Clutter

If you are like most people who live in the Western Hemisphere you have adopted the philosophy of wanting more.  If you live in the US, probably even more so…

Have you ever been to someone home and it seems that they have everything under the sun in their home? 

Many of our lives are like that.  We have everything under the sun in our lives:

Baggage from past relationships

Hurt feelings from previous experiences

Examples set forth by our parents (both bad and good)

Experiences with our bosses, community and church leaders.

Our training (vocational, religious, life and otherwise)

Our system of beliefs

And this list can go on and on….

With this kind of clutter in our lives it is virtually impossible to add anything else.  This is why we sometimes feel over whelmed, heavily burdened, depressed at times. The thing is if we want to bring anything else into our lives we must first clear space.

This means we can’t get more of God or anything else until we remove some of the clutter.

What is it that you can rid yourself of in order to make room for God?

Worried About Investing?


Are you worried about investing?  If you are like most US residents the answer is probably yes.  Based on a survey only 2 out of 3 US citizens have a savings or retirement account.  That is a third of the population.  Now obviously saving is not investing.  The point is that is if a third of American isn't saving they are probably not investing either, as the two usually go together.

Here is a quick way to begin investing - ETFs or Exchanged Traded Funds.  Please understand, I am not saying that this is the best way to invest but it is a quick way, let me show you how.  These funds are securities that track a particualr index or commodity. For instance let's say use want to invest in gold, you would look up the ticker symbol GLD and see how the gold index is doing. Please understand that the values of these ETFs change rapidly so it is always good to do two things:

Do your homework - ETFs are great but you want to track the past progress of these funds to see if they are a good fit for you.

Ask a professional - speak with a financial planner regarding your investment in ETFs.

Leveraging Education

Many of us were taught as young children by our parents or guardians to go to school, get good grades and get a good job.  Typically there is nothing wrong with this advice, but I would like to show you something.

According to the US Department of Education in 2008 the average annual salary for a male high school graduate was $32,000.00 and a male college graduate (bachelor’s degree) was $55,000.00.  The numbers for female graduates was $25,000.00 and $45,000.00 respectively.  This means on average there is a 72% increase in the income of males if they graduate from college as opposed to simply finishing high school.  For the females there is a 80% increase. 

What does all of this mean?  Obviously, we have to exclude the entertainers, athletes and the college drop outs that are currently rich – this is a small percentage of the population in America and even smaller percentage when factoring in the rest of the world.  Here is what it means?

First, push through the tough four to five years to gain your undergraduate degree.  Obviously from the numbers presented here you will do better financially if you persevere. 

Secondly, it means that by the time you are 60 years old you would have earned well over a million dollars.  Say what?  Based on the average salary of high school graduates males would hit the mark in a little over 31 years and females in 40 years.  College graduates would hit the million dollar mark in less time (18 years for males and 22 years for females). 

That means you are either a millionaire now or you are a millionaire in the making!

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Tightening The Belt

With America's credit rating being downgraded it should be a clear clue to each of us that we have to make some changes.

What types of changes are necessary? There are three changes that I believe we should make immediately.

Change the way we view credit.

With the average American household being in more than $16k in credit card debt we need to see change. Many view credit as a means to access more cash when they don't actually have the cash. This is the wrong mentality to have.

Credit is designed to assist a responsible person or business to use the bank's money while theirs is being invested. The idea here is that you and I should only use credit cards if there is an extreme emergency and we don't have the cash or if our money is being invested in something that is earning more of interest than we are paying the bank. If neither of these are the case, then we should keep the plastic in our pockets.

Change our posture on needs and wants.

There has to be a clear definition for each of us as to what a “need” is and what a “want” is. Here is the way I view the two. A “need” is something that is essential to survival (i.e. shelter, clothing, food). A “want” is anything outside of a need. For instance, I need shelter but I may want to live in one of the most exclusive zip codes in my city. This is where many people get it wrong. It is human, especially in America, to confuse a need with a want.

The second part of the definition is that once the “need” has been meet and there is the financially wherewithal to afford anything else, we can then and only then, explore the acquisition of any “wants.”

Do you have a clear definition of the two? If not, you have to develop one and prioritize your needs over your wants.

Change the manner in which we spend.

This bleeds from the second point. We have to learn to live beneath our means. Typically the first step in doing this is to learn to live on eighty percent of our net income. After mastering that, the next step is to live on fifty percent of our net income. How do you do that you may ask?

This can be accomplished by following the items in this blog, creating a budget and sticking to them both.

You can do it!
Go get 'em!

Financial Disciplines

These financial disciplines are for everyone, no matter how much money one earns.  If these disciplines are adhered to it will make a huge difference in a person's financial situation.  Here is a quick laundry list:

1. Create a budget - this is a priority a budget is literally a road map to your finances.  Without it you won't know if you are losing money or where you might be spending to much.

2. Manage your debt - always know how much debt you have, it is a necessity in an attempt to manage your finances better.  In this category include outstanding mortgage amount, credit card debt, student loans, medical bills and your monthly debt.

3. Increase your financial literacy - there is so much information out there but if you don't know what it means then you may have difficulty preparing and identifying changes as they relate to finance.  This might mean you will need to have a financial adviser or coach to explain certain information.

4. Develop assets - this is a must.  Assets are items that increase (or in some cases decrease) in value over time.  This is really the only way to get ahead in the game.  In asset which carries value can be sold or leveraged for cash.

5. Develop a plan to save and invest - this is where you setup an account to save for those "rainy days" ahead, vacation, etc.  If you have two or more reasons to save I would suggest to have separate accounts for each need (i.e rainy day account and vacation savings account, etc).  In addition to this you want to develop an investment strategy.

6. Be a money manager - money managers know the difference between need and desires.  They are able to sacrifice desires for need and not get swayed another way.  Money managers stay on top of their bills.

7. Check your credit at least once per year and do a financial assessment - this new financial disciplined life will begin to payoff dividends shortly.  Therefore check your credit annually to ensure that you see scores increasing and verify that all accounts on your report are actual yours. In addition do an assessment of all of your financial accounts quarterly (minimum).  You want to see if how much your investments are earning and the amount that you have saved up.

7. Have fun but be disciplined - this level of discipline isn't without fun, in fact it will allow you to enjoy life   even more than you are currently doing.  Continue to practice these simple financial disciplines for another year and see how far you have come.

Now get to it!

Your Retirement's Life or Death

During this time there are many who will retire within the next two to three years.  This a great thing but I ask this question, are you prepared to retire?  Before you answer think about this -

1. The US is slowly increasing the minimum eligibility age to receive full social security benefits.

2. Many employer sponsored retirements plans have yet to earn its losses back from the downturn we began to experience about six years ago.

3. The US economy, and the world's economy, has not reached a TRUE bottom yet.

4. Many of us have not experienced nor considered another factor known as inflation inflation.

What is inflation?  In simple terms inflation is the rate the prices for goods and services rise and the purchasing power for the same things falls.  Perfect example is that a little over six years ago the average price was $2.23 per gallon, today that average is $3.62 per gallon.  

This means with $20.00 in 2006 you and I would have been able to buy just under 9 gallons of gas.  Today we would only be able to buy 5.5 gallons.  Imagine a spike in inflation while you are on a fixed income, exactly it could be the death of your retirement, especially if the rate of inflation is rising faster than the rate of your investment.

Is there any relief from this possibility?  Of course there is, the relief is building assets.  Assets have the unique ability to increase in value even in tough economic times.  What asset can you build?  There are several including real estate, businesses, collection items, etc.  Look to build assets into your retirement.

Setting The Record Straight

Obviously, we are still here today, May 22nd a day after the prediction!  I would like to turn your attention to Matthew chapter 24 verses 36-41 which reads:

“No one knows about that day or hour, not even the angels in heaven, nor the Son, but only the Father. As it was in the days of Noah, so it will be at the coming of the Son of Man. For in the days before the flood, people were eating and drinking, marrying and giving in marriage, up to the day Noah entered the ark; and they knew nothing about what would happen until the flood came and took them all away. That is how it will be at the coming of the Son of Man. Two men will be in the field; one will be taken and the other left. Two women will be grinding with a hand mill; one will be taken and the other left.”

The first issue hear is that the Bible is clear, no one knows the time that the Lord will appear.  No one - not the angels in heaven, nor the Son of Man - this includes anyone here on Earth as well.  In fact the Bible states that the coming of the Lord will be like the days of Noah.  In Noah’s day, Noah was informed to build an ark and warn the people of a coming flood.  Noah however did not know exactly when it would begin, Noah simply did what he was told to do - warn others and prepare himself and his family for that day.  As believers we are not call to predict the date of the Lord’s return - that is a waste of time - we are to warn others and to prepare for that time.

The state of the people during the time of Noah is interesting though.  Although Noah was preparing this ark, for an apparent flood, the Bible says that the people were basically doing their own thing.  Eating, drinking, marrying and getting married are signs that the people were more interested in satisfying their own desires, being sociable, making deals, etc than they were in hearing Noah’s warning to prepare themselves for the destruction of the world as they knew it.

Strangely enough we see the same thing going on today.  The church is preparing and warning while many are simply doing what they feel is right for them.  This weekend might have been a mockery of all we believe because we have experienced those that have entered in the business of predicting the unpredictable.  But this doesn’t negate the fact that the Lord will return.  The question is when He returns which person will we be?  The Bible states that there will be two men in the field (both engaging in the same practice, doing the same thing at the same time) and there will be two women grinding with a hand mill (doing the same thing at the same time) but one man and woman gets left and the other is taken.  What does that mean?  

The man and woman that are “taken” are those that have heeded the warning and have change their lives to conform it to the ways of Christ.  The man and woman that get left are those that have did what they felt was right.  The Bible offers no other distinction between these two (those who are taken and those who are left), This means that economic or racial differences don’t matter.  The other thing that matters is is they have believed in Christ and conformed their lives to Him or not.  

When the Lord does return, and He will, will you be the one who gets taken or the one who gets left?  

Calling

What is it that you are called to do?  This is a popular question in many church circles, but it is a questions that so often doesn’t get a direct answer. I hope this helps.

Calling is two fold.  First calling is what one has committed to when they adopt a life of faith in Jesus Christ.  Therefore there are certain things because of that which we adopt. For instance what falls onto this list is being holy because God is holy (1 Peter 1:16), the putting away, nullifying, destroying the works of the flesh and live in the Spirit (Romans 8:13), not conforming to the world or its system but have a different mindset (Romans 12:1-2), being Christlike (Philippians 2:5) and reaching the world with the gospel of Christ (Matthew 28:19).  There is obviously a lot more that can be added to that list, but I will stop there for now.  As believer, part of the Body, we are called to adopt this nature and Christ gives us the power to do so.

The second level of calling is what is that God called me to do.  I must submit that it is difficult (impossible) to truly live out this area of calling if we don’t address and practice the first level.  That was a sidebar, back to the subject….

So the second level of calling addresses what is it that you were designed by God to do here on Earth?  For some people this becomes clear immediately but for others it is not so easy.  Here is a way to find out what were you divinely created to do:

1. Pray and ask the Lord to reveal this divine call to you.

2. Access areas that you are good in.

3. Allow others, that you trust, to access the same.

4. Find out what motivates or drives you.

5. List the top 1 - 3 areas where you see a need that drives you to want to help.

6. Continue to practice the first level of calling.

In due time what you were called to do will be very apparent to you.  

One more thing, whatever it is may not be an easy task, in fact it never usually is.  But that area for you is enjoyable despite the difficulties.  It is a place (some call it a zone) that you might say to yourself “wow I could do this all day if I were able to and I’d do it for free.”  

Practice the first level of calling and discover the second level!

Three Weeks Left

With three weeks left in the year business owners have a few things to consider:

1. Have you gotten your books in order? - Many business owners use the "shoe box technique" to keep the books in order.  This is not advisable.  Business owners should use Excel or an accounting program such as QuickBooks to record financial transactions during the year.  Within the next three weeks it is important for business owners to get their books in order.

2. Minutes in order? Corporations are required to maintain meeting minutes during the year.  Many small business owners fail to get this done.  It is important to stay in compliance with Federal and State laws that corporations make certain minutes minutes are maintained.

3. Year end information - Many businesses deal with or hire independent contractor (i.e. professional services, extra labor, etc.).  It is vital, and required by law, that every business obtain the name, address and social security number of each contractor hired.  Be sure that you obtain all of the required information, even if the contractor was paid by cash.

4. Time to reflect - After you have resolve the above three matters it is important to reflect.  Reflect on the events that surrounded your business this year.  During this time I suggest that you ask yourself the following questions: (a) What areas did the business fail in? (b) Is there something you can change? (c) Where did the business excel? This helps you place the year in perspective so that the necessary adjustment can be made during the coming year.

If there is a need for assistance in any of these areas, we can refer someone to you.

Year Closing Tax Tips

As we approach the end of the year many people are thinking about the upcoming Christmas holiday, spending time with relatives and friends.  While that is good, we should also think about how we can lower our tax liability before December 31st arrives.  Here is a short laundry list of things that most of us can do:

Spring cleaning in December - Go through your closets and sort out items that you truly need and items that you do not need.  What you don't need give to charity but remember to itemize a list of what you are donating.  Also give the item a true value based on the age of the item and the wear the item has.  This might be a good time to go through rented storage space.

Rid yourself of under-performing securities - If you have securities that are losing money you might want to consider selling the securities in order to take the loss on the sale of stock.  Don't worry, if you don't want to get rid of the security you can always buy it right back at the lower price.

Charity - Consider making a year end gift to a charitable organization.  This will assist in meeting the need of others and give you a deduction all with one stroke of the pen.

These are just a few simple things that do not take a long time to do.  Take some time and save some tax dollars before 2010 is complete.

The Towles Group Inc can assist you further, give us a call at (516) 522-2676 or visit us at www.thetowlesgroup.com. 

Let's Bring Financial Literacy Home

I have written several posts that have involved with becoming financially literate.  In order for any of us to ever enjoy true financial freedom we must become financially literate.  I would like to share with you a tool that I used personally to assist me become financially literate in the early days.  Would you believe it is a board game?  My wife and I along with another couple played this game many times.  It is very fun but most importantly it will begin to shape the way you think about finances.  I even use this game in my presentations on becoming financially literate.  During this Christmas season why don’t you invest in yourself and your family. 

The name of the board game is Cashflow 101.  Buy it, play it, grow financially literate and enjoy time with your friends and family.   This board game could be the start of change of your financial thinking.  

Please note the game is listed in this blog, click on the link to purchase the game.

Charge-offs

Charge-offs on a credit report are detrimental to a person’s credit report.  I often notice that people don’t have their credit reports pulled very often.  Instead they rely on credit monitoring services, which is not bad, but what about the charge-off that were there before the monitoring started?  Others are many time oblivious to their credit score or any derogatory marks on their credit report.

Here is what I suggest, first pull your credit report from a reliable source.  The second thing you want to do is to review your report with alone or with a financial expert.  Then identify all of the accounts that have charge-off attached to them.  Normally you can contact the original creditor and make arrangements to pay the balance, if it is truly your of course.  Upon paying the balance request from the creditor a satisfaction letter showing that the amount has been paid in full.  Then you will want to send a copy of this letter to the credit bureau(s) which the original creditor reported the charge-off to.

In a matter of 1-3 months your report should show that the amount was paid in full and the charge-off goes away.  Your credit score should begin to rise a bit once this happen.  

Please note that the process, although sounds very easy, can be intense. If you need further assistance please feel free to contact me at info@frederickotowles.com.

The Success Addict

There are a number of addictions that we all can admit to or deny.  Some of these addictions are visible while some others are covert and very hard to detect to those on the outside and even to the addict themselves. One of these addictions is success.

Now of course there is nothing wrong with success but there is something wrong with the addiction to success.  Every addiction has at least three things in common: an addict, a supplier and the supply.  In the addiction the addict can be you or I, the supply is “success” and the supplier varies based on what our goals are.  Therefore success can look differently for two different people.  Success for one could be a debt free life, a nice moderate home, good marriage and a few children.  While success for another could be a multi million dollar home, homes in other parts of the world and a huge bank account.

Success addicts feed into what the popular model of success is and do everything they can to obtain that model.  In many cases if you are reaching for a model that you did not really imagine on your own then you probably are going to have a lot of stress getting there.  You might even lose your family or your life trying to attain this model.

The danger in this is that no person can sell you the model of what success is.  In fact you are the only one who can determine what success is for you.  Others can stress the borders of your imagination but only with your permission.  Here is your challenge. Pick up a dictionary and look up the word success to see what you come up with.

Set measurable goals, plan aggressively and work passionately to accomplish these goals. Don’t be a success addict but focus on what success means for you and your family and then do it – be successful!

The Eye of the Storm

The eye of a storm is the middle of the storm. It is believed to be the calmest part of the storm. As a youngster I remember a hurricane hitting the city I lived in. The beginning of the storm brought a lot of rain, hail and high wind. This part of the storm continued for about three to four hours. At some point, the sun came out and the rain and wind ceased. This was my first introduction to the term, "the eye of the storm."  The weather report on television warned people to stay indoors even if the storm appeared to be over. The report confirmed that the storm would start again at some point within the next three hours.


Financially, we have witnessed part one of the storm. This consisted of the government take over of Fannie and Freddie, the Wall Street bailout, the departure of Arthur Anderson, Washington Mutual and other various companies. In addition, the first half of the storm was accented by sub prime home lending, stimulus packages, rising rates of unemployment and corporate scandals at giant corporations such as Enron and WorldCom.


Currently we are in the “eye of the storm”. Things appear to be "stabilizing" in this supposed "recovery." However, in actuality we are not recovering. We are in the “eye of the storm". Wall Street gurus and DC politicians are attempting to comfort the public by using this “recovery language”. Do not be deceived, we are simply in the “eye of the storm”. What should you do in the eye of the storm? You simply realign or establish your financial goals, seek and execute investment opportunities and read to be as financial literate as you can and then gear up for part two of the storm.


What can we anticipate for part two of the storm? That is a good and scary question at the same time. It is quite possible that another super power can arise in the second half the storm. It is also possible that we will see many world governments financially fail, people sleeping in tents, an increase in the levels of unemployment, hyper-inflation and the rise of a single world wide bank.

The Crisis

At this point with the economy in a recession, depression or what Wall Street or the media wants to call it, we need answers.  I call the economic climate we currently find ourselves in as a CRISIS.

Why do I call this climate a crisis? This term is defined by Merriam Webster’s Dictionary as an unstable or crucial time or state of affairs in which a decisive change is impending, especially: one with the distinct possibility of a highly undesirable outcome.  We are currently at this position.

Just yesterday someone spoke to me about a huge percentage of business took a hit.  I told the young man many businesses are taking a hit now because of the economic climate.  Many businesses, especially small businesses, rely on credit cards and bank loans to pull the out or assist them in times like these.  Here is the issue which creates the crisis, the banks are not lending like they normally would which places a hold on loans and lines of credit. 

So what is a business or an individual to do in such a crisis?  I say that both should realign their culture of revenue generation, spending and investing.  This applies to the six figure W2 earner to the non profit organization to a Fortune 500 company.  We must examine the culture in which we do business.  We must ask the difficult questions and make some tough decisions. 

When was the last time you measured your organization’s strengths and weaknesses?  Do you have a product or service idea that is tailor made for the crisis we find ourselves in?  How do you go about possibly replacing key leaders and training others?  These are just some of the questions that must be asked in order to examine the culture and to stop this crisis.  I think crisis management just took on a new distinction!

For more information on financial crisis management contact info@thetowlesgroup.com

The Four A’s of Finances

There is a process to wealth for the non-wealthy and we look to expose this process in this article.

The first step is arranging. Arrange your financial picture that is readable and understandable. You might want to speak with a financial advisor or your tax professional that will work with you to prepare accurate personal financial statements.

The next step is assessing. Once the financial statements are prepared it is now time to assess your financial situation.  How much debt are you carrying?  What areas are your revenue coming from? What opportunities are there to produce more income or shrink your debt?

The third step is set an aim.  After the assessment is done it is now time to create a plan and set a goal.  When you set your goals, be sure to work backwards, yes backwards.  Look at where you would like to be.  Make that your long term goal, three to five years out.  Determine the steps you will need to take from where you are now to where you want to be.  These will be your mid range goals.  What can you do right now (within the next 30 days) to move in that direction?  These will be your short range goals.

The fourth step is to administer. Now that there is a plan in place, the plan must be executed.  Life is full of obstacles therefore you will need to form a team of people to whom you will be accountable to with regard to administering your aim.  It is important that you do something everyday to push you closer towards your aim.  It is also important to select people on the accountability team who will be honest with you and those who are not jealous of your progress.

Statistics Tell the Real Story

It is funny that we focus on what is called a recession.  Is there a real recession going on?  Think about it for a second!  If I look at the entertainment industry numbers I would not know that jobs are decreasing, livelihoods are being threatened and discretionary income is evaporating. Iron Man II has been in the movies less than a week and has grossed $133 million.  Let’s put this in perspective, if we add the films that were in positions 2 – 10 the combined gross was less than $40 million.  There was a lot of discretionary income spent this past week.  I wonder how many are worried about the recession but still went to see Iron Man II. 

It seems even in the midst of economic hardship the entertainment still does relatively well while other industries feel the effects of the hardship more severely.

Watch the Greece

Wow this may be a sign of what's to come! In America we almost saw the collapse of corporate America. Right after we expierenced the "Great Bailout" orchestrated by the US government.  Now we are witnessing the fall of a government. If you have watched the news at all over the past month you would have heard about the financial debacle going on in Greece.

Take a close look at what has happened in Greece. First, Greece's expenses had grown more than its production. Second, the Greek government tried to help itself by continued spending and other government programs. Third, the people of Greece suffered from high unemployment rates and no job security.  Does this sound familiar? Could this happen in America? The short answer is, yes it is!

We should all listen to and read more about world financial news!

It Just Isn’t the Same Anymore

When we look over our lives we realize that many things aren’t the same anymore. For each of us our age has changed, for some our weight has changed, money in the bank, aspirations, goals and energy level has changed. While all of this is going on one thing has changed for each of us, our money!

There used to be a time where a person who made over $100K annually would be considered to be doing relatively well. I recently read an article on Bankrate.com that stated two important facts:

(1) Less than 20 percent of the US population produces over $100K in income annually.

(2) What $100K would buy in 1976 would now cost $381K.

These two facts are staggering. This means that prices have nearly quadrupled over the past 34 years but 80% of the US population is probably not in a position to make a significant lateral financial move due to the increase in expenses.

This is sign to you and I to really focus on two areas: (1) scrutinize our expenses and (2) work on increasing our income.

The Cup Is Really Half Empty

Reports are that this year the Social Security fund will pay out more than it actually takes in.  Entertainment costs are increasing – try going to the movies or to a sporting event.  The healthcare reform bill has been signed.  The war in the Middle East is a constant vacuum which never gets full.  Do you see the recurring theme here?  Expenses are rising but there is no mention of revenues rising for individuals like you and I.

This should make both you and I look a little differently at our budget and what we spend our money on.  Right now is the time more than ever not to be optimistic but be realistic.  We need to examine our investments because this is the time, more than any other time, which we need to invest in assets.

What are you going to invest in?