugh also with him?  

Think about it - the reason "why" is because you didn't understand what was said in Chinese - right?  

You BOTH heard the EXACT SAME THING, but he understood it, and you didn't understand it.  He reacted, you didn't react.  Why?  

Back to the language of money.  

Now, lets say that you share a Taxi with another business person, and you are both going to the Airport.  

He wants to make a telephone call and asks you if you don't mind if he has it on the speaker phone, since his bluetooth headset is broken.  You tell him you don't mind.  

He makes his call and starts talking to his Private Banker or Attorney - you're really not sure - and they talk about some financial stuff you really don't understand!!!  He also talks about some sort of merger and buy opportunity and other stuff about the market and yield spreads and buy / sell stop losses and on and on! Oh my God my head hurts!!!!!

Your mind starts to wonder and drift over to thinking about your family and then you think about how you need to make the lease payment on your new car, and how excited you are that you just bought a new, larger flat-screen TV and on and on... Pretty soon you don't really even notice or hear the other guy on his phone!  

You tuned him out Why???  Just like you had tuned out the Chinese language radio program in the first example!  WHY IS THAT???

Because you BOTH speak DIFFERENT LANGUAGES!!!!  Get it?!  

This is no different than the Chinese Language example - you didn't get the joke because you didn't speak Chinese!  You didn't hear a potential financial opportunity because you don't speak "Rich" or "Wealthy".  Get it!  

This is your wake up call my friend!  You have to start learning the language of "rich" and "wealthy" if you want to be "rich or wealthy", just like you would need to learn Chinese if you wanted to live in China!

You need to start thinking in the terms of how a "rich" person thinks and not how you currently think!  You need to start thinking about being that rich person.  Ask yourself questions, why does that "rich" person do what he does?  Why is his decision making process different than mine?

There are some websites and good books on this subject.  I encourage you to use your favorite search engine and search the following terms: "How Millionaires really live book".  If you never "spoke rich" before, you will find this new knowledge very interesting, perhaps even fascinating.  

In Conclusion...

Do you have to become "fluent" in "rich" or "wealthy" before the RV?  No, luckily you do not!

But, you do need to start learning some "words" of "rich" - just like that Chinese Taxi Driver did.  He knew just enough words of English to take you to the Airport - you need to do the same with the Money Language!  

You are also lucky because you are not alone!  After the RV the IQD Team has said that for an unspecified time after the IQD does RV they will hold regularly scheduled conference calls and post even more resources on their website which will assist you in the process of becoming even more familiar with this new "wealth" language!  

_Thanks to one of my favorite guy "Anonymous"  who just keeps sending good ideas and things to remember....Thanks you are an angel (one of my favorite things)

THE NEW "BIG" RESPONSIBILITY
  - by Anonymous


Hello again!  This article of contemplation of gifting comes to you now as we near the RV of the IQD Currency.


Lately I have been thinking a lot about gifting some of this new good fortune and blessing away.  Perhaps that has been on your mind more also? 


It occurs to me that on the surface this gifting idea and the idea of "random acts of kindness" can have a much larger and deeper impact than you and I have perhaps thought about before.  Honestly, I've never had too much disposable income to freely give away that would seriously impact other people's lives!  So, I'm a novice at this, maybe you are too?

SO WHAT'S THERE TO WORRY ABOUT?

I'm thinking of people I can easily gift one, two or maybe even more 25K IQD Notes to.  As we know, after the RV these one or two 25K IQD notes will be a very substantial amount of money to this person!  I want to give this money to them, but should I do it anonymously or should I let them know it was me? 

AN ACT OF DESTRUCTION?

Sometimes I really wonder if the action of giving a person some of this money is a destructive act instead of a blessing?  I'm worried that I may be changing this person's "destiny" or "God's will" or call it what you will according to your belief system. 


There are stories of people faced with winning the lottery, and lost it in various ways, and then committed suicide!  Just because they could not handle the stress of the money!  This unfortunately will happen to many of us Dinarians, especially the ones out there that are not fortunate enough to have found a great resource like what is offered here at the IQD Team.

THE SPOUSE MAY HAVE OTHER IDEAS...

There are people of the opposite gender that I want to give money to, some of these people my spouse would approve of, however there are others that my spouse would probably be pretty mad at me for giving them any money, let alone tens of thousands of dollars!  Do you risk your marriage and the love of your spouse just to commit a random act of kindness?  These questions and scenarios need to be carefully thought out now, in advance, while you and I still have time to think!

DANGER - ITS A LOT OF MONEY

Have you noticed how much people on TV Reality Shows are affected by a "small" amount of money?  Ever notice how excited a winner on a TV Game Show gets when they win $5 or $10 thousand dollars or even some bigger prizes of just $50 or $100 thousand dollars?  They are jumpin' up and down and screaming and hollering with excitement!  This is what people will do when we gift them money!  It will make us feel good inside, but it may also put us and our family in to DANGER!

But, that person just got a wad of cash from us, they would never HURT us!!!  Maybe not directly, but they will feel compelled to talk about you and your act of kindness to other people, other people who have not received any money.....  See the potential problem?!  Those other people will want money too!  NOW DO YOU SEE THE PROBLEM?

Furthermore, you must think about the impact that giving a large sum of money to a person will do to them!  If they don't handle the money correctly, they could end up having serious problems, like if they fail to pay their Taxes on the money!  Even though it was their fault not paying the Government Taxes, they will blame you - most people never want to take responsibility for their own actions.  Taxes is just one serious consideration, there are may others to think about too before you just go out and hand someone a large sum of cash!

KILLING THE GOLDEN GOOSE

We must remember the children's story growing up about the Golden Goose and how it laid a golden egg every day.  But, later this was not good enough for the Farmer and he grew more impatient with the goose, and he started thinking crazy thoughts about getting inside of that goose to get all of the eggs at once, instead of waiting for a new egg each day!  You remember this story don't you, he killed his golden goose, found no gold eggs inside and was left with nothing!

Your RV cash out IS YOUR GOLDEN GOOSE - don't "kill" her by trying to get all the eggs at once!  With a large cash amount, that can be invested properly in interest bearing accounts which are higher than the average rate of inflation (aprox 4% annually is the rate of Inflation in the US).

DISCLAIMER:  Before I continue, I'm NOT giving you "investment advice" I am pointing out ideas for you to take with you to a Financial Investment Professional.

Back to our golden goose - your cash is your golden goose!  Using just simple numbers I am going to show you that with an extra $1,000,000.00 USD (after paying taxes etc) is used for "giving away" after the RV!  This is the money you are setting aside to give away to charity, people, etc. 

Instead of splitting this up 10 or 20 ways and giving to only 10 or 20 people, single one-time gifts, think about this:  Setting up your own Charity, fund it with the $1M in cash, have that cash invested in safe Mutual Funds that have a long track record of successfully averaging high returns (i.e. 10%+). 

This new Charity fund of yours (keeping it simple) can now earn an annual $100K / year interest on the $1M invested.  There will be taxes to pay, and a portion should be kept to add to the principle.  But, lets say for a simple example this leaves you with $50K / year to give away as scholarships and to worthy people and your favorite charitable causes!  You could do to this for the rest of your life, not just one time to just 10 or 20 people!  It is something to think about, right?!

IN CONCLUSION....

I may expand on this topic later, or you can even urge the IQD Team Mods to host a Call Pre/Post that will cover this topic along with other related topics.  However, for now, I only wanted to spark the fire, and let it grow within you.  Think about it, think about the long-term affects, not just the short-term gratitude of the situation. 

I will be contemplating this also, trying to figure out if over-riding my huge ego to be recognized as a "great" person is more important to the safety and security of myself and my family!  It just may be better to commit these acts of kindness as "random acts of kindness" and never let that person know who it came from!

_ More Advice sent in by one of my favorite listeners.....Thank You

LISTEN TO MOM - DON'T PUT ALL YOUR EGGS IN ONE BASKET!!!      - by Anonymous

If you had a mom (or dad) that was anything like mine, you probably remember hearing her tell you a thousand times growing up to "not put all your eggs in one basket"! Well, if you are like me, as a child, you mostly let tuned her out and let it go in one ear, and out the other!  Right!!!???   Oh, we can laugh about it today, but this is just a little more serious, and mom's advice is more true today than ever before with the prospects of the Iraqi Dinar revaluing sometime hopefully in the very near future.  So, please listen up my Dinarian Friends!

I bring this up because earlier today a good friend of mine blew my socks off when she told me a story of a personal friend of hers who had actually won $1,000,000.00 from the Lottery! 

Holy Cow I thought, I finally actually know someone who knows someone that has really won the Lottery!!!

Long story short, her friend had trusted just one "Very Professional looking and fast talking" Financial Adviser/Company with investing all of his $1 Million lottery winnings!  Yikes!!!  Sounds foolish right???  Especially after all those years of mom telling us while growing up - "don't put all your eggs in one basket"!

So, how does that apply to us Dinarians? 

First, we can learn from his mistake by trusting just one person/company to handle all of our money!  Today the Big 4 Banks try to train us to keep all of our investing and money with their one company or family of companies.

How many of you have your Checking and Savings, Mortgage and Car Loan all with one Banking Institution?  The banks do this to make more money off of you!  They do this despite it being in your "best" interest!  We have been trained to do this - at our own peril.

Next, let me make a very simple and quick Dinarian example:

Let's assume you're holding a total of 1 Million IQD Dinars.  

And lets assume "today" the Dinar has revalued to the equivalent of $4.00 to 1.00 IQD Dinar!  Wahoo!!!  Party!!!  Celebration!!!

Okay, now that we all have celebrated its time for you to get a little more serious about your thinking!  

You now have $4,000,000.00 in Cash!  What Next???... Think about this, split up the money to several "baskets", maybe something like this:

Basket #1 = $500,000.00  (to pay off bills, the mortgage, car loans, pay for a vacation, etc.)

Basket #2 = $500,000.00  (to buy real estate investments - read my other article  "ADVICE: 'PROTECT YOUR PRINCIPLE" CONSIDER THIS AFTER THE RV" )

Basket #3 = $3,000,000.00 (long term investments such as mixed Mutual Funds issued by ONLY Top 10 Investment Companies)  Lets say you are satisfied with the qualifications of the Top 10 Ranked Investment Companies (i.e. Investco, Franklin Templeton, Oppenheimer, etc.)  You could give each company just $300,000.00 to invest for you, right?!!!

This is only an example, I'm really trying to get you to start thinking of how to split up your money and your investments.  

By splitting up your $3 Million with 10 different Top Rated investment companies, you greatly minimize your risk of loosing all of your money like the guy who gave ALL of his Lottery Winnings to one Investment Broker/Company!

In Conclusion.....  

Listen to Mom's Advice, sometimes she is correct!!!

_Sent in by one of our listeners....Thank You to you know who....

ADVICE: "PROTECT YOUR PRINCIPLE" CONSIDER THIS AFTER THE RV    - by Anonymous

To save time and keep this simple I'm going to get straight to the point...

After the RV happens all of us will be afflicted with SWS (Sudden Wealth Syndrome) a common ailment that is a real problem for people who come in to wealth suddenly.  There have been plenty of articles written about it, so Google for it to learn more if you want - I won't focus on SWS in my article here.

With a deep respect for SWS, after the RV you and I will be highly tempted to run out and buy lots of "stuff" - please don't do it!!!  As the IQD Team Mods are always suggesting, take a few weeks to absorb the fact that you are now wealthy!

So, now you've taken a little time after the RV, and you are now looking around and thinking of what to do with your money - may I suggest you think about this, Invest your money, and try to ONLY SPEND THE INTEREST.

Here is an example: Lets say after the RV you'll have $500,000.00 USD as "free" cash to spend.  You are thinking about investing in Real Estate, maybe buying a home to live in or as a rental for rent income.

At first you think, I'll just pay cash for that house, and own it out right!  That may not be the best option, lets just for fun say that the house/rental you want to buy is $350,000.00 USD - did you realize that you can use the interest from your $500,000.00 that is invested to purchase this home?

Let me break it down with simple CONSERVATIVE numbers: 

   Purchase Price = $350,000.00     
   Down Payment = $ 50,000.00                   
   Loan = $300,000.00

Lets look at your loan:  NOTE: you can find free loan / mortgage calculators all over the internet as well as iPhone / Android Phone Apps.                  

Loan = $300,000.00        
Loan's Term = 30 years       
Interest Rate = 6.0% - fixed 30 years  (today's rate I got was 3.60%, but I'm going very conservative with 6% almost being double today's rate)      
Mo. Payment = $2,298.65   NOTE: A payment of $2,600.00/month will reduce the term from 30 years to 20 years - paying just $300 extra a month will save you a lot of money on Interest.  
Annual Payment = $27,583.80

NOW, Lets look at investing your $500,000.00 in "free" cash  - DISCLAIMER: This is NOT investment advice, consult a professional, every individual has their own situation based on Age, risk tolerance, etc.  Again, seek out a professional - not me!  :0) There!  

Cash =  $500,000.00     
Interest Rate = 10.0%  (Investco has a portfolio which averages over 11% for over 40 years - This company is listed as one of the top 10 Investment companies in the world, there are other great companies to look at to that pay less and pay more, but for this example I'm bench-marking at 10%).    
Annual Distribution = $50,000.00 (Gross before  - their will be income and capital gains taxes that will be due as well)
Quarterly Distribution = $12,500.00 (Mutual funds normally distribute Quarterly)

Okay, I'm sure by now you are starting to see where I'm going and putting 2 & 2 together!!!

So, lets look at it...  You have annual mortgage payments of $27,583.80, and you have annual Interest gains of $50,000.00 - even after taxes you will more than cover your mortgage on the real estate property.  

The leftover monies that you don't need to use to pay the mortgage you can leave in your mutual fund to increase the principle.  So, lets assume you can leave $10,000.00 of the $50,000.00 gain on the Principle - that will add $200,000.00 to your principle making it $700,000.00 in priciple within just 20 years!  But hold on, it gets even better, because of the compounding effect of principle your $200,000 will be actually approximately $630,000.00 + your original $500,000.00 - or $1,130,000.00!!!  AND YOU OWN BOTH THE CASH AND THE HOUSE!!!

For the real estate investment, I would also suggest you think about paying a little extra to accelerate that mortgage so you pay it off in 15 or 20 years instead of 30 years - only about an extra $300/month on the payment will drop that term down to 20 years, probably saving you well over $100K in interest. 

Oh, and remember, that mortgage interest is tax deductible if it is your primary residence!  If it is an income property (commercial) then your CPA can Depreciate the property and that will reduce your tax.  Be sure to consult with your TAX, LEGAL and Investment Professional before you make any final decisions!  

Buy now - at the end of say 20 years, you will have a paid off home or rental (which is also paying you rental income) and you also have your original $500,000.00 - that friends is how the Wealthy People get richer!!!  I know this last line was a bit "repetitive" however, I believe this point is extremely important - you can have BOTH!!!  

Regarding Insurance a tip for you to please consider....

For your real estate investment's mortgage you will be required to purchase mortgage insurance and fire insurance to protect the lender, this sucks, but is normal.  You may also want to get Home Owners Insurance (there is a version for investment properties also).  In most states you also need car insurance to drive, these types of insurance are necessary-evils and cannot be avoided - just try to get the best rates you can!

HOWEVER -- Think long and hard BEFORE you purchase ANY Life Insurance Product (i.e. Whole Life Insurance, Annuity, etc.) - Insurance is generally not a good product for "investment" although they try to dress it up - but you can't "polish a turd" (IMHO).  Think about this, if you have $500,000.00 (or more) in Cash and Investments - more than enough to cover any/all expenses for your spouse & family if you should die, then why waste (IMHO) your good money on buying Life Insurance or Annuity products???  

Please promise yourself that you will think long and hard about it first, those policies are almost impossible to read and understand, and ANYTHING the Agent "tells" you, INCLUDING if s/he writes it on paper - it null and void and NOT enforceable!!!  The only entity that can modify those insurance policies is/are the Corporation/Underwriter - and they will never do it for you!  If you are confused - then DON'T sign it, don't do it!  :-)

In Conclusion.... The real estate example above does not have to be just for real estate, it can relate to cars, vacations, parties, and other luxury toys!  Remember, let your money work for you - keep the principle protected!  Keep a portion of the interest on the principle and then spend the rest of the interest - this will let you have both your toys and keep your security of your investment!  :-)

One last and very important thing, please be careful of the people you take advice from!!! Don't be afraid to interview many people - think of it like dating (especially from a Lady's perspective....) and please don't be too tight with your money, go ahead and pay for true professionals, not your 2nd cousin's brother-in-law who just joined with an investment company!  One tip I can suggest is look for Series 65 Licensed Investment Advisers - they make their money from the fee you pay to them.  Then you can take that advise and purchase from whomever you wish.  Keep in mind that Series 6, 7 and 63 Licensed Professionals make their fee from the investment they SELL to you!  This isn't "bad" I'm just making you aware of the differences.

Thank you for sharing

_Financial Planners
 
You may be considering help from a financial planner for a number of reasons, whether it's deciding to buy a new home, planning for retirement or your children's education, or simply not having the time or expertise to get your finances in order. Whatever your needs, working with a financial planner can be a helpful step in securing your financial future.
 
The questions in this brochure will help you interview and evaluate several financial planners to find the one that's right for you. You will want to select a competent, qualified professional with whom you feel comfortable, one whose business style suits your financial planning needs. An interview checklist has been included for your convenience.
 
10 Questions   
 
Checklist for Interviewing a Financial Planner            
 
To Check the Disciplinary History of a Financial Planner or Adviser
 
To Find a Financial Planner in Your Area        
 
Learn About Financial Planning Online  
 
About CFP Board           
 
 
 
10 Questions:
 
1. What experience do you have?
 
Find out how long the planner has been in practice and the number and types of companies with which she has been associated. Ask the planner to briefly describe her work experience and how it relates to her current practice. Choose a financial planner who has experience counseling individuals on their financial needs.
 
2. What are your qualifications?
 
The term "financial planner" is used by many financial professionals. Ask the planner what qualifies him to offer financial planning advice and whether he is recognized as a CERTIFIED FINANCIAL PLANNER™ professional or CFP® practitioner, a Certified Public Accountant/ Personal Financial Specialist (CPA/PFS), or a Chartered Financial Consultant (ChFC). Look for a planner who has proven experience in financial planning topics such as insurance, tax planning, investments, estate planning or retirement lanning.
 
Determine what steps the planner takes to stay current with changes and developments in the financial planning field. If the planner holds a financial planning designation or certification, check on his background with CFP Board or other relevant professional organizations.
 
Read More button on right
3. What services do you offer?
 
The services a financial planner offers depend on a number of factors including credentials, licenses and
 
areas of expertise. Generally, financial planners cannot sell insurance or securities products such as mutual funds or stocks without the proper licenses, or give investment advice unless registered with state or Federal authorities. Some planners offer financial planning advice on a range of topics but do not sell financial products. Others may provide advice only in specific areas such as estate planning or on tax matters.
 
4. What is your approach to financial planning?
 
Ask the financial planner about the type of clients and financial situations she typically likes to work with.
 
Some planners prefer to develop one plan by bringing together allof your financial goals. Others provide advice on specific areas, as needed. Make sure the planner's viewpoint on investing is not too cautious or overly aggressive for you. Some planners require you to have a certain net worth before offering services.
 
Find out if the planner will carry out the financial recommendations developed for you or refer you to others who will do so.
 
5. Will you be the only person working with me?
 
The financial planner may work with you himself or have others in the office assist him. You may want to meet everyone who will be working with you. If the planner works with professionals outside his own practice (such as attorneys, insurance agents or tax specialists) to develop or carry out financial planning recommendations, get a list of their names to check on their backgrounds.
 
6. How will I pay for your services?
 
As part of your financial planning agreement, the financial planner should clearly tell you in writing how she will be paid for the services to be provided.
 
Planners can be paid in several ways:
 
A salary paid by the company for which the planner works. The planner's employer receives payment from you or others, either in fees or commissions, in order to pay the planner's salary.
 
Fees based on an hourly rate, a flat rate, or on a percentage of your assets and/or income.
 
Commissions paid by a third party from the products sold to you to carry out the financial planning recommendations. Commissions are usually a percentage of the amount you invest in a product.
 
A combination of fees and commissions whereby fees are charged for the amount of work done to develop financial planning recommendations and commissions are received from any products sold. In addition, some planners may offset some portion of the fees you pay if they receive commissions for carrying out their recommendations.
 
7. How much do you typically charge?
 
While the amount you pay the planner will depend on your particular needs, the financial planner should be able to provide you with an estimate of possible costs based on the work to be performed. Such costs should include the planner's hourly rates or flat fees or the percentage he would receive as commission on products you may purchase as part of the financial planning recommendations.
 
8. Could anyone besides me benefit from your recommendations?
 
Some business relationships or partnerships that a planner has could affect her professional judgment while working with you, inhibiting the planner from acting in your best interest. Ask the planner to provide you with a description of her conflicts of interest in writing. For example, financial planners who sell insurance policies, securities or mutual funds have a business relationship with the companies that provide these financial products. The planner may also have relationships or partnerships that should be disclosed to you, such as business she receives for referring you to an insurance agent, accountant or attorney for implementation of planning suggestions.
 
9. Have you ever been publicly disciplined for any unlawful or unethical actions in your professional career?
 
Several government and professional regulatory organizations, such as the National Association of  Securities Dealers (NASD), your state insurance and securities departments, and CFP Board keep records on the disciplinary history of financial planners and advisers. Ask what organizations the planner is regulated by and contact these groups to conduct a background check. (See listing at right.) All financial planners
 
who have registered as investment advisers with the Securities and Exchange Commission or state securities agencies, or who are associated with a company that is registered as an investment adviser, must be able to provide you with a disclosure form called Form ADV Part II or the state equivalent of that form.
 
10. Can I have it in writing?
 
Ask the planner to provide you with a written agreement that details the services that will be provided. Keep this document in your files for future reference.
 
Checklist for Interviewing a Financial Planner Planner's Name:
 
 
 
__________________________________________________
 
Company: _______________________________________________________
 
Address: ________________________________________________________
 
Phone: __________________________________________________________
 
Date: ___________________________________________________________
 
1. Do you have experience in providing advice on the topics below? If yes, indicate the number of years.
 
Retirement planning
 
Investment planning
 
Tax planning
 
Estate planning
 
Insurance planning
 
Integrated planning
 
Other
 
2. What are your areas of specialization?
 
What qualifies you in this field?
 
3. a. How long have you been offering financial planning advice to clients?
 
Less than one year
 
One to four years
 
Five to 10 years
 
More than 10 years
 
b. How many clients do you currently have?
 
Less than 10 clients
 
10 to 39
 
40 to 79
 
80 +
 
4. Briefly describe your work history.
 
5. What are your educational qualifications?
 
     Give area of study.
 
Certificate
 
Undergraduate degree
 
Advanced degree
 
Other
 
6. What financial planning designation(s) or certification(s) do you hold?
 
Certified Financial Planner™ or CFP®
 
Certified Public Accountant/Personal Financial Specialist (CPA/PFS)
 
Chartered Financial Consultant (ChFC)
 
Other
 
7. What financial planning continuing education requirements do you fulfill?
 
8. What licenses do you hold?
 
Insurance
 
Securities
 
CPA
 
J.D.
 
Other
 
9. a. Are you personally licensed or registered as an Investment Adviser with the:
 
State(s)?
 
Federal Government?
 
If no, why not?
 
b. Is your firm licensed or registered as an Investment Adviser with the:
 
State(s)?
 
Federal Government?
 
If no, why not?
 
c. Will you provide me with your disclosure document Form ADV Part II or its state equivalent?
 
Yes
 
No
 
If no, why not?
 
10. What services do you offer?
 
11. Describe your approach to financial planning.
 
12. a. Who will work with me?
 
Planner
 
Associate(s)
 
b. Will the same individual(s) review my financial situation?
 
Yes
 
No
 
If no, who will?
 
13. How are you paid for your services?
 
Fee
 
Commission
 
Fee and commission
 
Salary
 
Other
 
14. What do you typically charge?
 
a. Fee:
 
Hourly rate $ _________
 
Flat fee (range) $ _________ to $ _________
 
Percentage of assets under management _________ percent
 
b. Commission:
 
What is the approximate percentage of the investment or premium you receive on:
 
stocks and bonds _________
 
mutual funds _________
 
annuities _________
 
insurance products _________
 
other _________
 
15. a. Do you have a business affiliation with any company whose products or services you are
 
recommending?
 
Yes
 
No
 
Explain:
 
b. Is any of your compensation based on selling products?
 
Yes
 
No
 
Explain:
 
c. Do professionals and sales agents to whom you may refer me send business, fees or any other benefits to
 
you?
 
Yes
 
No
 
Explain:
 
d. Do you have an affiliation with a broker/dealer?
 
Yes
 
No
 
e. Are you an owner of, or connected with, any other company whose services or products I will use?
 
Yes
 
No
 
Explain:
 
16. Do you provide a written client engagement agreement?
 
Yes
 
No
 
If no, why not?
 
To Check the Disciplinary History of a Financial Planner or Adviser:
 
Certified Financial Planner Board of Standards, Inc.
 
            888-237-6275       - www.CFP.net/
 
North American Securities Administrators Association
 
            202-737-0900       - www.nasaa.org
 
National Association of Insurance Commissioners
 
            816-842-3600       - www.naic.org
 
Financial Industry Regulatory Authority (FINRA)
 
            800-289-9999       - www.finra.org
 
National Fraud Exchange (fee involved)
 
            800-822-0416     
 
Securities and Exchange Commission
 
            202-942-7040       - www.sec.gov
 
To Find a Financial Planner in Your Area  Financial Planning Association
 
            800-282-7526       - www.fpanet.org
 
National Association of Personal Financial Advisors
 
            888-333-6659       - www.napfa.org
 
American Institute of Certified Public Accountants/Personal Financial Planning Division
 
            888-999-9256       - www.aicpa.org
 
Society of Financial Service Professionals
 
            888-243-2258       - www.financialpro.org
 
Learn About Financial Planning Online
 
 
 
CFP Board's Web site, www.CFP.net/learn, is a comprehensive resource for financial planning, offering useful information for visitors at every stage of the financial planning learning curve. Interactive tools provide help for your personal situation, including changing jobs, managing debt, planning your retirement and more. Join the eNewsletter for updates and check back regularly to participate in polls and quizzes.
 
About CFP Board
 
The information in this brochure is provided as a public service by Certified Financial Planner Board of  Standards Inc. (CFP Board). A nonprofit, professional regulatory organization, CFP Board fosters professional standards in personal financial planning so that the public values, has access to and benefits from competent and ethical financial planning.
 
The U.S. Securities and Exchange Commission's Office of Investor Education and Assistance has reviewed this publication. The SEC does not endorse the commercial activities, products or members of this or any other private organization.
 
It's your future. Plan it!SM is a service mark owned by Certified Financial Planner Board of Standards Inc.
 
This publication may be reprinted for educational and nonprofit purposes only.
 
Certified Financial Planner Board of Standards, Inc.
 
1670 Broadway, Suite 600, Denver, Colorado 80202-4809
 
Consumer Toll-free Number:   888-CFP-MARK  (888-237-6275)
 
P: 303-830-7500     
 
F: 303-860-7388
 
E: mail@CFP-Board.org
 
W: www.CFP.net/learn
 
Copyright © 1998-2003, Certified Financial Planner Board of Standards Inc. All rights reserved.
 
http://www.pueblo.gsa.gov/cic_text/money/financial-planner/10questions.html
 
--------------------------
 
From "THE IQD TEAM"  
www.theiqdteam.com

_How to Fight Your Financial Demons
Posted 8 hours ago by Libby Kane

We all have our demons.

Some just lurk under the bed, but others bare their teeth as we go about our day—say, every time we pull out our wallet.

Financial demons are particularly vicious because their effects aren’t confined to the pages of our journal or emails to our best friend. Our finances permeate just about every aspect of our lives, from where we live to the job and lifestyle we choose.

And for that reason, our financial demons can be particularly invasive–and toxic.

But the good news is that demons can definitely be vanquished (or subdued, at the very least). As with anything, they can be worn down with the right tools and the right mindset. Fortunately, we have both.

First, identify your demon … or demon(s). Then we’ll show you exactly how to send them packing.
If You Have Shopping Demons …

The Tools: As you know, “just stop shopping” isn’t helpful advice. Instead, look at your habit from the other end: Your closet. Your makeup bag. Or your gadget collection, depending on the spending that’s most problematic for you. Use our process from Priceless Style Bootcamp to evaluate your ten most recent purchases. If lots of your recent buys are rated “not worth it,” it’s time to reevaluate your spending patterns. The first step is to avoid letting one bad spending choice drag you into a downward spiral. If you suspect you’re currently in such a phase, you can use this tool to spiral back up. If your purchases are all rated “worth it,” but you know you’re shopping too much, take a close look at your last month of spending and ask yourself whether you’re truly happy with everything you bought, or if that same amount of money could have been applied to a different financial goal, whether bulking up your emergency fund, or beginning to invest.

The Mindset: Instead of being just a shopper, be a smart shopper. A purchase should never make you feel guilty or regretful. The same sweater can be worthwhile or unnecessary, depending on the circumstances surrounding its arrival in your home. So, before buying something, imagine yourself in a month: Will you still be glad you bought what you did? If you decide you want that item later, it (or one just like it) will still be there when the time is right.
If You Have Debt Demons …

The Tools: First off, not all debt is the kind with fangs. Student loan debt, for instance, can actually help your credit score. In Get Out of Debt Bootcamp, we break down which debt is harmful and which is just annoying, then show you a way out. If you’re facing credit card debt, we recommend that you immediately stop using your card for non-essential purchases. To make the commitment to your finances more permanent, take the LV Pledge and then print out our money wraparound to remind yourself of that commitment every time you go to use it. You’ll never climb out of that hole if you’re still digging. Sign up for the 15-day Get Out of Debt Bootcamp here.

The Mindset: Debt does not make you a bad person. It does not make you irresponsible or unintelligent. Debt is frequently a result of unforeseen circumstances like hospital bills or the recession, and the aspect that reflects on you the very most is the fact that you’re trying to eliminate it. Approach paying off your debt as you would any other project, with planning, small steps and genuine excitement at the thought of seeing it completed.
If You Have ‘Friends and Family’ Demons …

The Tools: Peer pressure demons include that friend who keeps inviting you to $100 dinners, the significant other who thinks your year-end bonus should go to a weekend in Vail rather than to max out your IRA (or who tends to overspend for the both of you, or parents (or in-laws) who pressure you to keep up with their lavish lifestyles. You know they love you, but that only makes it harder to say no. For your detailed strategy when it comes to dealing with money-toxic friends and relatives, read this. Meanwhile, significant others come with different needs and issues, especially in a shared household. Here are the top eight reasons couples fight about money, and how you and your significant other can stop.

The Mindset: It may feel like a me-versus-them situation, but it doesn’t have to be squabbly. By advocating for yourself, you’re being both practical and mature. Not only will this help you avoid spending money when you’re uncomfortable, but it’ll also set important boundaries for your relationships and show that your (very reasonable) opinion matters.

    Are You Paying Student Loans?

    College was great, but the debt … not so much. Share your tips for effective debt management and learn from others in LV Discussions.

    SHARE

If You Have Credit Score Demons …

The Tools: Your credit score is simply a tool to help lenders evaluate how trustworthy you are. Since they can’t spend a week on your couch asking you questions about your ideals, they base their judgment on a three-digit number between 300 and 850. A low credit score–below about 650–can sabotage your ability to make large purchases such as a home or car—or affect the rates on loans you’ll get to do so. Start by checking your credit report for errors (you can get a free report at AnnualCreditReport.com). Then, check out our detailed breakdown of the factors impacting your score, which includes advice on how to raise it back up. Going forward, check your score for free on CreditKarma.com as often as you’d like, so you can monitor your progress as it happens.

The Mindset: Think of your credit score like a puzzle. Which are the biggest pieces and how can you fill them in? You can’t undo the past, but from now on, every action you take can help complete the puzzle. Rather than letting a low number get you down, embrace the excitement of watching that number go up and up as you make small changes in the way you use your credit.
If You Have Competitive Demons …

The Tools: Keeping up with the Joneses is hard enough, but practicing the ancient art of financial one-upmanship will really create problems for your bottom line. Shiny new toys and dollar-sucking experiences aside, constantly competing with and comparing yourself to those around you is exhausting, not to mention debt-inducing. We’ve created an anti-comparisonitis game plan, here.

The Mindset: You should be able to recognize that someone will always be “er” than you. Richer, smarter, prettier, better at any number of things. And you can’t control them. The sole person you can control is yourself. Instead of fighting to be “er,” celebrate what’s already great about you, and work on doing the best you can to improve all aspects of your life: work, family, friendships, finances.
Remember:

Financial demons are undoubtedly rough, but once you know why they’re so troublesome, they’re much less threatening. With a cool head and little information, you’ll have them hiding under the bed.
More From LearnVest

SOURCE

FREE BOOTCAMP PROGRAMS FOR TAKING CONTROL OF YOUR LIFE

Email Programs written by experts and delivered to you daily to get your money organized..
You must sign up via email - but these Bootcamps are Free.....
FREE IS GOOD...


Take Control Bootcamp
In this 10-day Bootcamp, you'll take a look at the current state of your finances, including your budget, earnings and spending patterns. Learn how to earn more, spend better and get what you really want from your money.

Personal Finance Basics
In 17 days you will become the master of your financial domain. Get the accounts you need, create a budget you can stick to, and get on the right track for retirement.

Cut Your Costs
Cut your expenses one room at a time with this 15-day bootcamp! From your cable bill to your closet, we'll give you insider tips to drastically reduce your living expenses.

Get Out Of Debt
No matter how much debt you have, this 15-day Bootcamp will give you the tools, support, and know-how to tackle it once and for all.

Priceless Style In 10 days
You'll learn to tackle financial dilemmas that tug your heart one way and your head another: Should I buy that perfect dress out of my budget? When can I splurge? How do I maximize my style purchases?

 
Build Your Career
Learn to excel on the job and navigate career transitions so you get where you want to go in this 10-day bootcamp.

Baby on Board
In this 10-day bootcamp, prospective parents can get themselves financially prepared for all the changes a baby brings. _

https://www.learnvest.com/mylv/pages/bootcamp/subscribe

_7 banks that are still awesome

While other banks are busy hiking fees, these financial institutions are bucking the trend by offering free checking and other perks.

Alliant Credit Union

Alliant is one of the largest credit unions in the United States. And while it's located in Illinois, residents in any state can join if they meet certain requirements.

To become a member, you need to either work for one of more than 175 qualifying companies and organizations, including Google, JetBlue and 1-800-Flowers, or simply make a one-time donation of $10 or more to Foster Care to Success.

The credit union offers a checking account with no monthly service fee and no minimum balance requirement.

While the basic free checking account doesn't pay interest automatically, you can easily earn a competitively high annual percentage yield, or APY, of 1.10% on your checking account if you opt out of paper statements and make at least one online deposit per month.

Customers can also access a nationwide network of more than 80,000 ATMs for use without charge.

Ally

Bank of Internet USA

Connexus Credit Union

The Incredible Bank

ING Direct

Perk Street

LINK

_Tools and Calculators for Investors

Here are several tools and calculators to help you with your investment decisions:
   

Library of Congress Report:

Behavioral Patterns of U.S. Investors

Mutual Fund Cost Calculators
Scam Meter
Tax-Free vs. Taxable Yield Comparison Calculator
College Savings Calculator
Loan Calculator
Savings Calculator
Mutual Fund Breakpoint Search Tool        
Social Security Retirement Planner
Risk Meter Ballpark Estimate
Retirement Calculator
529 College Savings Plan Expense Calculator
Investor Quiz: Test Your Money Smarts 

http://sec.gov/investor/tools.shtml

_Office of Investor Education and Advocacy

The SEC’s Office of Investor Education and Advocacy provides a variety of services and tools to address the problems and questions you may face as an investor. We cannot tell you what investments to make, but we can help you to invest wisely and avoid fraud.

Please visit our website dedicated to retail investors, Investor.gov.

http://sec.gov/investor.shtml

_You're suddenly rich? Bummer

An avalanche of unexpected wealth can be traumatic, but don't expect anyone except other instant millionaires to sympathize.

Here are 5 rules to guide your noble struggle.

By MP Dunleavey

Who doesn't dream of landing a windfall someday -- of winning the lottery, inheriting $3 million from a long-lost aunt, finding a suitcase full of unmarked bills on the bus -- or a genie in a bottle? Me, I'm not terribly picky about where the millions come from, because the cash alone will solve all my problems.

At least that's the fantasy. The reality of life after a windfall isn't nearly as rosy. In fact, being flooded with a sudden fortune, whether earned or inherited, can be highly stressful and sometimes even traumatizing, say a new breed of financial experts who call themselves "wealth counselors."

I know. You look a little dubious. Skeptical, even. And who can blame you (or me) for raising an eyebrow (or snorting) at the idea that an enormous truckload of cash would be hard to handle? Sure, I'd give my left arm for it, and that would be a little painful. Of course. But I'd adapt.

But sudden money has a dark side. Most of us idealize what life would be like with Big Money. It's easy to forget that, like any drug, money can have a strangely distorting affect on our lives -- especially when taken in large quantities.

A windfall "changes all the parameters of how you live," says Dennis Pearne, Ed.D., author of "The Challenges of Wealth" and a pioneer in this odd little corner of financial management (see link at left under "Related Sites"). "It changes what you can do, what you no longer have to do, where you can live, how much you can travel. So much changes so fast that it can be terribly overwhelming, and some people go into money shock."
We should all have such problems
I desperately want a taste of that money shock. Which is part of the reason I am ridiculously fascinated by the phenomenon.

I mean, observing wealth and those who have it is has always been one of the most compelling spectator sports. Why do the British still keep that stuffy monarchy around -- except to watch them live their impossibly affluent lives? Why are Americans addicted to the most brainless publication on earth, "InStyle"?

It's not enough to envy those who are wealthy. We want to press our noses up against their rich-and-famous lifestyles to better tally all the things They Have, and all the things We Don't Have, because we think what They Have is better.

In fact, we think we'd just love to be afflicted with Sudden Money Syndrome . . . although Susan Bradley, a financial planner and founder of The Sudden Money Institute in Palm Beach Gardens, Fla. would tell you to be careful what you wish for.

Bradley focuses on strategies to help people cope with the swirl of confusing emotions and impulses that come with sudden money. In fact, she wrote a book about it, "Sudden Money: Managing a Financial Windfall." But after her book was published in 2000, she says, "I started hearing more about Sudden Loss."

Here's what she found: Sudden loss and sudden wealth have quite a bit in common. Bradley found that the techniques she used with clients suffering from sudden wealth were just as useful for those plummeting toward a dot-com bottom. "That's when I realized that it's not about the sudden increase in income, it's about the sudden shift," Bradley said.
Abrupt changes, emotional bombshells
All this may be more relevant to your own life than you think. PowerBall or no, any of us could experience a sudden financial shift. That's painfully true for the many Americans who have lost their jobs in the past few years.

Meanwhile, thousands of workers who were on the verge of retirement saw their retirement money shrivel with the stock market, or simply stop growing. They've had to swerve back into the job market, a very sudden shift in their life plans.

On the plus side, some of us may indeed get to experience some sort of windfall in our lifetimes. The Social Welfare Resource Institute at Boston College estimates that as the older generation dies, some $41 trillion will be passed on to following generations.

With all those lives in flux, it is emotional bombshells that people are ill-equipped to handle, experts say. If you are going through a sudden financial change, it's critical to navigate through the emotional maze to avoid making unwise decisions and destabilizing your financial situation even further.
What? No sympathy?
Dennis Pearne tells the story of one client, a software developer, who had a wildly successful IPO and netted about $24 million overnight. Within a matter of months, his life was a mess and he had lost every dime in risky, overseas investments. Was the anxiety of wealth so great he needed to blow it? Did he feel on some level he didn't deserve it?

Pearne says that this software developer experienced a number of emotional factors in his life that reached a crescendo -- insecurity, shame, a bit of paranoia -- which is what many people experience after a sudden money shift. As his inner compass went spinning, he made faulty decisions. You might not think that fear and shame and guilt and anger and anxiety would be your first response to a major cash infusion, but it's very common.

Another problem: Who can possibly understand your woes? "Isolation can be a big factor," says Thayer Willis, author of the book, "Navigating the Dark Side of Wealth."

"People who are dealing with these challenges of wealth know that most people won't sympathize or empathize. Their attitude is: I should have your problems," Willis says.

And that's just one way that sudden money, or lack of it, can skew personal relationships. More than Money, a nonprofit based in Arlington, Mass., offers peer counseling for the recently rich that it says is free of "sales, fees, solicitations, scorn or envy."

There can be other emotional fallout. If the wealth arrives due to someone's death, recipients can feel tremendous amounts of anger and resentment. "Maybe the money comes from someone you didn't have a good relationship with," Willis adds. "Or maybe the fortune was created in a way the recipient doesn't like or disapproves of. Some people feel, 'I don't want anything to do with this money!' "

Then there's the shock factor. "Quite often, families keep trusts and inheritances a secret from their children," Pearne says. "We have clients who arrived at their 21st birthdays and had millions handed to them, and they have no way, emotionally or technically, to cope with it. That is traumatizing."
5 strategies for coping with a money shift
These practical measures can be helpful whether you've suddenly hit the jackpot or lost it all.

Take a timeout. "The first rule is to park the money," says Pearne. Don't do anything with it, and don't make any major decisions about your finances for at least three months, he advises. That allows time to get one's bearings and make plans.

Get organized. While it's not a time to make decisions, you need to figure out what the decisions will be, says Susan Bradley, and that requires getting organized. Go through your assets and debts; pay any taxes and high-interest debt. Review your insurance coverage. Think about how you're going to live while you're in this planning stage.

Figure out your bottom line. Pearne asks people to research their situation until they know the answers to these five questions:

    What is your net worth?

    What is your income?

    What are your fixed expenses?

    What is your tax obligation?

    How much is left over?

Know your priorities. The money moratorium is an opportunity to engage in what Bradley calls "a touchstone exercise." Basically, you keep asking yourself questions about what you want to do, how you want to live, and what is important to you. Do you want to live in a cabin in Montana? Do you want to pay for all your children's educations? Do you want to engage in more philanthropy? Wait it out, get your bearings, pin down your priorities.

Assemble a financial team. When the emotions have subsided and you've given yourself some time to fully grasp your new financial situation, then it's time to enlist the help of an adviser. For the suddenly wealthy, that can mean an accountant, a financial planner, an investment adviser and an estate attorney. "On the soft side," says Pearne, "you may want a counselor or wealth psychologist."

LINK

_Family's Fall from Affluence Is Swift and Hard

by Geraldine Fabrikant
Monday, November 29, 2010
 
Nick Martin at the Highland Community College vineyard in Wamego, Kan., where he has taught winemaking since losing a fortune he got from the sale of the business his father founded. (Steve Hebert for The New York Times)
 
Grateful to have found work in this tough economy, Nick Martin teaches grape growing and winemaking each Saturday to a class of seven students in a simple metal building here at a satellite campus of Highland Community College. Then he drives 14 miles in an 11-year-old Ford Explorer to a sparsely furnished tract house that he rents for $900 a month on a dead-end street in McFarland, a smaller town. Just across the backyard is a shed that a neighbor uses to make cartridges for shooting the prairie dogs that infest the adjacent fields.
 
It is a far cry from the life that Mr. Martin and his family enjoyed until recently at their Adirondacks waterfront camp at Tupper Lake, N.Y. Their garage held three stylish cars, including a yellow Aston Martin; they owned three horses, one that cost $173,000; and Mr. Martin treated his wife, Kate, to a birthday weekend at the Waldorf-Astoria, with dinner at the "21" Club and a $7,000 mink coat.

That luxurious world was fueled by a check Mr. Martin received in 1998 for $14 million, his share of the $600 million sale of Martin Media, an outdoor advertising business begun by his father in California in the 1950s. After taxes, he kept about $10 million.
 
But as so often happens to those lucky enough to realize the American dream of sudden riches, the money slipped through the Martins' fingers faster than they ever imagined. They faced temptations to indulge, with the complexities and pressures of new wealth. And a pounding recession pummeled the value of their real estate and new financial investments, rendering their properties unaffordable. The fortune evaporated in little more than a decade.
 
While many millions of Americans have suffered through this recession with only unemployment benefits to sustain them, Mr. Martin has reason to give thanks — he has landed a job at 59, however far away. He also had assets to sell to help tide his family over. Still, Mr. Martin, a strapping man with a disarming bluntness, seemed dazed by it all. "We are basically broke," he said. Though he faulted the conventional wisdom of investing in stocks and real estate for some of his woes, along with poor financial advice, he accepted much of the blame himself. "We spent too much," he conceded. "I have a fourth grader, an eighth grader and a girl who just finished high school. I should have kept working and put the money in bonds."
 
Mrs. Martin recalled the summer night in 1998 when the family was having a spaghetti dinner at home in Paso Robles, in central California, and a bank representative called to ask where to wire the money. "It seemed like an unbelievable amount," she said regretfully. Soon after the money arrived, the family decided to leave Paso Robles, amid some lingering tensions that Mr. Martin felt with his brother and brother-in law, who had run the business. Mr. Martin had never been in management at the billboard company, though he had been on the board and worked at Martin Brothers Winery, another family business. First, the Martins bought a house in Somerset, England, near the home of Mrs. Martin's parents, and he decided to write a novel. At about the same time, they spent $250,000 on the 3.5-acre camp with four structures on Tupper Lake, deep in the Adirondacks, as a summer home. They began extensive renovations at the lake, adding a stunning three-story boathouse and two other buildings. Clouds gathered quickly. Life in England turned sour when Mr. Martin's novel, "Anthony: Conniver's Lament," did not sell, and the family's living costs — school fees, taxes and even advice for filing tax returns — swelled. In 2002, fed up with England, the Martins chose a new base, Vermont, and plunked down about $650,000 for a home there, as renovations continued on the Tupper Lake property.
 
By March 2007, the Martins were determined to move to the lake full time. They managed their expenses for a while, but the costs mounted and mounted some more as they worked at refurbishing the Adirondack property — eventually totaling a staggering $5.3 million, Mr. Martin said. He poured another $600,000 into the Vermont property, he said. He vacillates between blaming the builders and blaming himself for letting costs get out of hand. "We should have built something quite modest," he conceded. Tensions rose in 2007 as summer came without any offers for the Vermont home. "I thought that housing was going into a tailspin," he said. "I had the feeling that something bad was happening."
So "we started selling cars, shotguns, antique furniture, whatever," Mr. Martin said. The Aston Martin fetched $395,000. With a big gap in his employment history, he found a job teaching English at Paul Smith's College near his home in Tupper Lake for $14,000 a year. For an additional $7,000, he coached the school's cross-country runners.
 
Then came the financial crisis. The markets plunged, as did the value of the Martins' trust. By fall 2008, with much of the family's net worth tied up in housing, Mr. Martin faced a series of margin calls. He needed more cash in his brokerage accounts because he had been tapping into a credit line with his investments as collateral. In January 2009, he cashed in a retirement account worth roughly $91,000. The houses could not be sold quickly. Though if they had been, some of the pressure would have lifted. "To maintain those things, you have to have a pretty good cash flow," Mr. Martin said. The family ultimately put the Adirondacks property on the market for $4.9 million, then quickly slashed the price by half. Last month, the Martins got an offer for just half of the latest $2.5 million asking price. They have stopped making payments on their $1.1 million mortgage and their $53,000 in annual property taxes in the Adirondacks as well as the mortgage and taxes on their Vermont home. They cannot afford those obligations on Mr. Martin's current salary of $51,000. Their household income is down from $250,000 four years ago.
 
At the moment, they are working with a loan modification unit at their bank. The lender proposed a new payment of $3,550 a month, reduced from $7,400. Given his current status, Mr. Martin argued, that it does not make much sense. He predicts that the house will ultimately be sold or taken over by the bank. Meanwhile, for the Christmas holidays and some of next summer, the family has found renters for the main house to help cover some of the costs.
 
Over lunch recently at Barleycorn's Downtown Bar and Deli in Wamego, Mr. Martin said he believed "the worst is behind us."
Perhaps. But a forced restructuring can be difficult for children and spouses even in longstanding marriages. Sometimes he and his wife took it out on each other, he said. "She bought a bunch of horses. I blamed her for the horses. I bought cars. She blamed me for the cars — and the house being too big. We had a rough time," he acknowledged. "But I think we have gotten over that." Until Christmas, when she plans to join him, Mrs. Martin continues to work as a substitute teacher with autistic children at an Adirondacks elementary school: a $12,000-a-year job she loves in a place she says she is hesitant to leave. With their younger daughter, she has moved into a smaller building on their big property.

A lively woman who loves bike riding and horses, she has built a close network of friends. "What is the place in Kansas like?" she asked a reporter with some trepidation before her first visit at Thanksgiving. Mr. Martin, who moved to Kansas last April, brought the couple's 13-year-old son, Edward, to join him in the fall. He has been counting the days until his wife and Sophia, 9, come permanently. The older daughter, Mrs. Martin's from a previous marriage, has found work in Florida after finishing high school.
 
In the meantime, Mr. Martin is also overseeing a one-acre vineyard beside the Oregon Trail Road, drawing on his knowledge of the wine industry from his California days. He does what he can to lessen the family strains. "I have a temper. I have to control my temper," he said. "I could drink like a fish, but if you have problems in your life, drinking does not help." And he recites a quotation he holds dear : "The measure of a man is not whether he falls down, but whether he gets up again." Still, Mr. Martin is prone to ruminate over the loss of so much money. He is furious at the banks and the bankers, who he thinks gave him bad advice, and he still sounds angry at his brother and others who decided to sell the company and who he says gave him little voice. Some of them got more than $100 million each, he said, while he got $14 million, as did his father and his sister Ann, because they were all minority shareholders. His brother-in-law David Weyrich said that if Mr. Martin had objections to the sale, he did not voice them.
 
Mrs. Martin says she believes the move from California was motivated in part because he resented his brother and brother-in-law's bigger role in the community. She also speculates that the Adirondacks estate was alluring partly as a way of keeping up. "I think he wanted to show his brother and brother-in-law that he had a big home, too," she said over dinner recently in Saratoga Springs, N.Y. Mr. Martin disagreed. "We are Irish Catholics, and we thought it would be a compound for our family over generations," he said. After the cramped rooms at their house in England, he liked the big rooms, he said. "Sometimes, things don't work out."

LINK

_Getting Rich Quick: True Tales of Overnight Millionaires
by Abby Ellin
Monday, September 20, 2010
 
It's everyone's dream: Win the lottery! Sell your company for millions! Invent Beanie Babies and move to Fiji! In truth, though, instant millionaires don't quite get the joy ride they are hoping for. There may be a giddy rush of success, but the new money can also cause an enormous amount of anxiety.
 
In fact, when we interviewed some of the suddenly wealthy — a former flight attendant whose side business took off, a cancer survivor who won a medical malpractice judgment, a factory worker who won the lottery — we found a thread of caution running through all their responses. "I acquired a lot of friends — not by my choice," says Eric Ruthman, an inventor, investor and gambler on Long Island, N.Y. His advice to others: Change your phone number.
 
Read on to see his story — and those of four other overnight millionaires.

The Inventor
Name: Sandy Stein
Age: 59
Location: West Hills, Calif.
 
Source of wealth: The former flight attendant created a product that helps people find their lost keys
What did you buy? I bought a new Lexus convertible and paid cash for it and didn't even get a deal! I just took it right off the lot. I went on many trips and enjoyed plays, musicals, and concerts — as many as I wanted to see without feeling guilty. I even took my staff to Las Vegas for the weekend to celebrate our fifth anniversary.
 
Smartest thing you spent it on? A team of lawyers who have been protecting my patent from all the copycats who think it's OK to steal my idea.
 
Dumbest thing you spent it on? Paying full retail for my car. I have never done that before, nor will I ever do it again!
 
What are you doing now? I quit in 2005, after 35 years [as a flight attendant]. Now I am in the office five days a week, going to trade shows, and figuring out how to make more sales and solidify a spot in the marketplace.
 
Advice to others? It is fun to share your wealth with your community and friends. It is fun to spend the money on things you normally would not have spent it on, when you had limited funds. But it is even more fun to invest it wisely so that you don't have to worry what home your son is going to put you in as you get older.
 
The Dealmaker
Name: Eric M. Ruthman
Age: 51
Location: Long Island, N.Y.
 
Source of wealth: Sold a plastics company for $75 million — then invested early in eBay and made $14 million more
 
How did you get rich? I was involved in some manufacturing deals for the thermoplastics industry, invented some items and sold the company to a major player in the world of plastics — that was the base from which I started. As it turned out, my broker was engineering a great run into a new stock called eBay. It turned out to be a great deal — not only was I racking up stock and it was going to the moon — but when I realized what eBay was, I started cleaning out estates all over the East Coast , buying treasures for almost nothing and selling them on eBay. The cash flow from just that could be as much as $100,000 on little or no investment. ... I am also an avid gambler and have done very, very well for many years; some winning years have [made me] seven figures.
 
What did you buy? I have purchased many things through the years: a really nice boat that I spend most of the summer on; a home in Las Vegas and another in the Bahamas. I have an extensive watch collection that includes some really silly inexpensive items and some rare and cherished timepieces. I have 22 cars in my collection — the best is my little SmartCar. And I have a vast number of custom sport jackets from Versace and other designers.
 
Smartest thing you spent it on? The love of my life: Jenny, my Lab! She is numero uno.
 
Dumbest thing you spent it on? I invested some funds to help a friend establish a seafood company. I bought in hook, line and sinker (excuse the pun), and he failed. He would not take the advice of the investors he wrangled into the deal. I was not hot on the idea and should have listened to my inner voice, but a friend is a friend.
 
What are you doing now? I'm always up early — 5 a.m. at the latest, seven days a week. I start with televised news and printed news, spend time with Jenny, then hit the computer and TV for about an hour and tune into the world. I try to spend about three to four days in October through May at Harrah's in Atlantic City ... In the summer I'm on Long Island with the boat. I also do charity events and donate time and efforts to regional causes.
 
Advice to others? First, change your phone number! Then take 80 percent and invest it in solid growth-oriented funds with regular returns and minimal risk, and don't touch it for any reason. Live within the means of whatever your investments yield. Take 5 percent and go crazy with it — get it out of your system. With the other 15 percent, you can take the risk plunge into investments that may get you a nice windfall.
Finally, remember to take care of your family, friends and animals. Seriously: Give back, pay it forward, find a cause and support it. You will sleep a lot better at night.
 
 
The Entrepreneur
Name: Tracy Howe
Age: 40
Location: Frenchtown, N.J.
 
Source of wealth: In 2007, Howe and her husband, Peter Kraft, sold their college-recruiting software company for a multimillion-dollar sum.
 
How did you get rich? First of all ... "rich" means different things to different people. To us it doesn't just mean money, it means a house full of people, animals and activity. It means a "rich" life full of things to do. We made our by money building a technology company, Goalquest, in higher education. We built it from scratch and sold it eight years later.
 
What did you buy? We bought a house in the Hamptons as an investment property, but we haven't gotten our money out of it yet. Fortunately, the Hamptons is as near a recession-proof location as you can get, so we're optimistic about this investment. We also bought a horse farm in Florida — we're equestrians and show "jumpers," and we participate at the Winter Equestrian Festival in Wellington, Fla. That area, unfortunately, isn't as recession-proof as the Hamptons. Not only didn't we get our money out of that investment yet, but we'll probably lose money on that one. The market in Florida is terrible. We also bought a few horses for us.
 
Smartest thing you spent it on? Our kids' private education. It's incredible how much we can see the positive impact the school is having on their development, maturity and confidence.
 
Dumbest thing you spent it on? A very expensive grand prix show jumper [horse] for our trainer to ride and then resell. That definitely did not work out the way we had hoped it would.
 
What are you doing now? We started a new business in social philanthropy called SequentialT. We sell sequentially numbered shirts to people around the world. Each shirt raises money for charity and counts people in to a united effort to make the world a better place.
 
Advice to others? Take the time to think through want you really want for the next stage of your life, and don't rush into things too quickly. With unlimited amounts of money can come impulsive behavior. I think it's important to reward yourself for your success, but then you need proper planning for creating long-lasting assets so that you never [again] have to feel financial pressures.
 
 
The Lawsuit Winner
Name: Marv Doniger
Age: 65
Location: Laguna Niguel, Calif.
 
Source of wealth: After a bout with cancer, Doniger won $3.3 million in a medical malpractice lawsuit.
How did you get rich? I was forced to retire as a result of my longtime physician failing to recognize that I had cancer. After three months at UCLA Hospital and having lost my bladder, I was released — unable to walk. I have regained the ability to walk but was unable to resume my career as a management consultant to Fortune 500 companies. After years of litigation and two trials, I was awarded $3.3 million.
 
What did you buy? I have acquired a car and two poodles, Will & Grace, who are my constant companions. I also set up a trust fund for my grandchildren.
 
Smartest thing you spent it on? Investments that I made in accordance with my previously developed financial plan.
 
Dumbest thing you spent it on? I did not make any dumb financial decisions because I had a financial strategy and plan to cover the financial needs of my wife and myself. I have always looked at windfalls as something to be saved not squandered. Since I am no longer able to function as a management consultant, I chose to deploy the funds so as to ensure my wife's and my financial future.
 
What are you doing now? Based on my experience and reflection on my own personal financial plans, I have written books on managing finances.
 
Advice to others? A sudden influx of money presents one with a set of choices. You can use it to satisfy near-term desires, or use it to ensure your financial future. Develop a strategy for dealing with unforeseen financial needs. And beware of those who present you with investment ideas you don't understand and don't need to achieve your financial goals.
 
The Lottery Winner
Name: Dave Gehle
Age: 56
Location: Nebraska
 
Source of wealth: Together with seven of his co-workers at ConAgra Foods, Gehle won $365 million in the lottery in 2006. His share after taxes: about $15 million.
 
How did you get rich? I won the lottery!
 
What did you buy? A new snowblower and a new car; that's pretty much it. I still live in the same house I lived in before I won.
 
Smartest thing you spent it on? Travel. I went to Vietnam with another winner who was from Vietnam. He was being shot for a movie about lottery winners. I've also made some investments.
 
Dumbest thing you spent it on? To be honest — I haven't, really. I've been really careful. I guess I'm still kind of overwhelmed.
 
What are you doing now? I try to help out around town — I shovel snow for my neighbors and plow in the winters. For a while after I won I stayed at my job at ConAgra, but I finally quit.
 
Advice to others? Be really careful; be frugal. Don't blow it all. Invest. It's really tempting to spend it all. Don't.
 
SOURCE
 

FTC: Facts for Consumers: Investment Risks Scams Fraud

Picture this:
 
In search of investments for working capital, an oil company sends consumers surveys of property that suggest the land is oil-rich. The company’s sales force tells interested consumers that top oil experts project the fields will yield thousands of barrels of oil a day — and a tidy return to investors within a year.
 
A film production company tells potential investors it is raising capital to produce a high-quality, low-budget family film with actors who are willing to sacrifice their usual high salaries for the sake of art. Claiming that the independent film market, cable television and video stores have increased the demand for movies, investors are "guaranteed" to make their money back. According to the prospectus, investor money will be spent on production, distribution and the screenplay.
 
Brokers of gemstones, rare coins or precious metals tell investors that the market price of these hard assets is skyrocketing. According to the brokers, the assets will increase in value — not only because experts have graded them rare, but also because of the demand.
 
Brokers of an FCC-licensed partnership tell consumers they’re raising capital to acquire a communications business that can be enhanced with new technology and turned into a competitive high-tech enterprise to be sold or developed for huge profits.
 
Investment brokers are claiming to sell ownership interests in a company that will offer Internet access to the public. The brokers maintain that investors will realize substantial gains from the fees the company will charge its users.
 
What’s wrong with these pictures? In a word — plenty.
 
The oil surveys are fake. The land owned by the company has not been drilled for oil, and in a legitimate deal, much more capital is required to determine if oil could be produced from the land at all.
 
The principals of the film-flam scam are the "producers" and "screenwriters." They take most of the money raised and then use a small amount to produce a low-quality film that is unlikely to turn a profit, let alone be released commercially.
Gemstone, rare coin or precious metal scam promoters often charge very high mark-ups and, as a result, consumers who try to resell their assets almost always lose most of their money.
 
The communication technology promised may be unavailable, unworkable or too costly. The partnership brokers take most of the money for themselves after they acquire low-tech businesses for consumers that would require millions of dollars more to have even a slim chance at turning a profit.
 
The fraudulent promoters generally structure the deals to siphon off at least 85 percent of investor money, never intending to turn over a functioning business with Internet expertise, equipment or staff. Investors are left with little capital, expertise or business with which to compete on the Internet.
 
It’s easy to make a new venture sound like a sure-fire money-maker, especially if the press is writing about successful legitimate companies in similar industries. Fraud promoters create the illusion of authenticity and success by incorporating, renting office space and issuing partnership units or stock certificates. But while they claim to offer investments in exciting sounding businesses or sell lucrative assets, they deliver cheap imitations of what they promise. As for consumers, they remain unaware that they’ve bought something of little or no value until their money is gone and profits have not materialized.
 
Pre-Investment Questions
 
Fraud is always a possibility, even with secured, regulated investments. Before investing, ask tough questions, both of yourself and those who are soliciting your investments. If the answer to any of these questions is "no" — or if the answers are vague or complicated — more than likely the investment being pitched is a fraud.
 
Is the company I’m investing in registered to sell securities? 
Be cautious if the company selling you stock, assets, or partnership units has not registered its securities. Companies that register their securities file prospectuses and annual reports with securities regulators. If a promoter tells you that your investment is "structured" to exempt the securities of the company from registration, you may be dealing with an outfit that’s purposely avoiding contact with regulators.
 
Is it "too late" if I don’t invest my money now? 
Using sales scripts, scam artists create the impression that only a few shares of stock or partnership units are left. They try to convince you that you’ll miss out on a big opportunity if you don’t send them thousands of dollars by overnight courier or wire transfer. Once you give your money to a scam artist, it may be too late to get it back.
 
Does the investment have a track record? 
Claiming that their "opportunity" is similar to those of "hot" entrepreneurs, scam artists often use news stories about the success of legitimate companies as bait. Unfortunately, success stories of other companies in the field are irrelevant for your purposes. Get the track record of the company you’re considering investing in and the background of the people promoting it.
 
Where is my money going? 
Legitimate companies account for investors’ money at all times. Ask for written proof of how much of your money is going to the actual purchase or development of the opportunity and how much is going to commissions, promoters’ profits and marketing costs. If most of your financial investment is slated to cover expenses and costs, much less will be available to earn a return. Telemarketing is particularly expensive; if you are investing in a telemarketed investment, how much are your brokers getting paid to talk to you?
 
Do I have an independent, knowledgeable, trustworthy person who can advise me? 
Get an independent appraisal of the specific asset, business or venture you’re considering. An appraisal offered by the party selling the investment opportunity can be fake. Talk to the previous owners of an asset or a business you’re acquiring for its value history. Discuss all investment ideas or plans with an accountant or an advisor you know and trust.
 
Do I know who I’m dealing with? 
Can you find published information about the company in which you’re investing, proof that the company has registered the securities it is selling with a government agency (if required), or someone you trust who has heard of the company? Have you checked with your state securities agency to see if the promoter or sales person is licensed to sell securities in your state, if required? If not, be cautious. You’re giving your money to strangers.
 
Checking law enforcement agencies and Better Business Bureaus in the community where promoters are located is prudent, but not fool-proof. It may be too soon for the company’s victims to realize they’ve been defrauded or to have lodged complaints with the authorities. In addition, fraudulent promoters can lie about their name or their business history, or even pay people to be "references."
 
Can I tell a genuine company from a fictional one? 
Don’t let appearances fool you. For a few dollars, anyone can incorporate an entity. Personal computers and desktop publishing software help scam artists produce slick promotional materials. Phone service providers can put toll-free telephone numbers in homes.
 
Did my sales representative tell me the risk of losing my money was high? 
Sales representatives should tell you the risk of particular investments. Be particularly suspicious of sales pitches that play down risk or portray written risk disclosures as routine formalities required by the government. Believe the risk disclosures that say you could lose your whole investment. When your money is gone, fraudulent investment promoters often use "risk disclosures" against you.
 
Can I be certain a promoter is not lying to me? 
Scam artists lie. Their success depends on having an airtight answer for everything. They inflate the costs and value of worthless investments. They promise you profits years down the road so you won’t find out that your investment is a scam until long after they’ve disappeared with your money.
 
Do I know when something is too good to be true? 
Investing is risky business. Anyone who tells you an investment is likely to turn a profit quickly should have a basis for the claim. Demand written proof of profit projections from independent sources. Be especially wary when someone tells you profits will be big enough to offset the risk of investing. Every potentially high profit investment is high risk.
 
For More Information
 
Several government agencies and business organizations register, regulate, investigate or monitor companies and individuals who offer investment opportunities. If you have questions about a company or an individual, or you wish to make a complaint, contact one or more of these offices, as appropriate. When you seek information, understand that the absence of complaints filed with governmental and private agencies does not mean that a company or an investment is necessarily sound.
 
Federal Trade Commission
North American Securities Administrators Association (NASAA)
Chief United States Postal Inspector
Commodity Futures Trading Commission
Securities and Exchange Commission
Better Business Bureau
National Association of Securities Dealers
National Futures Association
National Fraud Information Center
Your State Attorney General's Office
Your State Securities Commission, Securities Department, or Department of Corporations
The FTC works to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint or get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. Watch a video, How to File a Complaint, at ftc.gov/video to learn more. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.
 
http://www.ftc.gov/bcp/edu/pubs/consumer/invest/inv03.shtm

Clark's Investment Guide
 
What kinds of investments are right for you?   Here's Clark's guide.
 
When I talk with someone trying to get started saving for the future, I sometimes notice their eyes glaze over as I answer their question. I can even tell when that glaze sets in as I talk to someone on the radio. It's typical -- investing can seem so complicated that you might feel tempted to shut down and do nothing -- or hire a salesperson to guide you.  Regardless of your level of investment knowledge, I want to help you tear down that wall.
If you are a regular listener or viewer, you hear me talk about both the Roth account and 401(k)s regularly. The purpose of both is to give you your earnings a tax break to save for your future.
 
A tradititional 401(k) is a  retirement savings plan that allows a worker to invest money now, and defer paying income taxes on the saved money (and earnings) until withdrawal, at retirement.

A Roth is a modified individual retirement account in which a person can set aside after-tax income up to $5,000 per year ($6,000 for those age 50 or older).  Earnings on the account are tax-free, and tax-free withdrawals may be made after age 591/2. This tax-free status beats just about everything. And you can set up a Roth account yourself.

Where do you put Roth money? Just about anywhere you want: A bank; credit union; full-commission stock broker; financial planner; in no-load mutual funds (a fund sold without commission) or with a discount stock broker. When you are young, I like for you to put the money with a discount broker or a no-load mutual fund. That's because I want all your money working for you.
 
Roths are really flexible depending on which company you choose to put your money into. You may be able to start with $50 and put as little as $50 per month into one. Or you may be able to open one for $100 with some companies, or $500 or $1,000 with others. (Here are some of my favorite low-cost investment options, broken down by the dollar amount you need to get started. )
 
My goal for you is to have an automatic deal where you put in a set amount of money each month to build the habit and reduce the risk to you. By making regular contributions monthly in equal amounts, you are doing what's called "dollar cost averaging." That's just a fancy way of saying in months that the stock market is tanking, your money buys more shares, and in months that the market is climbing, your money buys a smaller number of shares. In other words, dollar cost averaging is a way to pace your investing so that you're buying more shares when prices are low and fewer when they're high. Over time, putting money in this way reduces the possibility of panic in you and keeps you steady as you go. And staying in the game makes you more money over the long haul.
 
Investment Guide for all experience levels:
 
I hear from a lot of people who have the first part down -- putting the money into a Roth -- but are lost on the second part -- what to put the money in. On my investment guide choice list, I show a number of my favorite investments that could lose money in the short term, but make big bucks long term. Based on your level of investment knowledge, pick one of the following guides.
 
The EASY guide is for beginners, or those who want to "set it and forget it."
LINK


The MEDIUM guide is for intermediate investors, requiring more involvement.
LINK
 
The ADVANCED guide is designed for the most experienced investors.
LINK
 
 

Digging Out Of Personal Debt

Consumer debt is on the rise in more than just a few countries around the world. According to numbers released in March 2006 by the U.S. Federal Reserve Board, household debt has topped the $2-trillion mark in the U.S. - and that doesn't include mortgage debt. Consumer debt is a common topic of discussion and analysis, but it should not be considered a way of life. How can consumers get their debts under control? For an ever-growing number of them, the answer is debt consolidation. In this article, we show how consolidation can help - and why it often fails.
 
Tutorial: Budgeting Basics
 
The Ideal Process
Debt consolidation basically involves taking all of your debts and moving them to a single source. This often includes personal loans, home-equity loans, car payments, credit card balances and mortgage debt. Most brick-and-mortar lending institutions offer a variety of debt consolidation options. Online vendors also provide a vast selection of programs and a convenient medium for comparing them against each other. When it is done properly, debt consolidation results in a lower interest payment, a lower monthly debt payment and an increased amount of discretionary income each month. 
 
Ideally, the lower payment and reduced interest provided by debt consolidation free up enough income to enable you to live within your means. Once you can afford to make the monthly payment on your loan, you can begin to get out from under your debts by making extra payments in order to retire your loan as quickly as possible.
 
 
Watch: Consolidation DebtThe Reality of Debt Consolidation
While there are a number of financially savvy individuals who use debt consolidation as a tool to manage their finances, this is not typically the case. For most consumers, the need to engage in debt consolidation is a sign that they have been doing a poor job of managing their money. If they weren't, it isn't likely that they would be so deeply in debt in the first place.
 
Further cementing this argument is the fact that, immediately after consolidating, many of these individuals are no longer feeling pressured by their inability to pay their debts, so they go on a spending spree. Their previously maxed-out credit cards now have zero balances and, often, these consumers can't resist the urge to shop. 
 
In short order, many people who consolidate their debt go on to rack up so much additional debt on their credit cards that all of their newfound money is once again needed to make credit card payments. In other words, instead of using debt consolidation to reduce indebtedness, consumers are simply using it to dig themselves a deeper hole. (To read more, check out Home-Equity Loans: The Costs and The Home-Equity Loan: What It Is And How It Works.)
 
Change Your Behavior
Debt consolidation is the first step toward getting your bills under control, but changing your behavior is an equally critical part of the equation. In order for debt consolidation to have a meaningful and lasting impact on your financial situation, you need to break the debt cycle. Simply put, that means that you need to stop spending money that you haven't earned yet.
 
One of the easiest ways to minimize your spending is the elimination of your credit cards. Credit card abuse is one of the leading causes of consumer indebtedness. Another easy step is to put a moratorium on new loans. Your debt consolidation loan was taken in order to get your debts under control. Taking out additional loans is counterproductive. Keep in mind that "loans" include any scenario where you are racking up bills that require repayment at some point in the future. This includes the purchase of new automobiles and the purchase of items that offer no payment and no interest for a predetermined amount of time. (For more tips, see Take Control Of Your Credit Cards, Understanding Credit Card Interest and Credit, Debit And Charge: Sizing Up The Cards In Your Wallet.)
 
Conclusion
Ongoing debt minimization is critical to the long-term success of debt consolidation. Financial experts often note that your outstanding debts, including credit cards and mortgage payments, should not amount to more than 36% of your gross monthly income. That 36% figure is often referred to as a debt-to-income ratio. The ratio is calculated by dividing the amount of money you spend each month to service your debts by the amount of your income. When they do the math, people are often surprised to discover that their debt-to-income ratios are significantly higher than the recommended amount. Determining your debt-to-income ratio provides an excellent reminder that you aren't supposed to live paycheck to paycheck, spending every single dollar that you bring in each month.
 
If you find yourself in financial trouble, use debt consolidation as a tool to get your finances back on track, and then use good spending habits to keep your bankbook in the black. 
 
For additional information about sound ways to manage your money, see The Beauty of Budgeting, Seven Common Financial Mistakes and The Indiana Jones Guide To Getting Ahead. 

SOURCE  

Are Brokers Being Punished for Not Pushing Enough Product?

Yes, at one firm at least

March 2011

You'd expect a financial firm to fire an advisor for not serving the best interests of his or her clients. Merrill Lynch is also demoting those who don't bring in enough revenue, according to Financial Advisor magazine. 

The media report says that advisors who have at least 10 years of experience but don't bring in at least $250,000 annually in commissions and fees won't be allowed to be advisors anymore — continuing a trend that many large brokerages have been following for years. The firm says the move "aligns advisors' interests with those of our clients and shareholders," according to the magazine. 

It's obvious how Merrill's move might help shareholders: More revenue produces more profit. But it's harder to see the value for clients. The only way brokers generate commissions is by selling investment products. That means the brokers must constantly pitch new products to their clients. Is that compatible with the clients' financial goals? 

Merrill's policy might explain, in part, why thousands of brokers are leaving big brokerage firms to join smaller independent firms and why many of their clients are following them. At the end of 2008, big brokerages managed 48% of individual investors' assets, while independent firms managed 19%, according to Cerulli & Associates. But the research firm projects that the big firms' market share will drop to 41% by 2012 while independents' share will rise to 23%. 

Could it be that the prediction I offered in my second book, The New Rules of Money — that big brokerage firms are dinosaurs and will become extinct — might be coming true?

LINK