Tag Archive for: financial crisis

5 Ways to Avoid a Personal Financial Crisis

Here are some tips on what you should do to avoid a personal financial crisis:

1) Have an emergency slush fund

You should have at least 3 months of living expenses put away in case the worst happens. I am not talking about putting it in your mattress or in a coffee can. These funds should be liquid and fairly easy to access quickly but not so that you can dip into them & buy something if the whim strikes you. My wife and I have used an ING investment savings account, you could do something similar or open a Tax Free Savings account, that way your emergency fund is tax protected.

2) Know your income and expenses

Most people might know how much they make but have no idea how much they are spending. When I got out of University I worked as a personal trainer for a few years. When I took on a new client, I would have them keep track of what and when they ate for a week to give them a better idea of what is really going on in regards to their health. Your finances are no different, take a 30 day period, create an excel spreadsheet for example and track all income and expenses. Then sit down and take a real good look at it and decided if it is needed or not. Trim the fat and put the saving’s into your newly developed emergency fund.

3) Diversify your income

What I mean by this is don’t put all your eggs into one basket. Develop a secondary income stream incase something were to happen to your day job. Turn that passion or hobby into a business. Invest in real estate. Build a residual income stream by joining a network marketing or direct selling company. Make sure that what ever you do, it’s something that you are passionate about and will allow you to add to your bottom line. The other advantage is that your new business could become a great tax deduction, check with your accountant to make sure that it is structured properly.

4) Give your self an immediate 18-20% return!

How is this possible you may ask? It’s easier than you may think. Do it by paying off your debt. Start with your higher interest debt, your credit cards which are anywhere from 12%-18%, or if it is a department store card, it could be as high as 24%. Next your car payment, unless you have a 0% loan, you are probally paying 7-9%. Lastly your mortgage 3-7%. If you need a detailed plan on how to do this quickly, let me know I have designed quite a few of them.

5) Lastly make sure that your affairs are in order.

I am not trying to sound morbid, but we don’t live forever. Have a proper estate plan, have health insurance for your and your loved ones, and have an insurance policy big enough so that the one’s you leave behind are not faced with an immediate financial crisis. For this point I suggest consulting with your personal estate lawyer as well as your financial planner. If you don’t have one I can suggest for legal advice or here are two good options for financial planning.

Bonus point….and this should be a no brainer.

To achieve anything on this list, you should have a plan. Start with a clear picture of the current state of your finances. How much time do you have between where you are now and where you want to be? With the help of one of the financial planners above or your own, develop your plan and work your plan. Remember to be flexible in your approach, know what’s working or not, and be willing to make the necessary changes to insure that you achieve your goal.

*Note that I receive no gain monetary or other wise from promoting the services or products in this post.

As always, feel free to contact me if you have any questions and I look forward to hearing from you.

Cheers,

Pat

p.s- You can find me on Twitter,Linkedin, Facebookand friendfeed.

Thinking of throwing in the towel?

With all that has been happening in the financial markets these past few weeks, I would not blame you if that is what you have been thinking. However don’t do it, and here is why. 

1) Boom always follows the bust. As corny as it sounds, hard times never last, but good people do. My favorite investor Warren Buffet has a saying that rings true ” Be greedy when others are fearful and fearful when other are greedy”. There is no better time than now to prepare for your best financial future.

2) Have a plan. Your life may not be perfect right now, but you should know where you are going. You would not get in your car to go on a vacation with out a destination in mind. However many people go through life with out any clear objective. Begin with your end in mind, so get off your rear end and develop a plan and see your objective.

3) Clean your house. By that I mean your financial house. If you are to get out of this financial crisis smelling like roses, then you need to get your finances in order. Trim the fat and cut out any unnecessary expenses. Systematically eliminate all of your debt and start building true wealth.

I would be honored to help you develop your plan to eliminate your debts. Please feel free to contact me at my office so we can get you on the road to true financial freedom.

Cheers,

Pat

Are you in a rut or digging your grave?

How we feel about our own finances has an effect on the market as a whole. Well now you may be saying that you feel less optimistic because the markets have been going in the toilet lately. It’s sort of like the chicken and egg scenario. Didn’t this all start with the demise of the sub prime mortgage market. If you remember that all started when people were unable to keep up with their mortgage payments and started to lose their homes. It sort of has a snow ball effect don’t you think.

The real difference between a rut and a grave is the depth! So stop digging and put down your shovel. There are solutions and there is a better way.

1) Stop looking at your feet and start looking at where you want to go. Begin with the end in mind, and with that I mean that you should have a clear vision of where you want to go.

2)Take action now. Don’t get caught up in analysis of paralysis. Just do something, and learn from what you do until you find out what works.

3) Expect to succeed. Hoping and praying will kill you. Expect to achieve your end result. If your boat overturns in the middle of the lake, you don’t hope to make it to the shore, you find the closest point and swim your butt off and get there. Be persistent and find a way. 

If your current financial crisis finds you buried up to your eyeballs in bills, there is a better way. Contact my office today so we can show you how to systematically eliminate all your debts so you can build true wealth.

Cheers,

Pat