BANK
ARV 150,000
FMV 100,000
PP 70,000
80% LTV of PP 56,000
Here you’re still required to put 20% down and you might/would lose out on the deal since you didn’t just have 20% lying around
HML
ARV 150,000
FMV 100,000
PP 70,000
75% LTV of ARV 112,500
They lend you the money and then some. You are demonstrating ownership of the deal by paying the HML and thus you can refinance out your property when the time comes. You can/will typically use all of the money the HML gives you to fix up the place, pay for the fees/points associated with refinancing the place. Once that is done however you’ll have a 30k equitable position and you’ll be cash flowing at a much lower interest rate.
Friday, December 30, 2011
Thursday, December 29, 2011
Credit Application Steps
Handing out application
1) Rental Application
2) Third Party Guaranty if they haven’t rented before (Paying rent to parents doesn’t count) ($10 for credit check (http://www.mrlandlord.com/html/creditfaq.html)…do we want more for just the time to process the application?)
3) Associated Application Fees ($10 for credit check (http://www.mrlandlord.com/html/creditfaq.html)…do we want more for just the time to process the application?)
4) One pay stub
5) Copy of Photo I.D. (Drivers license)
6) An application is needed for each applicant 18 and over so as to not discriminate, even if they are not working or paying any of the rent so that we have a file of them on hand
Before Accepting the Application
1) Check to make sure all pages have been signed
2) Check to make sure there are no pets
3) Must have valid residence history before they can rent, otherwise we need a third party guaranty and the money needed to do the third party guaranty.
4) Check for money necessary to process the application
5) Give them a receipt and keep a copy of the receipt (carbon copy)
6) Check for copy of photo I.D.
7) Check for pay stub
8) Check for SS#, phone number to contact them (a valid number to get directly to them), and an email address
Approving the Application
1) Check sex offender/criminal database
2) Contact each and every previous landlord and ask them the questions for resident history
3) If first time renting:
· Check work to see if they still work there _______ (yes/no)
· How long they’ve worked _______ - ________
· Whether they are having issues that would lead to termination of work _____ (yes/no)
· Verify the amount that they are making each pay period/month $________
4) Run Credit Check (Also for Third Party if necessary)
5) If approved using the “Approved Form”:
· Call and tell them they’ve been approved
· Tell them which unit they will be in
· Find out when they are moving in
· Find out exactly how long they plan on living there so that you can fill it out on the Lease Agreement and the corresponding amount of pro-rated rent that is due the day they move in
· Find out when and what time they will be getting the security deposit to us
· Finally let them know that the longer they wait to get the security deposit to us that the less likely they are to have the apartment as we may rent it out to somebody else if we do not have their security deposit.
Once Application has been received and approved
1) Lease Agreement (Copy goes to tenant)
2) Lead Disclosure-booklet (Copy goes to tenant)
3) Mold Disclosure-booklet (Copy goes to tenant)
4) Move-in Inspection List (Copy goes to tenant)
5) Cable Channel List – leave with them
6) Maintenance Request - leave with them
7) Keys (Mail/Entry – record how many keys are given to them)
8) Have them read the lease agreement or give them a quick run through of everything, including various fees associated with lockouts, late rent, noise complaints that are tended to, and bounced checks
9) Let them know when rent is due and where to send it to
1) Rental Application
2) Third Party Guaranty if they haven’t rented before (Paying rent to parents doesn’t count) ($10 for credit check (http://www.mrlandlord.com/html/creditfaq.html)…do we want more for just the time to process the application?)
3) Associated Application Fees ($10 for credit check (http://www.mrlandlord.com/html/creditfaq.html)…do we want more for just the time to process the application?)
4) One pay stub
5) Copy of Photo I.D. (Drivers license)
6) An application is needed for each applicant 18 and over so as to not discriminate, even if they are not working or paying any of the rent so that we have a file of them on hand
Before Accepting the Application
1) Check to make sure all pages have been signed
2) Check to make sure there are no pets
3) Must have valid residence history before they can rent, otherwise we need a third party guaranty and the money needed to do the third party guaranty.
4) Check for money necessary to process the application
5) Give them a receipt and keep a copy of the receipt (carbon copy)
6) Check for copy of photo I.D.
7) Check for pay stub
8) Check for SS#, phone number to contact them (a valid number to get directly to them), and an email address
Approving the Application
1) Check sex offender/criminal database
2) Contact each and every previous landlord and ask them the questions for resident history
3) If first time renting:
· Check work to see if they still work there _______ (yes/no)
· How long they’ve worked _______ - ________
· Whether they are having issues that would lead to termination of work _____ (yes/no)
· Verify the amount that they are making each pay period/month $________
4) Run Credit Check (Also for Third Party if necessary)
5) If approved using the “Approved Form”:
· Call and tell them they’ve been approved
· Tell them which unit they will be in
· Find out when they are moving in
· Find out exactly how long they plan on living there so that you can fill it out on the Lease Agreement and the corresponding amount of pro-rated rent that is due the day they move in
· Find out when and what time they will be getting the security deposit to us
· Finally let them know that the longer they wait to get the security deposit to us that the less likely they are to have the apartment as we may rent it out to somebody else if we do not have their security deposit.
Once Application has been received and approved
1) Lease Agreement (Copy goes to tenant)
2) Lead Disclosure-booklet (Copy goes to tenant)
3) Mold Disclosure-booklet (Copy goes to tenant)
4) Move-in Inspection List (Copy goes to tenant)
5) Cable Channel List – leave with them
6) Maintenance Request - leave with them
7) Keys (Mail/Entry – record how many keys are given to them)
8) Have them read the lease agreement or give them a quick run through of everything, including various fees associated with lockouts, late rent, noise complaints that are tended to, and bounced checks
9) Let them know when rent is due and where to send it to
Wednesday, December 28, 2011
Currencies Are a Poor Measuring Stick
People often think that when they see their bank account go up in value due to the investments that they’ve made that they are getting richer. What they fail to take into account is inflation. If their investments only make 5% return and inflation is 10% then that means they actually lost 5% over the period. Just to break even they would need to make a 10% return, which historically, the stocks market barely does. Funny enough, when people see their holdings in gold/silver go up they also think they’re getting richer because they argue that those things are holding their purchasing power intact and now they can buy more things with it. Truth is that it is just maintaining their wealth and not increasing it.
A better way to measure your wealth is by measuring with other stores of value. For example, measure things like gold and silver with oil, real estate, and the DOW. The gold/DOW is often used as a measure of value for the dollar and whether or not gold/DOW is under or overvalued. The mean DOW to gold ratio has been about 4. That means it takes 4 ounces of gold to buy one share of the DOW.
Interestingly enough in 1929 it took 18 ounces of gold to buy one share of the DOW. Because the DOW was overvalued and it had to revert to the mean, in 1932 the DOW/gold ratio reverted to 2 ounces of gold to buy one share of the DOW. In 1966 the ratio was 28:1. In 1980 the ratio was 1:1. In 2000, the ratio was 45:1. Currently we’re hovering around 6-7:1. We’ve got a ways to go before we see things return to normal. Some people even believe, which is not entirely impossible, that we’re heading towards hyperinflation as a country, which means that the ratio could be 1/10th:1.
What is funny is both gold and silver are undervalued, but the silver ratio is even more volatile.
Peter Schiff says that the proper ratio of oil to gold should be 10:1. Right now it is about 18-20:1. With the 7 billionth baby being born we see the demand for oil only getting greater. Another way I’m learning more about is to measure value with the mortgage to rent ratio, more on this later.
Basically if you can use proper measuring sticks and those help you to get out of a certain investment at the right time you and you can buy into the undervalued asset you can make a killing.
A better way to measure your wealth is by measuring with other stores of value. For example, measure things like gold and silver with oil, real estate, and the DOW. The gold/DOW is often used as a measure of value for the dollar and whether or not gold/DOW is under or overvalued. The mean DOW to gold ratio has been about 4. That means it takes 4 ounces of gold to buy one share of the DOW.
Interestingly enough in 1929 it took 18 ounces of gold to buy one share of the DOW. Because the DOW was overvalued and it had to revert to the mean, in 1932 the DOW/gold ratio reverted to 2 ounces of gold to buy one share of the DOW. In 1966 the ratio was 28:1. In 1980 the ratio was 1:1. In 2000, the ratio was 45:1. Currently we’re hovering around 6-7:1. We’ve got a ways to go before we see things return to normal. Some people even believe, which is not entirely impossible, that we’re heading towards hyperinflation as a country, which means that the ratio could be 1/10th:1.
What is funny is both gold and silver are undervalued, but the silver ratio is even more volatile.
Peter Schiff says that the proper ratio of oil to gold should be 10:1. Right now it is about 18-20:1. With the 7 billionth baby being born we see the demand for oil only getting greater. Another way I’m learning more about is to measure value with the mortgage to rent ratio, more on this later.
Basically if you can use proper measuring sticks and those help you to get out of a certain investment at the right time you and you can buy into the undervalued asset you can make a killing.
Tuesday, December 27, 2011
Probate
Do whatever you can to avoid probate. It is a nightmare for families. Imagine somebody who has worked hard their whole life and wanted to leave their kids and grandkids inheritance, but because of a lack of cheap planning they end up paying half of what they would’ve given to their posterity in the form of taxes to Uncle Sam. Then they’re only getting the inheritance a few years later. This is what happens to people who don’t plan what to do with their estates and their posterity.
Plan for disability too. Not only yours, but your kids. I don’t have disabled kids though. Right now you don’t. You need to plan for the possibility that something would happen to the kids or yourself and what steps you want to have taken to avoid delays and excessive expenses in resolving those issues. You’ve been warned.
Plan for disability too. Not only yours, but your kids. I don’t have disabled kids though. Right now you don’t. You need to plan for the possibility that something would happen to the kids or yourself and what steps you want to have taken to avoid delays and excessive expenses in resolving those issues. You’ve been warned.
Monday, December 26, 2011
Life Insurance
There are several options out there with varying degrees of coverage. For me I’m going to get some once I’ve got two kids and it will be a term life insurance policy, which carries a lower monthly premium and covers you for a shorter period of time. What is nice about term versus whole life insurance is that it covers for the period of time you want to be covered, and for me I’m going to do it to cover my wife and kids till they are out of the house.
There are several things you’ll want to look into as far as who you name your beneficiary and its tax implications. Some people may have large estates that they’ll pass on to their kids, but those kids might be too young to handle a large inheritance and so there may be stipulations on when the child would receive their inheritance, i.e. they won’t get access to the trust fund until they’re 18 or 21.
Another timing issue that is linked with naming your kids as your beneficiary is that they’d get something once I passed, while my wife would still handle/inherit our investments and their income. In a book I read it talked about how sometimes kids will constantly pester their mother once the father passes saying that she is spending more than she should. I think I might look into that option so as to avoid any conflict with how my own wife spends OUR money. The kids can fight (but hopefully not) over how to deal with the estate once we both pass on.
There are several things you’ll want to look into as far as who you name your beneficiary and its tax implications. Some people may have large estates that they’ll pass on to their kids, but those kids might be too young to handle a large inheritance and so there may be stipulations on when the child would receive their inheritance, i.e. they won’t get access to the trust fund until they’re 18 or 21.
Another timing issue that is linked with naming your kids as your beneficiary is that they’d get something once I passed, while my wife would still handle/inherit our investments and their income. In a book I read it talked about how sometimes kids will constantly pester their mother once the father passes saying that she is spending more than she should. I think I might look into that option so as to avoid any conflict with how my own wife spends OUR money. The kids can fight (but hopefully not) over how to deal with the estate once we both pass on.
Friday, December 23, 2011
When Will Inflation Truly Hit the Market?
The money supply has increased by 300% since 2008. Yet we are only faced with 3% inflation. When would we even see an increase in inflation if it were to happen? It’ll happen by incredible amounts once the Fed stops paying banks for the excess reserves they have with the Fed.
As a side note, the Fed hasn’t paid banks for excess reserves for over 60 years. Why? Because there weren’t any to pay on since banks didn’t get paid if they held excess reserves. Fed is paying banks for excess reserves, which means they’re trying to delay inflation through fractional lending and its subsequent multiplier effect on the money supply. They don’t want the increased money supply that they printed and gave to the banks in form of bailouts to hit the market yet and that is why they’re paying banks to hold excess reserves.
Another reason banks are holding excess reserves is that the interest being earned on the excess reserves is guaranteed by the Fed, whereas a loan out to the consumer for a car or house runs the risk of default and with that risk the lender may not recoup the total cost lent out.
As a side note, the Fed hasn’t paid banks for excess reserves for over 60 years. Why? Because there weren’t any to pay on since banks didn’t get paid if they held excess reserves. Fed is paying banks for excess reserves, which means they’re trying to delay inflation through fractional lending and its subsequent multiplier effect on the money supply. They don’t want the increased money supply that they printed and gave to the banks in form of bailouts to hit the market yet and that is why they’re paying banks to hold excess reserves.
Another reason banks are holding excess reserves is that the interest being earned on the excess reserves is guaranteed by the Fed, whereas a loan out to the consumer for a car or house runs the risk of default and with that risk the lender may not recoup the total cost lent out.
Thursday, December 22, 2011
China and Gold and Inflation
I just read an article today that states that the Chinese have bought more gold in the last three months (July-October) then in all of 2010. A few things come to mind about this. Have they finally awakened to the fact that we aren’t going to repay them and are dumping their US dollars into something of value? Some may claim that they’re just gearing up for the Chinese New Year, which typically is a bullish season for gold. If you’ve read my Aftershock review though you’ll see that their housing market is SEVERELY in a bubble right now and the way it got there was through government and excess (inflation via printing).
Well the Chinese citizens are the ones on the ground and they are the ones that feel the effect of rising prices through inflation and they would be the ones protecting themselves from inflation not only domestically, but abroad as well through the purchase of gold and silver, which aren’t devalued when currency loses its value through inflation.
Well the Chinese citizens are the ones on the ground and they are the ones that feel the effect of rising prices through inflation and they would be the ones protecting themselves from inflation not only domestically, but abroad as well through the purchase of gold and silver, which aren’t devalued when currency loses its value through inflation.
Wednesday, December 21, 2011
What bullion to buy and where to store it
“In gold, we recommend buying either the 1 ounce gold coin or bar, or 10 ounce or one kilo bars. In silver, we prefer the 1 once coin, or 10 or 100 ounce bars. We also carry $1,000 face amount bags of "Junk Silver.”
Coins you want to buy
American Gold Eagle:
· Mint: United States Mint
· Composition: 91.67% Gold, 3% Silver, 5.33% Copper
· Years of Minting: 1986-Present
· Denominations: 1 oz, ½ oz, ¼ oz, 1/10 oz.
American Silver Eagle
· Mint: United States Mint
· Composition: 99.9% Silver, 0.1% Copper
· Years of Minting: 1986-Present
· Denominations: 1 oz. Only
Canadian Gold Maple Leaf
· Mint: Royal Canadian Mint
· Composition: 99.99% Gold
· Years of Minting: 1979-Present
· Denominations: 1 oz, ½ oz, ¼ oz, 1/10 oz, 1/20 oz
Canadian Silver Maple Leaf
· Mint: Royal Canadian Mint
· Composition: 99.99% Silver
· Years of Minting: 1988-Present
· Denominations: 1 oz only”
I called Wells Fargo and asked about their safe deposit boxes and this is what they told me as far as the charges go. Wells Fargo safe deposit boxes: 18$ annually and $25 for key deposit. Problem with this option is that if there is a bank run when things get bad you might not be able to get into your branch. This is because in the past there have been bank runs and when they occurred they just shut down branches and you couldn’t even talk to anyone. In some cases with a bank run the bank may shut down entirely and transfer the contents of their safe deposit boxes elsewhere and they may not even notify you and it is possible that the contents may be lost forever.
You can buy and store your bullion at insured places, but they can be pricey. You can also look at the Perth Mint in Australia as a place to store your bullion as they seem to have very good prices and are secure and have the stable government of Australia to back it as far as risk of political turmoil. Australia is heavily dependent on commodities and so if you wanted somewhere that was tolerant of a run up in the price of commodities it’d be there, whereas there is sentiment out there that says this might not be the case in the states in the case of turmoil.
Coins you want to buy
American Gold Eagle:
· Mint: United States Mint
· Composition: 91.67% Gold, 3% Silver, 5.33% Copper
· Years of Minting: 1986-Present
· Denominations: 1 oz, ½ oz, ¼ oz, 1/10 oz.
American Silver Eagle
· Mint: United States Mint
· Composition: 99.9% Silver, 0.1% Copper
· Years of Minting: 1986-Present
· Denominations: 1 oz. Only
Canadian Gold Maple Leaf
· Mint: Royal Canadian Mint
· Composition: 99.99% Gold
· Years of Minting: 1979-Present
· Denominations: 1 oz, ½ oz, ¼ oz, 1/10 oz, 1/20 oz
Canadian Silver Maple Leaf
· Mint: Royal Canadian Mint
· Composition: 99.99% Silver
· Years of Minting: 1988-Present
· Denominations: 1 oz only”
I called Wells Fargo and asked about their safe deposit boxes and this is what they told me as far as the charges go. Wells Fargo safe deposit boxes: 18$ annually and $25 for key deposit. Problem with this option is that if there is a bank run when things get bad you might not be able to get into your branch. This is because in the past there have been bank runs and when they occurred they just shut down branches and you couldn’t even talk to anyone. In some cases with a bank run the bank may shut down entirely and transfer the contents of their safe deposit boxes elsewhere and they may not even notify you and it is possible that the contents may be lost forever.
You can buy and store your bullion at insured places, but they can be pricey. You can also look at the Perth Mint in Australia as a place to store your bullion as they seem to have very good prices and are secure and have the stable government of Australia to back it as far as risk of political turmoil. Australia is heavily dependent on commodities and so if you wanted somewhere that was tolerant of a run up in the price of commodities it’d be there, whereas there is sentiment out there that says this might not be the case in the states in the case of turmoil.
Tuesday, December 20, 2011
Unfair Advantage Part 2
Cash dividend stocks guarantees company will be run for the benefit of shareholders (and where we’d invest were we to invest in just stokcs)
P/E and dividend yield are most useful indetermining value against others is same industry.
Growth oriented investments in aisa, euro zone, and K, Switzerland, and scandanavia
Get instructors/mentors from B &I quadrants, not S & E
“Rich Woman”
100 properties looked at before buying 1 (do it with stocks/business/franchises)
“Workforce housing” = steady demand for jobs/rents
True investors invest for both capital gains AND cashflow
AS a couple set financial goals together. Study and learn together.
B/I quadrants are best and set up with llc’s, limited partnerships, s/c corps
Cashflow game illustrates conversion from earned income to portfolio income
Traders (resellers) trade portfolio/earned income for more
Are resulting depreciation, amortization, and property appreciation better/more than offset lost value in dollar purchasing power?
Does it offset but only to a certain point/% lost?
Focus on infinite return, i.e. cashing out original “down pmt” and exchanging it up for something bigger.
OPM = other people’s money is key to getting wealthy and being in the I quadrant.
Non recourse loans are good since if you don’t have any renters on a property you can just give it back to the bank.
The smart man invests in preferred shares, not common shares.
There are more mutual fund companies than publicly traded companies.
Invest in actual assets and not the paper form of it. But what if you’re too poor/not an accredited investor?
Debt free? Are you naïve? Have you seen our national debt? 174k/person in US.
1) Learn to sell (control income) 2) Learn to invest in real estate (control debt) 3) Learn technical investing (control markets)
Kitco.com
Course on technical analysis
Have renters insurance included in rent
Sole proprietorships and general partnerships offer no protection and exposes all assets to risk and impairs ability to build business credit and may stunt any future economic opportunities
ASSETS BUY OUR LIABILITIES!!!!
Cashflow game is cone of learning or a simulator and shows us how to convert earned income into portfolio income.
P/E and dividend yield are most useful indetermining value against others is same industry.
Growth oriented investments in aisa, euro zone, and K, Switzerland, and scandanavia
Get instructors/mentors from B &I quadrants, not S & E
“Rich Woman”
100 properties looked at before buying 1 (do it with stocks/business/franchises)
“Workforce housing” = steady demand for jobs/rents
True investors invest for both capital gains AND cashflow
AS a couple set financial goals together. Study and learn together.
B/I quadrants are best and set up with llc’s, limited partnerships, s/c corps
Cashflow game illustrates conversion from earned income to portfolio income
Traders (resellers) trade portfolio/earned income for more
Are resulting depreciation, amortization, and property appreciation better/more than offset lost value in dollar purchasing power?
Does it offset but only to a certain point/% lost?
Focus on infinite return, i.e. cashing out original “down pmt” and exchanging it up for something bigger.
OPM = other people’s money is key to getting wealthy and being in the I quadrant.
Non recourse loans are good since if you don’t have any renters on a property you can just give it back to the bank.
The smart man invests in preferred shares, not common shares.
There are more mutual fund companies than publicly traded companies.
Invest in actual assets and not the paper form of it. But what if you’re too poor/not an accredited investor?
Debt free? Are you naïve? Have you seen our national debt? 174k/person in US.
1) Learn to sell (control income) 2) Learn to invest in real estate (control debt) 3) Learn technical investing (control markets)
Kitco.com
Course on technical analysis
Have renters insurance included in rent
Sole proprietorships and general partnerships offer no protection and exposes all assets to risk and impairs ability to build business credit and may stunt any future economic opportunities
ASSETS BUY OUR LIABILITIES!!!!
Cashflow game is cone of learning or a simulator and shows us how to convert earned income into portfolio income.
Monday, December 19, 2011
Unfair Advantage Part 1
Inflation is rising. January 4th, 2000 an ounce of gold cost $282. Ten years later, on December 30th, 2010, the same ounce of gold cost $1,405 an ounce. In the last decade, when measured against gold, the U.S. dollar lost 398% of its value. On January 4th, 2000, oil was $25 a barrel. By December 31st, 2010, oil was $91 a barrel. In 10 years, the price of oil has gone up by 264%. Yet the government claims there is no inflation. Has your pay gone up as much as these two things in the last 10 years? If not then you are losing that amount to inflation and devalued dollars each year and that is why inflation is bad.
The smart person would ask:
What will an ounce of gold cost at the end of the next decade, on December 31st, 2020?
How much will a gallon of gasoline cost in 2020?
What will food cost in the next 10 years?
These are questions most monkeys do not ask. Instead, monkeys go back to school, work harder, pay higher taxes, pay higher prices, do their best to live below their means, and save, save, save.
“I’ll never be rich.” IF that idea is not replaced, the the idea becomes your reality.
“I’d rather be happy than rich.” Why not be both? Thinking you can only have one is caused by limited thinking.
“I need job security.” Security and freedom are exactly opposite. The more security you desire, the less freedom you have. That is why inmates in maximum-security prisons have the least freedom. People/monkeys are trapped cause they cling to security.
“I need to invest for the long term in a well-diversified portfolio of stocks, bonds, and mutual funds.” At the start of 2000, the DIJA was at 11,357. At the close of 2010, the Dow was 11,577. A .2 percent gain in 10 years. If Dow performed like gold then it’d have ended around 45,000. Does this mean you should invest in gold? Absolutely not. This means it is best to gain real-world financial education.
Who’s heard this? Live modestly (within your means), have a budget and open a 401k retirement plan, catch up (in other words save, save, save.), pay off debt, work longer, retire later. He says he’d never follow that advice. It’s not only bad, but it is depressing.
Capital gains vs. cash flow. Income statement and balance sheet and how they affect the rich and poor.
The smart person would ask:
What will an ounce of gold cost at the end of the next decade, on December 31st, 2020?
How much will a gallon of gasoline cost in 2020?
What will food cost in the next 10 years?
These are questions most monkeys do not ask. Instead, monkeys go back to school, work harder, pay higher taxes, pay higher prices, do their best to live below their means, and save, save, save.
“I’ll never be rich.” IF that idea is not replaced, the the idea becomes your reality.
“I’d rather be happy than rich.” Why not be both? Thinking you can only have one is caused by limited thinking.
“I need job security.” Security and freedom are exactly opposite. The more security you desire, the less freedom you have. That is why inmates in maximum-security prisons have the least freedom. People/monkeys are trapped cause they cling to security.
“I need to invest for the long term in a well-diversified portfolio of stocks, bonds, and mutual funds.” At the start of 2000, the DIJA was at 11,357. At the close of 2010, the Dow was 11,577. A .2 percent gain in 10 years. If Dow performed like gold then it’d have ended around 45,000. Does this mean you should invest in gold? Absolutely not. This means it is best to gain real-world financial education.
Who’s heard this? Live modestly (within your means), have a budget and open a 401k retirement plan, catch up (in other words save, save, save.), pay off debt, work longer, retire later. He says he’d never follow that advice. It’s not only bad, but it is depressing.
Capital gains vs. cash flow. Income statement and balance sheet and how they affect the rich and poor.
Friday, December 16, 2011
On the road: Getting Married
Some of the things in this book I’ve already heard before and I won’t be repeating them as they are included in most every personal finance book you can find. Some of these notes are even things I’ve heard before, but may have forgotten and so will be including them here.
When saving up for 6 month buffer don’t forget to include things like car insurance, home maintenance, appliance replacements, vacationsx, camp for kids, estimated quarterly income taxes, gifts and holiday spending, and medical and dental bills.
When creating a budget ask yourself:
Do we have enough income to cover the payments if we take on more debt? Do we have enough money available to cover quarterly tax payments? Have we put aside enough to cover the holiday presents we want to give? Will our savings (rental properties, businesses, and dividend yielding investments) produce enough income to live on and maintain our current lifestyle so we can retire when we want to? What size mortgage payments can we afford?
Work out a budget together. Do a budget in pencil as it isn’t ever permanent due to changing circumstances and realizations. Use round numbers in your budget. It isn’t necessary to know everything to the exact penny. I’m a perfectionist and so I’m definitely going to have to work on this one since I actually like to see everything exactly as it is.
What is most frustrating to people about managing their money is the chaos feeling. Once that is under control then you can start to focus on savings and investing.
Most people can’t imagine a large monthly savings amount to fund their retirement, but people are fine with paying a large mortgage and a large car payment for years and decades.
Its possible the kids will want something as an inheritance when I die. Maybe look into an insurance policy that pays out to them once I die. I could be the insured and they the beneficiary and I could send them money to pay the premium. This way they get a little something when I die and then my wife could spend whatever money is left to her in the form on savings and monthly cash flow. After that she could plan or we could plan how the remainder could be divvied up when she passes.
Look at a revocable living trust and combining it with a second trust to avoid tax issues. Would it be smart to use the irrevocable trust in doing so?
Could we deduct from our taxes yard improvements?
When saving up for 6 month buffer don’t forget to include things like car insurance, home maintenance, appliance replacements, vacationsx, camp for kids, estimated quarterly income taxes, gifts and holiday spending, and medical and dental bills.
When creating a budget ask yourself:
Do we have enough income to cover the payments if we take on more debt? Do we have enough money available to cover quarterly tax payments? Have we put aside enough to cover the holiday presents we want to give? Will our savings (rental properties, businesses, and dividend yielding investments) produce enough income to live on and maintain our current lifestyle so we can retire when we want to? What size mortgage payments can we afford?
Work out a budget together. Do a budget in pencil as it isn’t ever permanent due to changing circumstances and realizations. Use round numbers in your budget. It isn’t necessary to know everything to the exact penny. I’m a perfectionist and so I’m definitely going to have to work on this one since I actually like to see everything exactly as it is.
What is most frustrating to people about managing their money is the chaos feeling. Once that is under control then you can start to focus on savings and investing.
Most people can’t imagine a large monthly savings amount to fund their retirement, but people are fine with paying a large mortgage and a large car payment for years and decades.
Its possible the kids will want something as an inheritance when I die. Maybe look into an insurance policy that pays out to them once I die. I could be the insured and they the beneficiary and I could send them money to pay the premium. This way they get a little something when I die and then my wife could spend whatever money is left to her in the form on savings and monthly cash flow. After that she could plan or we could plan how the remainder could be divvied up when she passes.
Look at a revocable living trust and combining it with a second trust to avoid tax issues. Would it be smart to use the irrevocable trust in doing so?
Could we deduct from our taxes yard improvements?
Thursday, December 15, 2011
Inc. and Grow Rich
Could we deduct for gas, cars (mileage used for business), Internet, 3rd bedroom as small office, webinar, un-sellable items, grad school, Community College?
When they say you deduct start-up costs what does that mean?
Taking a picture of the logo on the shirt, or keep a copy of the artwork, just in case you need to prove the deduction. With all deductions, keep track of you expenses and save your canceled checks and invoices.
Charitable Contributions are limited to 10% of your corporation’s net income.
First, education expenses are deductible (even if they lead to a degree) if the education that is undertaken 1) maintains or improves a skill required by the individual in the individual’s employment or other trade or business or 2) meets the requirements of the individual’s employer or the requirements of law or regulations.
Document, in writing, the business purpose of every class or seminar you take. Also, where appropriate, adopt an education assistance plan.
A corporation can pay up to $5,250 per year per employee for tuition, fees, books, supplies, etc., and the employee can exclude it from his or her income! Further the exclusion is available for both undergraduate and graduate degree programs and applies even if the employee is not seeking a degree. The courses covered by the plan need not even be job-related and could be courses involving sports, games or hobbies if they involve the employer’s business or are required as part of a degree program. Any excess greater than $5,250 would be included in the employee’s gross income and be subject to payroll taxes and federal income tax.
Save receipts for shipping, we could deduct for a phone, what about cell service? And what about monthly Internet? We’ll need to keep invoices, but would we ever have cancelled checks? Could I deduct 5-dollar cases sold for 1 dollar?
S Corp – may have multiple LLC’s underneath it, $400 in quarterly taxes
Stay sole proprietor until you think you’ve got something to lose.
The C Corporation is the only entity that is able to select a business year-end different from a calendar year-end. Only the C Corporation can decide “when to pay your taxes.” All other types of business structure are flow-through entities. “A C corporation is the dumbest thing you could do because of double taxation!” Then why is it the go to for the biggest corporations and has been around the longest as a structure?
Most expenses that a corporation pays are deducted against the income of the corporation, so there is no double taxation.
Verify that you have or will have sufficient non-wage income to justify a C corporation. Do not start a C corporation to own real estate!!!!! Verify that the tax benefits will outweigh the added cost and maintenance requirements needed to run a C corporation.
Rich dad poor dad, “S corporation stands for SMALL! The C Corporation is for people who want to think big.”
Knowledge = Money
For real estate, there was no LLC self-employment tax assessment.
LLC: they offer the advantage of limited liability, asset protection, flow-through taxation and discounted transfers of wealth. They offer flexibility when creating the operating agreement, which can be tailored to suit the simplest to the most complex business structures. They may not be appropriate for operating businesses due to all distributions being treated as self-employment income subject to self-employment tax.
When they say you deduct start-up costs what does that mean?
Taking a picture of the logo on the shirt, or keep a copy of the artwork, just in case you need to prove the deduction. With all deductions, keep track of you expenses and save your canceled checks and invoices.
Charitable Contributions are limited to 10% of your corporation’s net income.
First, education expenses are deductible (even if they lead to a degree) if the education that is undertaken 1) maintains or improves a skill required by the individual in the individual’s employment or other trade or business or 2) meets the requirements of the individual’s employer or the requirements of law or regulations.
Document, in writing, the business purpose of every class or seminar you take. Also, where appropriate, adopt an education assistance plan.
A corporation can pay up to $5,250 per year per employee for tuition, fees, books, supplies, etc., and the employee can exclude it from his or her income! Further the exclusion is available for both undergraduate and graduate degree programs and applies even if the employee is not seeking a degree. The courses covered by the plan need not even be job-related and could be courses involving sports, games or hobbies if they involve the employer’s business or are required as part of a degree program. Any excess greater than $5,250 would be included in the employee’s gross income and be subject to payroll taxes and federal income tax.
Save receipts for shipping, we could deduct for a phone, what about cell service? And what about monthly Internet? We’ll need to keep invoices, but would we ever have cancelled checks? Could I deduct 5-dollar cases sold for 1 dollar?
S Corp – may have multiple LLC’s underneath it, $400 in quarterly taxes
Stay sole proprietor until you think you’ve got something to lose.
The C Corporation is the only entity that is able to select a business year-end different from a calendar year-end. Only the C Corporation can decide “when to pay your taxes.” All other types of business structure are flow-through entities. “A C corporation is the dumbest thing you could do because of double taxation!” Then why is it the go to for the biggest corporations and has been around the longest as a structure?
Most expenses that a corporation pays are deducted against the income of the corporation, so there is no double taxation.
Verify that you have or will have sufficient non-wage income to justify a C corporation. Do not start a C corporation to own real estate!!!!! Verify that the tax benefits will outweigh the added cost and maintenance requirements needed to run a C corporation.
Rich dad poor dad, “S corporation stands for SMALL! The C Corporation is for people who want to think big.”
Knowledge = Money
For real estate, there was no LLC self-employment tax assessment.
LLC: they offer the advantage of limited liability, asset protection, flow-through taxation and discounted transfers of wealth. They offer flexibility when creating the operating agreement, which can be tailored to suit the simplest to the most complex business structures. They may not be appropriate for operating businesses due to all distributions being treated as self-employment income subject to self-employment tax.
Wednesday, December 14, 2011
Crash Proof 2.0
Stocks – invest in conservative stocks with high dividend yields.
Foreign Stock Portfolio
Step One
Cash account – have it be liquid. Buy a no-load mutual fund invested in foreign money market instruments, such as the Merk Hard Currency Fund. Convertible to cash in a week or so.
Foreign bank account – favorites are Switzerland, the Cayman Islands, Liechtenstein, Panama, Austria, and Luxembourg.
Step Two
Avoid emerging, developing markets and developed markets where there is any question of political risk. In NA Canada is the best.
· Industrial sectors
· Resource Block – Canada, Australia, New Zealand, South Africa, and Scandanavian countries like Norway.
· Producing/saving countries (real growth engines) – Hong Kong and Singapore, followed by Japan. Some money, but not as much in Thailand and Philippines.
Step Three
· Electric, oil, and gas utilities constant demand, can raise prices, and pay high dividends.
· Real Estate is best purchased in a property trust, and mostly commercial, i.e. industrial office buildings and shopping centers. You don’t actually OWN the real estate, but get all the benefits of it and managed professionally (no collecting rent/getting insurance).
· Commodity and natural resources. As dollar collapses and Asians need different products, namely products that are more resource intensive then we’ll see a big increase in raw material prices. Great exposure with ‘exceptional’ dividends being paid by companies in that sector. Many Canadian companies pay dividends of 12-15%. Coal producers are around 11% and companies mining zing, nickel, and lead are paying 7-10% dividends.
Step Four
Having decided sectors to be in, now we aim for individual stocks and we focus on safety and yield, then after this narrows the results we focus on. Don’t/won’t buy companies exposed to US. Those candidates will be good to buy after meltdown due to falling prices due to lost export sales. Key is exposure to foreign currency through companies that generate their revenues in their own local markets (i.e. a Japanese retailer), not by exporting to the United States. This will allow currency profits while avoiding losses, and perhaps even seeing gains, in the underlying share prices.. Then you’d use the appreciated foreign currencies to buy the exporters’ stock when the time is ripe, which would be after they take their lumps from the collapsed American market and their shares are cheap. Plus the exporters will gain lots by asian’s replacing poor american’s in the goods that are purchased.
Ratios to be familiar with:
Ratios that measure Corporate Liquidity
Current Ratio – divides current assets by current liabilities. A conservative ratio of 2.
Quick Ratio – refines the current ratio by excluding inventory. Divides current liabilities into cash and equivalents plus accounts receivable. Ratio should be 1.
Ratios that measure Profitability
Operating profit margin – net operating profits divided by net sales.
Net profit margin – dividing net income by net sales, which measures management’s overall efficiency.
Return on equity – divide net income by stockholder’s equity. The higher the better as long as it doesn’t invite competition.
Ratios that measure Leverage
Debt to total assets – total liabilities are divided by total assets to measure the proportion of assets financed with debt as opposed to equity.
Long-term debt to total capitalization – total long-term debt and divides it by total long-term debt + stockholder’s equity.
Debt to equity (debt ratio) – divides total liabilities by total stockholders’ equity. High is bad, and low is good.
Fixed-charge coverage – earnings before taxes and interest charges divided by interest charges plus lease payments
Ratios that measure stock values:
Price to earnings (p/e) – market price of a share divided by the earnings per share, computed using the previous 12 months or less commonly estimated 12 month earnings.
Price to book value – market price of a share divided by the book value per share, exluding intangible assets. Low ratio might be a sign of value and warrant closer analysis.
Price to sales – market price per share divided by sales and revenues per share.
Dividend payout – dividing dividends per common share by earnings per common share, we learn what percentage of its earnings a company pays out in dividends.
Dividend yield – company’s annual dividend as a percentage of its market price. Take company’s most recently reported quarterly dividend and annualizing it, that is, multiplying it by four, then dividing by the market price per share.
Altogether you should be getting a dividend yield of around 8 percent, with appreciating stock prices, which shouldn’t need to be sold.
Foreign Stock Portfolio
Step One
Cash account – have it be liquid. Buy a no-load mutual fund invested in foreign money market instruments, such as the Merk Hard Currency Fund. Convertible to cash in a week or so.
Foreign bank account – favorites are Switzerland, the Cayman Islands, Liechtenstein, Panama, Austria, and Luxembourg.
Step Two
Avoid emerging, developing markets and developed markets where there is any question of political risk. In NA Canada is the best.
· Industrial sectors
· Resource Block – Canada, Australia, New Zealand, South Africa, and Scandanavian countries like Norway.
· Producing/saving countries (real growth engines) – Hong Kong and Singapore, followed by Japan. Some money, but not as much in Thailand and Philippines.
Step Three
· Electric, oil, and gas utilities constant demand, can raise prices, and pay high dividends.
· Real Estate is best purchased in a property trust, and mostly commercial, i.e. industrial office buildings and shopping centers. You don’t actually OWN the real estate, but get all the benefits of it and managed professionally (no collecting rent/getting insurance).
· Commodity and natural resources. As dollar collapses and Asians need different products, namely products that are more resource intensive then we’ll see a big increase in raw material prices. Great exposure with ‘exceptional’ dividends being paid by companies in that sector. Many Canadian companies pay dividends of 12-15%. Coal producers are around 11% and companies mining zing, nickel, and lead are paying 7-10% dividends.
Step Four
Having decided sectors to be in, now we aim for individual stocks and we focus on safety and yield, then after this narrows the results we focus on. Don’t/won’t buy companies exposed to US. Those candidates will be good to buy after meltdown due to falling prices due to lost export sales. Key is exposure to foreign currency through companies that generate their revenues in their own local markets (i.e. a Japanese retailer), not by exporting to the United States. This will allow currency profits while avoiding losses, and perhaps even seeing gains, in the underlying share prices.. Then you’d use the appreciated foreign currencies to buy the exporters’ stock when the time is ripe, which would be after they take their lumps from the collapsed American market and their shares are cheap. Plus the exporters will gain lots by asian’s replacing poor american’s in the goods that are purchased.
Ratios to be familiar with:
Ratios that measure Corporate Liquidity
Current Ratio – divides current assets by current liabilities. A conservative ratio of 2.
Quick Ratio – refines the current ratio by excluding inventory. Divides current liabilities into cash and equivalents plus accounts receivable. Ratio should be 1.
Ratios that measure Profitability
Operating profit margin – net operating profits divided by net sales.
Net profit margin – dividing net income by net sales, which measures management’s overall efficiency.
Return on equity – divide net income by stockholder’s equity. The higher the better as long as it doesn’t invite competition.
Ratios that measure Leverage
Debt to total assets – total liabilities are divided by total assets to measure the proportion of assets financed with debt as opposed to equity.
Long-term debt to total capitalization – total long-term debt and divides it by total long-term debt + stockholder’s equity.
Debt to equity (debt ratio) – divides total liabilities by total stockholders’ equity. High is bad, and low is good.
Fixed-charge coverage – earnings before taxes and interest charges divided by interest charges plus lease payments
Ratios that measure stock values:
Price to earnings (p/e) – market price of a share divided by the earnings per share, computed using the previous 12 months or less commonly estimated 12 month earnings.
Price to book value – market price of a share divided by the book value per share, exluding intangible assets. Low ratio might be a sign of value and warrant closer analysis.
Price to sales – market price per share divided by sales and revenues per share.
Dividend payout – dividing dividends per common share by earnings per common share, we learn what percentage of its earnings a company pays out in dividends.
Dividend yield – company’s annual dividend as a percentage of its market price. Take company’s most recently reported quarterly dividend and annualizing it, that is, multiplying it by four, then dividing by the market price per share.
Altogether you should be getting a dividend yield of around 8 percent, with appreciating stock prices, which shouldn’t need to be sold.
Tuesday, December 13, 2011
Aftershock
Here are the notes from this book I read.
1) The real estate bubble
2) The stock market bubble
3) The private debt bubble
4) The discretionary spending bubble
5) The dollar bubble
6) The government bubble
Real estate bubble – 2% growth in income from 2001-2006 and housing price up 80% from 2001-2006.
Gold bubble? Money supply up 300% from 2008-2011. Gold up 50.8% in same period. We’ve got a ways to go folks till gold catches up to the money supply.
Inflation = an increase in the price of goods and services not due to growing demand or shrinking supply for those goods and services, but due instead to the dollar losing its buying power through excess printing beyond GDP growth or population growth.
Is inflation bad? As inflation rises, so do interest rates, and as interest rates rise, asset values fall. It’s even worse when things are in a bubble. Prices will go up, but not as much as inflation does. Lenders know that inflation is occurring and will only lend at rates that are higher than inflation so as to make a profit on the loans they’re making. When money is more expensive to borrow, less lending occurs. When less buying occurs, and when less buying occurs, the demand for assets – like our homes, stocks, savings accounts, artwork, jewelry, cars, and all dollar-denominated assets – falls. Demand falls, supplies go up (because of fewer buyers), and asset values go south. Rising interest rates will cause bond value to fall, businesses to do poorly, stock prices to drop, and home prices to decline even further. Rising inflation and rising interest rates lead to falling asset values. Nominal prices may go up, but adjusted for inflation and these prices won’t have gone up.
What is good for borrowers is bad for lenders. If you don’t outpace inflation then you’re losing money, which is every investor in 10 year treasuries right now as even the government stated that the CPI is over 3% and the 10 year treasury yield is less than 3%. This flight into treasuries is complete nonsense.
With the government each time they refinance their debt they expose themselves to highest interest rates due to increasing investor skepticism. Look to Italy and my prior post if you don’t believe this.
Real estate prices at 4% interest. An increase to 5% interest is a 11% drop in asset prices to keep payment the same. 7.5% mortgage is a 32% drop in asset price. 10% interest merits a 45% drop in asset prices. Even worse as interest rates rise, the value of mortgage bonds falls drastically, which means there won’t be much mortgage money to lend, even if home buyers wanted to borrow it at the high rate. Higher rates means fewer borrowers for mortgages, business loans which means fewer hires, and eventually it lowers the price of stocks/bonds doing damage to everything.
Money supply has increased 300% since 2008, which will lead to double-digit inflation. When will that happen? See future blog post.
Fed is paying banks for excess reserves, which means they’re trying to delay inflation through fractional lending and its subsequent multiplier effect on the money supply.
Foreign inflows from foreign investors to buy our bonds is slowing from 1 trillion in 2007 to $824 billion in 2010, with some drops and increases in between.
Debt is close to 15 trillion. If we made 500 billion dollar payments per year, it’d take us 30 years to pay that off. More realistically we’d need the 500 billion and another 1.5 trillion (our yearly national deficit), which means we’d need to increase all taxes by 100 percent or income taxes by 200 percent, which isn’t economically or politically possible/feasible and thus we see that it is impossible for us to pay back our debts. What happens then? We WILL either default or we’ll print the money to pay off the debt, which causes inflation and possibly hyperinflation just like with Greece, Rome, Weimar Republic, Tulip Mania, Argentina, and Zimbabwe.
6 stages of psychological denial
1) Denial
2) Market Cycles
3) Fantasized Great Depression
4) Back to Basics
5) Imagined Armageddon
6) Revolutionary Action
Average sales price of Beijing apartment is 57 times that of the average workers income. 65.4 million houses went without electricity for six months straight, which means they were empty and that there is excessive overbuilding in China. Recommended max is buying something 2-3 times your gross income. What does this mean? The Chinese government has huge inflation coming down the pipeline. See blog post on China and Gold.
Aftershockeconomy.com
GDP 2007 – 14 trillion
GDP 2010 – 14.6 trillion
US government borrowed/spent – 163 billion in 2007
US government borrowed/spent – 1.4 trillion in 2010.
This means that our ‘recovery’ is fake and that all the growth can be attributed to government spending and not real legitimate growth.
Bond yields at record lows and prices at record highs…can only go up from here.
10 year treasury at 3% - goes up to 5%, loses 18% of its value, 6% loses 25%, 7% loses 31%, 10% loses 46%, and 15% loses 63%.
LEAPS – long-term equity anticipation securities that are long term and that you can short over the period of 1-2 years. www.cboe.com/products/leaps.aspx or www.optionseducation.org/basics/leaps/default.jsp. Government could limit/ban use of leaps and shorts in order to stabilize the falling stock market. It has happened before and is most likely to happen again.
ETFs for currencies: FXE, FXF, FXC, FXY. What about for Australia and Norway? Better to do ETFs or to do Merk hard currency fund? UDN is an ETF that rises when the dollar falls against a currency of baskets. What currencies are in that basket?
Are TBTF and TBT in Robert Kiyosaki’s trading program or any of these symbols for that matter?
Demand for us produced coal, grain, and beef to be good due to low value of dollar and increased export demand for these products, i.e. find solid companies that have this exposure and invest in them.
If gold has done well in a negative environment, how is it going to do in a good one, i.e. one with lots of inflation and high investor fear??? Over the past decade with low inflation, a pretty stable dollar, and two of the big alternative investments to gold – stocks and bonds- have done okay and yet gold is up over 400%.
Many whole life insurance companies will go bankrupt during the aftershock.
Monday, December 12, 2011
Gold and Silver Notes
Here are some interesting notes I took when reading a book about investing in gold and silver.
· “Grandfather Economic Report” – Michael Hodges
· “Rich Dad Prophecy”
· Ron paul interview on goldsilver.com
· Gata.org
· Silver’s main cost is energy when it is being mined. Is oil going to go up? Yes. If oil goes up then when silver is being mined then the price of silver has to go up as well to account for the increased cost of mining it, or the energy used to mine it.
· 12:1 Historical average for silver to gold, i.e. one ounce $10 of silver should buy one ounce $120 of gold. Today (9/22/11) it is at 50:1.
· DIJA undervalued when it costs less than 4 ounces of gold to buy one share of DIJA (BUY DIJA!!!)
· DIJA is fairly valued when it costs 6-7 ounces of gold to buy one share of the DIJA
· DIJA is overvalued when it costs more than 10 ounces of gold to buy one share of DIJA (SELL DIJA!!!)
· Shadow-stats.com
· From 2000-2008 M3 increased 112% so anything that made less than that over the same period of time lost money.
· Make a guesstimate of the price of your house. Then divide the price of the house by the current points of the Dow and you’ll know how many shares of the Dow your house is worth. Now take the price of your house and divide it by the price of gold and you’ll know how many ounces of gold your house is worth. Then take the price of your house and divide it by the price of a barrel of crude oil and you’ll know how many barrels of oil your house is worth.
· Write out a plan!!!!!!!!!!!!!!
· Just cause you write out a plan, however, doesn’t mean you can’t modify it. Success depends on it, especially if you’re failing.
· A plan should have a goal, a strategy (the big picture of how you’re going to get from A to B), and a tactic (the specific methods to be employed to implement the strategy)
· Warren Buffet, “Put all your eggs in one basket and then watch that basket very carefully”.
· Start a business that will grow in the future economic picture you see
· Physical Precious Metals constitute about 50-70% of his investments. 20-40% precious metal stocks, 5-10% is between energy stocks and stocks in other commodities, and the remaining 5% in cash.
· At home portion of precious metals is 10-50% gold and 50-90% silver.
· “Grandfather Economic Report” – Michael Hodges
· “Rich Dad Prophecy”
· Ron paul interview on goldsilver.com
· Gata.org
· Silver’s main cost is energy when it is being mined. Is oil going to go up? Yes. If oil goes up then when silver is being mined then the price of silver has to go up as well to account for the increased cost of mining it, or the energy used to mine it.
· 12:1 Historical average for silver to gold, i.e. one ounce $10 of silver should buy one ounce $120 of gold. Today (9/22/11) it is at 50:1.
· DIJA undervalued when it costs less than 4 ounces of gold to buy one share of DIJA (BUY DIJA!!!)
· DIJA is fairly valued when it costs 6-7 ounces of gold to buy one share of the DIJA
· DIJA is overvalued when it costs more than 10 ounces of gold to buy one share of DIJA (SELL DIJA!!!)
· Shadow-stats.com
· From 2000-2008 M3 increased 112% so anything that made less than that over the same period of time lost money.
· Make a guesstimate of the price of your house. Then divide the price of the house by the current points of the Dow and you’ll know how many shares of the Dow your house is worth. Now take the price of your house and divide it by the price of gold and you’ll know how many ounces of gold your house is worth. Then take the price of your house and divide it by the price of a barrel of crude oil and you’ll know how many barrels of oil your house is worth.
· Write out a plan!!!!!!!!!!!!!!
· Just cause you write out a plan, however, doesn’t mean you can’t modify it. Success depends on it, especially if you’re failing.
· A plan should have a goal, a strategy (the big picture of how you’re going to get from A to B), and a tactic (the specific methods to be employed to implement the strategy)
· Warren Buffet, “Put all your eggs in one basket and then watch that basket very carefully”.
· Start a business that will grow in the future economic picture you see
· Physical Precious Metals constitute about 50-70% of his investments. 20-40% precious metal stocks, 5-10% is between energy stocks and stocks in other commodities, and the remaining 5% in cash.
· At home portion of precious metals is 10-50% gold and 50-90% silver.
Friday, December 9, 2011
How to achieve your dreams
Dream it – Take the time to list all you want your profit potential to be.
Detail it – tell how you can accomplish each item in the above list. Give the names, phone numbers and addresses of the people and firms that can help you.
Do it – Create a calendar of events. Make it realistic so you will be able to achieve your profit potential. Give the date you will start and conclude each activity and who will help you.
Protect I – Decide upon the business structures(s) you should have to operate your business most efficiently and profitably and that will help you protect your assets. List the names, phone numbers and addresses of the people and firms that can help you,
Invest it – Create your investment plan to achieve your profit potential. List the names, addresses and phone number of those who can help you.
Share it – List the ways you would like to share your wealth. Include how you will share it, now and after you are gone. Be specific. Set up a system for sharing it. List the names, addresses and phone numbers of those you wish to help and who can assist you.
Enjoy it – List all the ways you want to enjoy your life when you achieve your profit potential and who will help you. Be specific. Give the names, addresses and phone numbers of those who will help you in this process.
Detail it – tell how you can accomplish each item in the above list. Give the names, phone numbers and addresses of the people and firms that can help you.
Do it – Create a calendar of events. Make it realistic so you will be able to achieve your profit potential. Give the date you will start and conclude each activity and who will help you.
Protect I – Decide upon the business structures(s) you should have to operate your business most efficiently and profitably and that will help you protect your assets. List the names, phone numbers and addresses of the people and firms that can help you,
Invest it – Create your investment plan to achieve your profit potential. List the names, addresses and phone number of those who can help you.
Share it – List the ways you would like to share your wealth. Include how you will share it, now and after you are gone. Be specific. Set up a system for sharing it. List the names, addresses and phone numbers of those you wish to help and who can assist you.
Enjoy it – List all the ways you want to enjoy your life when you achieve your profit potential and who will help you. Be specific. Give the names, addresses and phone numbers of those who will help you in this process.
Thursday, December 8, 2011
I want to live in a foreign country
Where should I live though? I've been researching Australia and Singapore recently. Today I was on the CIA's world factbook website reading up about Singapore. And I wasn't very happy about it. Why? A few reasons that are mostly financial.
Their GDP is surging right now. Last year alone they grew at 14.5% rate. Our rate of growth sucks.
After some more reading I found out that...
In 2006 if you $100,000 in US Dollars and moved it to a bank account in Singapore, at the end of 2010 you'd have $116,000 moved back to your US bank account cause that is how much the US dollar has gone down in value.
Or you could reverse it.
If you had a $100,000 singapore dollars and transferred it to the US in 2006, when you transferred it back, you'd only have $84,000 in Singapore dollars.
If that doesn't upset you then I don't does. If you don't think taking a 4% cut in pay for the last 4 years is a problem for you then we should talk. Especially in the face of rising costs at the pump and the grocery store.
Their GDP is surging right now. Last year alone they grew at 14.5% rate. Our rate of growth sucks.
After some more reading I found out that...
In 2006 if you $100,000 in US Dollars and moved it to a bank account in Singapore, at the end of 2010 you'd have $116,000 moved back to your US bank account cause that is how much the US dollar has gone down in value.
Or you could reverse it.
If you had a $100,000 singapore dollars and transferred it to the US in 2006, when you transferred it back, you'd only have $84,000 in Singapore dollars.
If that doesn't upset you then I don't does. If you don't think taking a 4% cut in pay for the last 4 years is a problem for you then we should talk. Especially in the face of rising costs at the pump and the grocery store.
Financial Statement Basics
A balance sheet is what shows assets, liabilities, and equity. It involves double entry accounting, which means that each transaction affects at least two items. There will be a debit and a credit to each transaction.
Assets = Liabilities + Equity
If you have an asset that is paid off then you wouldn’t add that to liabilities, but instead you would increase your equity on your balance sheet.
An income statement is a financial statement that summarizes the income and expenses incurred by a business over a period of time. Its purpose is to measure whether or not the business earned a profit.
Assets = Liabilities + Equity
If you have an asset that is paid off then you wouldn’t add that to liabilities, but instead you would increase your equity on your balance sheet.
An income statement is a financial statement that summarizes the income and expenses incurred by a business over a period of time. Its purpose is to measure whether or not the business earned a profit.
Wednesday, December 7, 2011
CPA and how to find one
Ask successful business owners for recommendations before you select a CPA.
Like and trust the CPA you choose as you’ll be meeting with them often for a long time.
Do your homework.
Find the best to prepare your taxes.
Set up initial consultations with the CPA finalists (during the off-season) and clearly indicate that this is only an initial consultation.
Prepare for the meeting with copies of all past returns and income projections for the current year.
Discuss your business and business problems with the CPA.
Identify characteristics that you find important.
Are you comfortable with the person?
Ask about rates.
The difference between a CPA, a bookkeeper, an enrolled agent and a tax attorney is in the education and licensing requirements of each.
Good Accounting = Tax Deductions = Lower Taxes
Questionnaire
Do you sell products?
Do you have employees in your business?
Are you interested in learning how to take deductions for your obsolete business equipment?
Do you, your spouse or your children plan on taking any courses?
Do you have a vehicle that you use in your business?
Like and trust the CPA you choose as you’ll be meeting with them often for a long time.
Do your homework.
Find the best to prepare your taxes.
Set up initial consultations with the CPA finalists (during the off-season) and clearly indicate that this is only an initial consultation.
Prepare for the meeting with copies of all past returns and income projections for the current year.
Discuss your business and business problems with the CPA.
Identify characteristics that you find important.
Are you comfortable with the person?
Ask about rates.
The difference between a CPA, a bookkeeper, an enrolled agent and a tax attorney is in the education and licensing requirements of each.
Good Accounting = Tax Deductions = Lower Taxes
Questionnaire
Do you sell products?
Do you have employees in your business?
Are you interested in learning how to take deductions for your obsolete business equipment?
Do you, your spouse or your children plan on taking any courses?
Do you have a vehicle that you use in your business?
Tuesday, December 6, 2011
Inc. and Grow Rich
Here are the notes from this book that I read.
Could we deduct for gas, cars (mileage used for business), internet, 3rd bedroom as small office, webinars, unsellable items, grad school, slcc?
When they say you deduct start-up costs what does that mean?
Taking a picture of the logo on the shirt, or keep a copy of the artwork, just in case you need to prove the deduction. With all deductions, keep track of you expenses and save your canceled checks and invoices.
Charitable Contributions are limited to 10% of your corporation’s net income.
First, education expenses are deductible (even if they lead to a degree) if the education tha tis undertaken 1) maintains or improves a skill required by the individual in the individual’s employment or other trade or business or 2) meets the requirements of the individual’s employer or the requirements of law or regulations.
Document, in writing, the business purpose of every class or seminar you take. Also, where appropriate, adopt an education assistance plan.
A corporation can pay up to $5,250 per year per employee for tuition, fees, books, supplies, etc., and the employee can exclude it from his or her income! Further the exclusion is available for both undergraduate and graduate degree programs and applies even if the employee is not seeking a degree. The courses covered by the plan need not even be job-related and could be courses involving sports, games or hobbies if they involve the employer’s business or are required as part of a degree program. Any excess greater than $5,250 would be included in the employee’s gross income and be subject to payroll taxes and federal income tax.
Save receipts for shipping, we could deduct for a phone, what about cell service? And what about monthly internet? We’ll need to keep invoices, but would we ever have cancelled checks? Could I deduct 5 dollar cases sold for 1 dollar?
S Corp – may have multiple llc’s underneath it, $400 in quarterly taxes
Stay sole proprietor until you think you’ve got something to lose.
The C corporation is the only entity that is able to select a business year-end different from a calendar year-end. Only the C corporation can decide “when to pay your taxes.” All other types of business structure are flow-through entities. “A C corporation is the dumbest thing you could do because of double taxation!” Then why is it the go to for the biggest corporations and has been around the longest as a structure?
Most expenses that a corporation pays are deducted against the income of the corporation, so there is no double taxation.
Verify that you have or will have sufficient non-wage income to justify a C corporation. Do not start a C corporation to own real estate!!!!!Verify that the tax benefits will outweigh the added cost and maintenance requirements needed to run a C corporation.
Rich dad poor dad, “S corporation stands for SMALL! The C corporation is for people who want to think big.”
Knowledge = Money
For real estate, there was no LLC self-employment tax assessment.
LLCs: they offer the advantage of limited liability, asset protection, flow-through taxation and discounted transfers of wealth. They offer flexibility when creating the operating agreement, which can be tailored to suit the simplest to the most complex business structures. They may not be appropriate for operating businesses due to all distributions being treated as self-employment income subject to self-employment tax.
Could we deduct for gas, cars (mileage used for business), internet, 3rd bedroom as small office, webinars, unsellable items, grad school, slcc?
When they say you deduct start-up costs what does that mean?
Taking a picture of the logo on the shirt, or keep a copy of the artwork, just in case you need to prove the deduction. With all deductions, keep track of you expenses and save your canceled checks and invoices.
Charitable Contributions are limited to 10% of your corporation’s net income.
First, education expenses are deductible (even if they lead to a degree) if the education tha tis undertaken 1) maintains or improves a skill required by the individual in the individual’s employment or other trade or business or 2) meets the requirements of the individual’s employer or the requirements of law or regulations.
Document, in writing, the business purpose of every class or seminar you take. Also, where appropriate, adopt an education assistance plan.
A corporation can pay up to $5,250 per year per employee for tuition, fees, books, supplies, etc., and the employee can exclude it from his or her income! Further the exclusion is available for both undergraduate and graduate degree programs and applies even if the employee is not seeking a degree. The courses covered by the plan need not even be job-related and could be courses involving sports, games or hobbies if they involve the employer’s business or are required as part of a degree program. Any excess greater than $5,250 would be included in the employee’s gross income and be subject to payroll taxes and federal income tax.
Save receipts for shipping, we could deduct for a phone, what about cell service? And what about monthly internet? We’ll need to keep invoices, but would we ever have cancelled checks? Could I deduct 5 dollar cases sold for 1 dollar?
S Corp – may have multiple llc’s underneath it, $400 in quarterly taxes
Stay sole proprietor until you think you’ve got something to lose.
The C corporation is the only entity that is able to select a business year-end different from a calendar year-end. Only the C corporation can decide “when to pay your taxes.” All other types of business structure are flow-through entities. “A C corporation is the dumbest thing you could do because of double taxation!” Then why is it the go to for the biggest corporations and has been around the longest as a structure?
Most expenses that a corporation pays are deducted against the income of the corporation, so there is no double taxation.
Verify that you have or will have sufficient non-wage income to justify a C corporation. Do not start a C corporation to own real estate!!!!!Verify that the tax benefits will outweigh the added cost and maintenance requirements needed to run a C corporation.
Rich dad poor dad, “S corporation stands for SMALL! The C corporation is for people who want to think big.”
Knowledge = Money
For real estate, there was no LLC self-employment tax assessment.
LLCs: they offer the advantage of limited liability, asset protection, flow-through taxation and discounted transfers of wealth. They offer flexibility when creating the operating agreement, which can be tailored to suit the simplest to the most complex business structures. They may not be appropriate for operating businesses due to all distributions being treated as self-employment income subject to self-employment tax.
Monday, December 5, 2011
On the road: Getting Married
Some of the things in this book I’ve already heard before and I won’t be repeating them as they are included in most every personal finance book you can find. Some of these notes are even things I’ve heard before, but may have forgotten and so will be including them here.
When saving up for 6 month buffer don’t forget to include things like car insurance, home maintenance, appliance replacements, vacationsx, camp for kids, estimated quarterly income taxes, gifts and holiday spending, and medical and dental bills.
When creating a budget ask yourself:
Do we have enough income to cover the payments if we take on more debt? Do we have enough money available to cover quarterly tax payments? Have we put aside enough to cover the holiday presents we want to give? Will our savings (rental properties, businesses, and dividend yielding investments) produce enough income to live on and maintain our current lifestyle so we can retire when we want to? What size mortgage payments can we afford?
Work out a budget together. Do a budget in pencil as it isn’t ever permanent due to changing circumstances and realizations. Use round numbers in your budget. It isn’t necessary to know everything to the exact penny. I’m a perfectionist and so I’m definitely going to have to work on this one since I actually like to see everything exactly as it is.
What is most frustrating to people about managing their money is the chaos feeling. Once that is under control then you can start to focus on savings and investing.
Most people can’t imagine a large monthly savings amount to fund their retirement, but people are fine with paying a large mortgage and a large car payment for years and decades.
Its possible the kids will want something as an inheritance when I die. Maybe look into an insurance policy that pays out to them once I die. I could be the insured and they the beneficiary and I could send them money to pay the premium. This way they get a little something when I die and then my wife could spend whatever money is left to her in the form on savings and monthly cash flow. After that she could plan or we could plan how the remainder could be divvied up when she passes.
Look at a revocable living trust and combining it with a second trust to avoid tax issues. Would it be smart to use the irrevocable trust in doing so?
Could we deduct from our taxes yard improvements?
When saving up for 6 month buffer don’t forget to include things like car insurance, home maintenance, appliance replacements, vacationsx, camp for kids, estimated quarterly income taxes, gifts and holiday spending, and medical and dental bills.
When creating a budget ask yourself:
Do we have enough income to cover the payments if we take on more debt? Do we have enough money available to cover quarterly tax payments? Have we put aside enough to cover the holiday presents we want to give? Will our savings (rental properties, businesses, and dividend yielding investments) produce enough income to live on and maintain our current lifestyle so we can retire when we want to? What size mortgage payments can we afford?
Work out a budget together. Do a budget in pencil as it isn’t ever permanent due to changing circumstances and realizations. Use round numbers in your budget. It isn’t necessary to know everything to the exact penny. I’m a perfectionist and so I’m definitely going to have to work on this one since I actually like to see everything exactly as it is.
What is most frustrating to people about managing their money is the chaos feeling. Once that is under control then you can start to focus on savings and investing.
Most people can’t imagine a large monthly savings amount to fund their retirement, but people are fine with paying a large mortgage and a large car payment for years and decades.
Its possible the kids will want something as an inheritance when I die. Maybe look into an insurance policy that pays out to them once I die. I could be the insured and they the beneficiary and I could send them money to pay the premium. This way they get a little something when I die and then my wife could spend whatever money is left to her in the form on savings and monthly cash flow. After that she could plan or we could plan how the remainder could be divvied up when she passes.
Look at a revocable living trust and combining it with a second trust to avoid tax issues. Would it be smart to use the irrevocable trust in doing so?
Could we deduct from our taxes yard improvements?
Friday, December 2, 2011
Piercing the Corporate Veil
The following steps should be taken to avoid having an attorney pierce your corporate veil. This is important to follow. In one of the seminars that I went to with Matt Atkinson there was an attorney there who said the biggest things he looks for when he is suing a company for damages/losses is to try and pierce the corporate veil and he was very convincing and had obviously had success at doing it since he was very adamant in what he was explaining to us. The number one thing he mentioned he uses to do that is commingling of funds. So the list goes like this:
· Never commingle personal and corporate funds or other assets.
· Do not divert corporat funds or assets to other than corporate uses.
· Do not treat corporate assets as if they were your own.
· Whenever you are going to subscribe to or issue more stock, always get proper authorization by holding a special meeting of the directors (which can be just one person).
· Never assert that shareholers are personally liable for corporate debts (personal guarantee).
· Maintain and update corporate records (annual meeting minutes, resolutions).
· To avoid confusion over which entity entered into a transaction, keep separate records for each business you own.
· Avoid identical equitable ownership in two corporations (control group issue).
· If you have more than one corporation:
o Avoid the appearance of total domination and control over both,
o Elect separate officers and directors,
o Use different offices and business locations
o Hire different employees and legal counsel
· Make sure you have enough capital and insurance to deal with any potential liability.
· Have a real business purpose
· Never conceal or misrepresent the corporation’s owners, management or financial interests.
· Adhere to all legal formalities and make sure all transactions between related parties are at arm’s length.
· Never use the corporation as a shield when contracting with others if the intent is to avoid performance or to commit illegal transactions
· Never use the corporation to avoid an existing liability for yourself or another entity.
· Keep the corporation in good standing by complying with annual state filing requirements.
All of these things need to be followed if you are to use a corporation for your business and if you want to avoid having your corporate veil being pierced.
· Never commingle personal and corporate funds or other assets.
· Do not divert corporat funds or assets to other than corporate uses.
· Do not treat corporate assets as if they were your own.
· Whenever you are going to subscribe to or issue more stock, always get proper authorization by holding a special meeting of the directors (which can be just one person).
· Never assert that shareholers are personally liable for corporate debts (personal guarantee).
· Maintain and update corporate records (annual meeting minutes, resolutions).
· To avoid confusion over which entity entered into a transaction, keep separate records for each business you own.
· Avoid identical equitable ownership in two corporations (control group issue).
· If you have more than one corporation:
o Avoid the appearance of total domination and control over both,
o Elect separate officers and directors,
o Use different offices and business locations
o Hire different employees and legal counsel
· Make sure you have enough capital and insurance to deal with any potential liability.
· Have a real business purpose
· Never conceal or misrepresent the corporation’s owners, management or financial interests.
· Adhere to all legal formalities and make sure all transactions between related parties are at arm’s length.
· Never use the corporation as a shield when contracting with others if the intent is to avoid performance or to commit illegal transactions
· Never use the corporation to avoid an existing liability for yourself or another entity.
· Keep the corporation in good standing by complying with annual state filing requirements.
All of these things need to be followed if you are to use a corporation for your business and if you want to avoid having your corporate veil being pierced.
Thursday, December 1, 2011
The proposal/engagement/marriage story
Time to indulge a little bit here and put up a story I wrote...
Its been a few months since it happened, but I’m going to do my best to recall the story as far as I remember it on my end. Ashlee and I had decided to get married in what seemed like a very fast fashion. We had spoken to our singles ward bishop, bishop jibson, just about a week or so before we decided to get married. I remember that the night of deciding to get married that I could not sleep to save my life. I was on the phone with Ashlee and decided to go to bed and when I couldn’t fall asleep I called her back and hesistantly asked if she was still awake to which she responded she was. I asked her what she was doing and she, “What do you think?” I responded that she was looking at rings and she responded in the affirmative. From the conversation drifted into honeymoon destinations.
We didn’t budget or anything for it. I’m the numbers guy and in hindsight maybe we should’ve looked into setting a budget for everything before we just dove into the plans. I’m happy though with how everything turned out. We discussed going to…New York City, California, Florida, Hawaii, doing cruises, going down to South America, going to the Bahamas, going to somewhere in Central America and none of them worked for either of us. I finally mentioned what about going stateside somewhere on the coast and that just naturally led me to think about us going to Texas. I grew up in Texas and had always wanted to go to Corpus Christie/Galveston/South Padre. Ashlee had on her bucket list to go to Texas someday and that is how it worked out that we ended up on South Padre Island for the honeymoon.
We then started looking into flights and hotels. Expensive. We had found some flights for the dates we were looking at, but didn’t book them right away, which was probably just cause of the jitters of it all. When we did finally go to book the flights for whatever reason the first try didn’t work. I tried it again and BOOM the prices had gone up $300 bucks. Needless to say I was pissed. Like a lot. We booked the flights and hotel and then started into the marriage plans.
Now what day to get married? We wanted as much of the family to come as possible so we called parents and siblings and worked out a few times. Ashlee and I had always joked while we were dating that we could/couldn’t do such thing because we’d be married already by June 23rd or June 24th. Well turns out that those days weren’t exactly a weekend, but we were looking right around then. June 18th was an option, but my parents got married then and were doing their anniversary things and wouldn’t be able to make it out for the wedding. The original june time wasn’t a go because my dad had some speaking engagements he was already committed to and we weren’t about to extend weeks after the forth of July weekend because we knew we didn’t need/want that much time to prepare. July 2nd worked perfectly for all the family and it was also the holiday Ashlee likes the most and so it worked perfect also for the honeymoon.
I called and booked the temple asap because we knew times would be getting snatched up at the slc temple quickly cause all those crazy mormons love getting married in the summer. Lucky for us we got the sized room we wanted and at the time we wanted, which was 12:20. Not too late, but not so early that we would have to wake up at the break of dawn to go to the temple.
Then the question of how do I propose. I had thought of several things, like going to a fondue restaurant and then going on a walk and actually proposing without a ring cause our ring situation was so ridiculous. I thought of booking a hot air balloon ride and proposing then, but that was freaking expensive so I nixed that one. Finally I decided on going to a nice dinner downtown at an Italian restaurant, which I can’t remember off the top of my head, but we went there for dinner. I’ll jump into the rest of the proposal. I picked her up, we went to dinner, but before I had gone to the bank and cashed a check that my dad sent me for being the first Norton boy to get married since he proposed a challenge that to which ever boy got married first he’d give a thousand dollars. I cashed it out in one dollar bills. The teller and their manager didn’t really have any beef with me doing it at all. It is impressive by the way to have two bricks of $500 in your hands. Kinda fun. Anywho I picked her up and had the money in the glove compartment just inches away. The one thing that really had me nervous about it was that the place where we parked the car was right by a park downtime that has a lot of sketchy people and so I was semi worried that someone would break into the car and steal a thousand bucks just like that.
Dinner was good. It wasn’t very private though and it was weird to sit there and want to talk about stuff, but there are people almost elbow to elbow next to you. At one point during dinner Ashlee asked me how I had managed to get Zales to get the ring sized quickly in time to have it done by Saturday. I just told her it took a little bit of magic/money and that’s how I did it. Funny thing though is that if she had kept pushing the issue my face would’ve totally given me away so I’m glad she let it rest after that. We got back in the car and headed to her apartment. There we parked and I told her that I had a surprise for her. That it was something she’d been waiting for for a long time and that it was in the glove compartment. She hesitantly opened it and I think she said, “Are you serious?” She pulled it out, handled it, took a picture of it I believe. I think we covered the money in a coat cause she was worried about just carrying it inside. We took it upstairs and told her sisters molly and Courtney what she got. They were surprised. By the way I told her the reason this money was something she’d been waiting a long time for was to pay off her student loans and whatever else she had outstanding.
So we left a thousand big ones with her sisters and I was a little frantic to get the show on the road and go on our agreed upon walk before it got too dark. We walked up to this park that overlooks the capital, salt lake temple, valley, and had a setting sunset. I had talked to my brother, kyle, and had him set the empty ring box and a dozen roses on the park bench overlooking everything. When we walked up to the bench, and luckily we did when we did as there was another couple heading straight for that spot, Ashlee first spotted the roses and asked, “What is this?” She then scooted forward and spotted the ring box and then said, “WHAT IS THIS?” about two or three times. I told her to go ahead and pick up the box, which she did. As she was doing that I was slowly getting on my knee and when she opened up the box, and I’ll never forget this, her face just kinda dropped in the way that she always does it. That is when I pulled out the ring, was kneeling on one knee, and asker her if she would marry at which point she said she would and then we hugged and kissed and hugged some more. It was fun. She had a huge smile on her face and on the way home she couldn’t stop looking at the ring. For several weeks after that she’d always be checking out her ring.
It was a fun proposal and in hindsight it was good that I did the thousand cash cause she wasn’t thinking a proposal was coming up after that. When we got back to the apartment and as soon as she opened the door she said to her sisters, “Guess what?”. They said let us see it referring to the ring. After talking about how they knew she was about to get engaged and how I did it we just sat down and then realized we needed to start telling people about it so we started calling people and letting them know. What was fun, and hopefully we still have it, but Molly wrote down funny things that people said when they were told she was engaged.
From there we started into the wedding plans.
Ashlee liked Coral for the color of the wedding, which to this day I couldn’t tell you what the color actually is. We had that color for the guy’s ties and the girls wore pearl bracelets with that color. At first I wanted a big reception so that I could say hi to friends and family, but after analyzing money from both of us and the family it became apparent that it wasn’t going to happen and after some talking with Ashlee it became more and more apparent to me that doing something smaller was the route both of us wanted to go.
It was funny and a little sad to hear stories every once in a while of people saying that they really thought we ought to do a big thing and it kinda came across as entitled to come to our big day.
We ended up on just a small family and close friends dinner at a restaurant at the mouth of cottonwood canyon.
Another thing me and Ashlee spent a while talking about was what to do with our living arrangements. We thought about living in my uncle’s basement, living in Ashlee’s apartment, and living in many different types of homes that we wanted to buy. I’d actually already been looking at homes/places to live for a couple months before we decided to get married and so it was nice to have Ashlee’s input to finally settle down and pick a place. How we got to that point to come up with the money to do so is kinda funny.
Ashlee had a really nice car that was a tremendous gift by some close friends of hers. We decided that we would trade in the car and free up some of the cash in it to use in our down payment of a home. Turns out the lendor I went through didn’t even allow that money to be used to qualify as part of the down payment, but it was good to have as we had pretty big credit card bills from the wedding and the ring that I wouldn’t have been able to pay for otherwise had we not traded in the car. We first went to Carmax and they offered us 12k cash for the car. We went to Tim Dahle Nissan and traded in her 2010 Chevy Cobalt for a 2006 Chrysler PT Cruiser and we also got about 4200 in cash. We hate the pt cruiser. Although it has been somewhat handy to get a fridge from Roy to SLC and to also pick up yard equipment like a mower and trimmer. It is also good for a drive in movie if you don’t have anyone parked in front of you with a big vehicle as the pt cruiser isn’t very high off of the ground. Eventually we are going to part with the PT with sadness as we remember how much it did for us by getting us into a house and moving important stuff around that we needed as previously mentioned. My mom thought we were crazy and kept telling Ashlee that she didn’t need to do that as she was afraid I was pushing Ashlee to do it without her really wanting to. Luckily Ashlee was more for living in a house for the both of us instead of having a really nice car. On top of that we dropped Ashlee’s insurance premium each month from 170-180 range down to 17 dollar range, which I’m not complaining about either. My mom was surprised at how quickly we seemed to be acting together as a couple. Ashlee is great is why we were able to do it even though she won’t admit it. So that is pretty much the house. We’d like to keep it as a rental and have it supplement our retirement one day. In the meantime it is a nice love nest and a bit of a project, but a fun project at that.
Ashlee rented her dress versus buying one, which I love cause it looked fantastic as they custom tailored it and it probably ended up costing us a third/fourth of what it would’ve been had she bought one outright.
We took engagement pictures before we were actually engaged. Ashlee paid her friend 95 bucks to take them for us. She took thousands and there were just handful that we thought were just ok. Neither of us were really in love with any of them. Weird. You’d think you would, but no. Hindsight we’d have told her more of what we thought we wanted and we would’ve looked specifically/directly into the camera even though it didn’t seem like it was really necessary at the time, at least not for me. I’m a weirdee I know. Ashlee picked out someone who did some really nice announcements for us. They turned out great. I disliked getting all the information needed though to send them out. That was not fun for me. Which reminds me. Next time Ashlee and I get married I’m not going to do a gift registry at Bed bath and beyond. It took forever and we got like two and a half things out of it. Next time we’ll just tell people what we want if they ask us.
We closed on the house about two weeks before we got married. I couldn’t wait to close and couldn’t wait to get her moved in. It was quite the project to get her moved in. We had all my siblings come help and hers too. I think Andrew and Lincoln were busy with some other stuff and so they didn’t come that day, but it still took forever even with everyone we had helping. Funny how that is with just two people…I’m scared when we have a bigger family and how much moving will be going on.
The night before the wedding we had Ashlee go through the temple. I forgot (nobody ever told me) my new recommend and had my old one. They had me sit and wait to get permission for me to go in even though I was getting married the next day. It was good to go through the temple. Peaceful and it was fun to have my family there. They were great for doing so. Ashlee had her dad’s parents there and some family/friends as well. It was good. We went and got Café Rio afterwards. It was delicious.
The day of the wedding I woke up and packed my car with the very last of whatever I had at Uncle Dave’s as I had been moving stuff slowly over to the house that I knew I wasn’t going to need immediately. I got everything moved into the house and had nothing else to do as Ashlee and her sisters were getting ready for the temple so I just went to the temple straight away. Good thing I did cause I couldn’t find the underground parking to save my life. Eventually I did and sat in the waiting room for a little bit while family and Ashlee trickled in. My dad saw her first and looked over at me and kinda motioned with a head nod to have me come look. She looked amazing ya’ll. Not even kidding. She was just so cute and had beautiful hair and makeup and her dress was awesome. I was/am impressed with her. We didn’t have to check in her dress, but then had our escort take us downstairs. We parted ways and met back up together a little later and they walked us to where the sealer was and he talked to us/got to know us a little bit more and then we went into the sealing room. I’d never been to one so it was weird to see all the friends and family in regular church clothes and we were the only ones in our temple clothes. The one thing that stuck out to me that the sealer said was that the Earth would be utterly wasted if we didn’t do the temple work for the dead. Hopefully Ashlee and I can keep that up. After his words and us putting on our rings we stood in a line and said hi to everyone and hugged everyone. It was cool.
Afterwards we went and changed back into normal clothes and then came pictures. It was pretty disorganized. One of Ashlee’s coworker’s dad is a photographer and he took pictures for us. He had some helpers that had some light director shields that were blinding. So bright it hurt. We literally had to close our eyes until he told us to open them. Definitely a different experience as I’d never taken pictures like that before. We were all sweating during pictures.
After taking pictures Ashlee and I drove in the PT Cruiser back to the house and changed shirts to be in NOT sweaty ones. I hadn’t packed for the honeymoon yet and so we did that and then left straight away to the dinner. No fooling around occurred.
We drove to the place and took some more pictures with our photographer. Then dinner was pretty much ready. We all sat down and my dad said a few words, some more exaggerated than others, but words nonetheless. I can’t remember if my mom said some words, but Ashlee and I said a few things to everyone there and then everyone got up and said a thing or two about either/both of us. It was really sweet. I kinda wish we had video taped it, but either way it was just really really really nice to have all my siblings and Ashlee’s siblings there. We got some gifts and some money and desert was really good. It was a chocolate cake. It was rich and delicious, which is always a bonus for the desert lover here. After dessert we changed, paid the dinner bill which was about 500 bucks less then we thought it’d be and then left for our hotel. Molly drove us there and as we were walking into the hotel all I can remember is that Courtney yelled, “Have lots of sex!”
The honeymoon was great. Up until then we hadn’t really had good quality time together and it was just so nice to relax. Our hotel was right on the beach so we walked on it and went swimming in the ocean once. Other than that we went and swam in the pool and laid out at the pool as it was free instead of $25 for renting an umbrella and two lawn chairs that were absolute garbage. I do have to mention that we got an extra day of honeymoonage when our connecting flight from dallas down to Brownsville got cancelled due to the flight missing one pilot. That was annoying/good at the same time. I would’ve been really upset if we were out another couple hundred bucks for the hotel that we pre paid for.
Today is actually exactly one month of being married. I feel lucky in who I married. It is so nice to wake up next to her. I’m jealous everytime I do though cause she just looks so gosh darn peaceful and comfortable. There are more ups then downs in marriage and I’m confident that will become even more so as we learn each other and our quirks, but so far so good. It is a fun challenge and I’m a happy man.
Brock Norton
8/2/2011
The proposal/engagement/marriage story
By
Brock Norton
Its been a few months since it happened, but I’m going to do my best to recall the story as far as I remember it on my end. Ashlee and I had decided to get married in what seemed like a very fast fashion. We had spoken to our singles ward bishop, bishop jibson, just about a week or so before we decided to get married. I remember that the night of deciding to get married that I could not sleep to save my life. I was on the phone with Ashlee and decided to go to bed and when I couldn’t fall asleep I called her back and hesistantly asked if she was still awake to which she responded she was. I asked her what she was doing and she, “What do you think?” I responded that she was looking at rings and she responded in the affirmative. From the conversation drifted into honeymoon destinations.
We didn’t budget or anything for it. I’m the numbers guy and in hindsight maybe we should’ve looked into setting a budget for everything before we just dove into the plans. I’m happy though with how everything turned out. We discussed going to…New York City, California, Florida, Hawaii, doing cruises, going down to South America, going to the Bahamas, going to somewhere in Central America and none of them worked for either of us. I finally mentioned what about going stateside somewhere on the coast and that just naturally led me to think about us going to Texas. I grew up in Texas and had always wanted to go to Corpus Christie/Galveston/South Padre. Ashlee had on her bucket list to go to Texas someday and that is how it worked out that we ended up on South Padre Island for the honeymoon.
We then started looking into flights and hotels. Expensive. We had found some flights for the dates we were looking at, but didn’t book them right away, which was probably just cause of the jitters of it all. When we did finally go to book the flights for whatever reason the first try didn’t work. I tried it again and BOOM the prices had gone up $300 bucks. Needless to say I was pissed. Like a lot. We booked the flights and hotel and then started into the marriage plans.
Now what day to get married? We wanted as much of the family to come as possible so we called parents and siblings and worked out a few times. Ashlee and I had always joked while we were dating that we could/couldn’t do such thing because we’d be married already by June 23rd or June 24th. Well turns out that those days weren’t exactly a weekend, but we were looking right around then. June 18th was an option, but my parents got married then and were doing their anniversary things and wouldn’t be able to make it out for the wedding. The original june time wasn’t a go because my dad had some speaking engagements he was already committed to and we weren’t about to extend weeks after the forth of July weekend because we knew we didn’t need/want that much time to prepare. July 2nd worked perfectly for all the family and it was also the holiday Ashlee likes the most and so it worked perfect also for the honeymoon.
I called and booked the temple asap because we knew times would be getting snatched up at the slc temple quickly cause all those crazy mormons love getting married in the summer. Lucky for us we got the sized room we wanted and at the time we wanted, which was 12:20. Not too late, but not so early that we would have to wake up at the break of dawn to go to the temple.
Then the question of how do I propose. I had thought of several things, like going to a fondue restaurant and then going on a walk and actually proposing without a ring cause our ring situation was so ridiculous. I thought of booking a hot air balloon ride and proposing then, but that was freaking expensive so I nixed that one. Finally I decided on going to a nice dinner downtown at an Italian restaurant, which I can’t remember off the top of my head, but we went there for dinner. I’ll jump into the rest of the proposal. I picked her up, we went to dinner, but before I had gone to the bank and cashed a check that my dad sent me for being the first Norton boy to get married since he proposed a challenge that to which ever boy got married first he’d give a thousand dollars. I cashed it out in one dollar bills. The teller and their manager didn’t really have any beef with me doing it at all. It is impressive by the way to have two bricks of $500 in your hands. Kinda fun. Anywho I picked her up and had the money in the glove compartment just inches away. The one thing that really had me nervous about it was that the place where we parked the car was right by a park downtime that has a lot of sketchy people and so I was semi worried that someone would break into the car and steal a thousand bucks just like that.
Dinner was good. It wasn’t very private though and it was weird to sit there and want to talk about stuff, but there are people almost elbow to elbow next to you. At one point during dinner Ashlee asked me how I had managed to get Zales to get the ring sized quickly in time to have it done by Saturday. I just told her it took a little bit of magic/money and that’s how I did it. Funny thing though is that if she had kept pushing the issue my face would’ve totally given me away so I’m glad she let it rest after that. We got back in the car and headed to her apartment. There we parked and I told her that I had a surprise for her. That it was something she’d been waiting for for a long time and that it was in the glove compartment. She hesitantly opened it and I think she said, “Are you serious?” She pulled it out, handled it, took a picture of it I believe. I think we covered the money in a coat cause she was worried about just carrying it inside. We took it upstairs and told her sisters molly and Courtney what she got. They were surprised. By the way I told her the reason this money was something she’d been waiting a long time for was to pay off her student loans and whatever else she had outstanding.
So we left a thousand big ones with her sisters and I was a little frantic to get the show on the road and go on our agreed upon walk before it got too dark. We walked up to this park that overlooks the capital, salt lake temple, valley, and had a setting sunset. I had talked to my brother, kyle, and had him set the empty ring box and a dozen roses on the park bench overlooking everything. When we walked up to the bench, and luckily we did when we did as there was another couple heading straight for that spot, Ashlee first spotted the roses and asked, “What is this?” She then scooted forward and spotted the ring box and then said, “WHAT IS THIS?” about two or three times. I told her to go ahead and pick up the box, which she did. As she was doing that I was slowly getting on my knee and when she opened up the box, and I’ll never forget this, her face just kinda dropped in the way that she always does it. That is when I pulled out the ring, was kneeling on one knee, and asker her if she would marry at which point she said she would and then we hugged and kissed and hugged some more. It was fun. She had a huge smile on her face and on the way home she couldn’t stop looking at the ring. For several weeks after that she’d always be checking out her ring.
It was a fun proposal and in hindsight it was good that I did the thousand cash cause she wasn’t thinking a proposal was coming up after that. When we got back to the apartment and as soon as she opened the door she said to her sisters, “Guess what?”. They said let us see it referring to the ring. After talking about how they knew she was about to get engaged and how I did it we just sat down and then realized we needed to start telling people about it so we started calling people and letting them know. What was fun, and hopefully we still have it, but Molly wrote down funny things that people said when they were told she was engaged.
From there we started into the wedding plans.
Ashlee liked Coral for the color of the wedding, which to this day I couldn’t tell you what the color actually is. We had that color for the guy’s ties and the girls wore pearl bracelets with that color. At first I wanted a big reception so that I could say hi to friends and family, but after analyzing money from both of us and the family it became apparent that it wasn’t going to happen and after some talking with Ashlee it became more and more apparent to me that doing something smaller was the route both of us wanted to go.
It was funny and a little sad to hear stories every once in a while of people saying that they really thought we ought to do a big thing and it kinda came across as entitled to come to our big day.
We ended up on just a small family and close friends dinner at a restaurant at the mouth of cottonwood canyon.
Another thing me and Ashlee spent a while talking about was what to do with our living arrangements. We thought about living in my uncle’s basement, living in Ashlee’s apartment, and living in many different types of homes that we wanted to buy. I’d actually already been looking at homes/places to live for a couple months before we decided to get married and so it was nice to have Ashlee’s input to finally settle down and pick a place. How we got to that point to come up with the money to do so is kinda funny.
Ashlee had a really nice car that was a tremendous gift by some close friends of hers. We decided that we would trade in the car and free up some of the cash in it to use in our down payment of a home. Turns out the lendor I went through didn’t even allow that money to be used to qualify as part of the down payment, but it was good to have as we had pretty big credit card bills from the wedding and the ring that I wouldn’t have been able to pay for otherwise had we not traded in the car. We first went to Carmax and they offered us 12k cash for the car. We went to Tim Dahle Nissan and traded in her 2010 Chevy Cobalt for a 2006 Chrysler PT Cruiser and we also got about 4200 in cash. We hate the pt cruiser. Although it has been somewhat handy to get a fridge from Roy to SLC and to also pick up yard equipment like a mower and trimmer. It is also good for a drive in movie if you don’t have anyone parked in front of you with a big vehicle as the pt cruiser isn’t very high off of the ground. Eventually we are going to part with the PT with sadness as we remember how much it did for us by getting us into a house and moving important stuff around that we needed as previously mentioned. My mom thought we were crazy and kept telling Ashlee that she didn’t need to do that as she was afraid I was pushing Ashlee to do it without her really wanting to. Luckily Ashlee was more for living in a house for the both of us instead of having a really nice car. On top of that we dropped Ashlee’s insurance premium each month from 170-180 range down to 17 dollar range, which I’m not complaining about either. My mom was surprised at how quickly we seemed to be acting together as a couple. Ashlee is great is why we were able to do it even though she won’t admit it. So that is pretty much the house. We’d like to keep it as a rental and have it supplement our retirement one day. In the meantime it is a nice love nest and a bit of a project, but a fun project at that.
Ashlee rented her dress versus buying one, which I love cause it looked fantastic as they custom tailored it and it probably ended up costing us a third/fourth of what it would’ve been had she bought one outright.
We took engagement pictures before we were actually engaged. Ashlee paid her friend 95 bucks to take them for us. She took thousands and there were just handful that we thought were just ok. Neither of us were really in love with any of them. Weird. You’d think you would, but no. Hindsight we’d have told her more of what we thought we wanted and we would’ve looked specifically/directly into the camera even though it didn’t seem like it was really necessary at the time, at least not for me. I’m a weirdee I know. Ashlee picked out someone who did some really nice announcements for us. They turned out great. I disliked getting all the information needed though to send them out. That was not fun for me. Which reminds me. Next time Ashlee and I get married I’m not going to do a gift registry at Bed bath and beyond. It took forever and we got like two and a half things out of it. Next time we’ll just tell people what we want if they ask us.
We closed on the house about two weeks before we got married. I couldn’t wait to close and couldn’t wait to get her moved in. It was quite the project to get her moved in. We had all my siblings come help and hers too. I think Andrew and Lincoln were busy with some other stuff and so they didn’t come that day, but it still took forever even with everyone we had helping. Funny how that is with just two people…I’m scared when we have a bigger family and how much moving will be going on.
The night before the wedding we had Ashlee go through the temple. I forgot (nobody ever told me) my new recommend and had my old one. They had me sit and wait to get permission for me to go in even though I was getting married the next day. It was good to go through the temple. Peaceful and it was fun to have my family there. They were great for doing so. Ashlee had her dad’s parents there and some family/friends as well. It was good. We went and got Café Rio afterwards. It was delicious.
The day of the wedding I woke up and packed my car with the very last of whatever I had at Uncle Dave’s as I had been moving stuff slowly over to the house that I knew I wasn’t going to need immediately. I got everything moved into the house and had nothing else to do as Ashlee and her sisters were getting ready for the temple so I just went to the temple straight away. Good thing I did cause I couldn’t find the underground parking to save my life. Eventually I did and sat in the waiting room for a little bit while family and Ashlee trickled in. My dad saw her first and looked over at me and kinda motioned with a head nod to have me come look. She looked amazing ya’ll. Not even kidding. She was just so cute and had beautiful hair and makeup and her dress was awesome. I was/am impressed with her. We didn’t have to check in her dress, but then had our escort take us downstairs. We parted ways and met back up together a little later and they walked us to where the sealer was and he talked to us/got to know us a little bit more and then we went into the sealing room. I’d never been to one so it was weird to see all the friends and family in regular church clothes and we were the only ones in our temple clothes. The one thing that stuck out to me that the sealer said was that the Earth would be utterly wasted if we didn’t do the temple work for the dead. Hopefully Ashlee and I can keep that up. After his words and us putting on our rings we stood in a line and said hi to everyone and hugged everyone. It was cool.
Afterwards we went and changed back into normal clothes and then came pictures. It was pretty disorganized. One of Ashlee’s coworker’s dad is a photographer and he took pictures for us. He had some helpers that had some light director shields that were blinding. So bright it hurt. We literally had to close our eyes until he told us to open them. Definitely a different experience as I’d never taken pictures like that before. We were all sweating during pictures.
After taking pictures Ashlee and I drove in the PT Cruiser back to the house and changed shirts to be in NOT sweaty ones. I hadn’t packed for the honeymoon yet and so we did that and then left straight away to the dinner. No fooling around occurred.
We drove to the place and took some more pictures with our photographer. Then dinner was pretty much ready. We all sat down and my dad said a few words, some more exaggerated than others, but words nonetheless. I can’t remember if my mom said some words, but Ashlee and I said a few things to everyone there and then everyone got up and said a thing or two about either/both of us. It was really sweet. I kinda wish we had video taped it, but either way it was just really really really nice to have all my siblings and Ashlee’s siblings there. We got some gifts and some money and desert was really good. It was a chocolate cake. It was rich and delicious, which is always a bonus for the desert lover here. After dessert we changed, paid the dinner bill which was about 500 bucks less then we thought it’d be and then left for our hotel. Molly drove us there and as we were walking into the hotel all I can remember is that Courtney yelled, “Have lots of sex!”
The honeymoon was great. Up until then we hadn’t really had good quality time together and it was just so nice to relax. Our hotel was right on the beach so we walked on it and went swimming in the ocean once. Other than that we went and swam in the pool and laid out at the pool as it was free instead of $25 for renting an umbrella and two lawn chairs that were absolute garbage. I do have to mention that we got an extra day of honeymoonage when our connecting flight from dallas down to Brownsville got cancelled due to the flight missing one pilot. That was annoying/good at the same time. I would’ve been really upset if we were out another couple hundred bucks for the hotel that we pre paid for.
Today is actually exactly one month of being married. I feel lucky in who I married. It is so nice to wake up next to her. I’m jealous everytime I do though cause she just looks so gosh darn peaceful and comfortable. There are more ups then downs in marriage and I’m confident that will become even more so as we learn each other and our quirks, but so far so good. It is a fun challenge and I’m a happy man.
Brock Norton
8/2/2011
Wednesday, November 30, 2011
Networking
When you are networking suggest ways for the other person to improve and show them how you could help them with YOUR expertise. "Givers Get."
Tuesday, November 29, 2011
Describe a significant leadership experience, which has enhanced your professional development.
Leadership has been described as the “process of social influence in which one person can enlist the aid and support of others in the accomplishment of a common task”. I have been allowed the privelege to see and practice great leadership through civic, religious, and social venues. One of my most meaningful experience came while serving as an LDS missionary from the ages of 19 to 21.
At the ripe age of 19 I was given several leadership roles. One of these roles was as a trainer teaching brand new missionaries time management, cultural differences, teaching skills, proper work ethics, and goal setting. Basically I was teaching them everything they needed to know to be successful missionaries. Because these assignments started at only seven months into my tenure as a missionary it endowed me with a confidence that the mission leadership trusted me and thought I was equal to the task. From this I learned that people would rise to the occasion given the challenge and opportunity to do so. Given a new title and responsibility people will often start behaving in a way that is commiserate with that position. In future leadership roles I am excited to find, develop, and put people in positions that they themselves might not otherwise feel they are capable of to see how they grow and mature professionally in a way that is a boon to the company and its bottom line.
As I taught these new missionaries I deciphered a very effective means of training people. The steps for this practical process was to describe what needed to be done, give or show them an useful example, let them practice the given task, and finally give them constructive criticism on how they did. Often people need a mentor or at least an example to glean the skills necessary to successfully perform in their position. However, I also learned through teaching these young missionaries that people intrinsically desire feedback. People want to know how they are doing and how they can improve. People want to be good at what they do and be recognized as such by their peers and superiors. If they feel like you are helping them towards that then they will respect what you have to say and need them to do.
I was asked at one point to train a missionary that had already been working for well over a year, but had only been doing it in English and now needed to learn the language and cultural differences of working in Spanish. What I found was that it didn’t matter how I implemented the previously successful training techniques that I had employed with the three other missionaries mission leadership had given me to groom. I could not get this missionary on board for what he needed to do to be successful in his new opportunity. I informed the mission leadership of this issue and they demoted him back to where he was and they gave me another missionary that transitioned great from English to Spanish. What I learned in this leadership role was that sometimes when people aren’t in the right seat on the bus you can’t force them to want to be in the right seat and if they are obstinate enough that it is best to completely let them go as that type of attitude affects the productivity and morale of others negatively. This is when a leader makes the call to let the person go and cut their losses while they are still low and then move on to the next person that is willing to do what is needed to get the job done.
At the ripe age of 19 I was given several leadership roles. One of these roles was as a trainer teaching brand new missionaries time management, cultural differences, teaching skills, proper work ethics, and goal setting. Basically I was teaching them everything they needed to know to be successful missionaries. Because these assignments started at only seven months into my tenure as a missionary it endowed me with a confidence that the mission leadership trusted me and thought I was equal to the task. From this I learned that people would rise to the occasion given the challenge and opportunity to do so. Given a new title and responsibility people will often start behaving in a way that is commiserate with that position. In future leadership roles I am excited to find, develop, and put people in positions that they themselves might not otherwise feel they are capable of to see how they grow and mature professionally in a way that is a boon to the company and its bottom line.
As I taught these new missionaries I deciphered a very effective means of training people. The steps for this practical process was to describe what needed to be done, give or show them an useful example, let them practice the given task, and finally give them constructive criticism on how they did. Often people need a mentor or at least an example to glean the skills necessary to successfully perform in their position. However, I also learned through teaching these young missionaries that people intrinsically desire feedback. People want to know how they are doing and how they can improve. People want to be good at what they do and be recognized as such by their peers and superiors. If they feel like you are helping them towards that then they will respect what you have to say and need them to do.
I was asked at one point to train a missionary that had already been working for well over a year, but had only been doing it in English and now needed to learn the language and cultural differences of working in Spanish. What I found was that it didn’t matter how I implemented the previously successful training techniques that I had employed with the three other missionaries mission leadership had given me to groom. I could not get this missionary on board for what he needed to do to be successful in his new opportunity. I informed the mission leadership of this issue and they demoted him back to where he was and they gave me another missionary that transitioned great from English to Spanish. What I learned in this leadership role was that sometimes when people aren’t in the right seat on the bus you can’t force them to want to be in the right seat and if they are obstinate enough that it is best to completely let them go as that type of attitude affects the productivity and morale of others negatively. This is when a leader makes the call to let the person go and cut their losses while they are still low and then move on to the next person that is willing to do what is needed to get the job done.
Monday, November 28, 2011
Describe a significant career accomplishment that you found particularly rewarding
“Well thank you Brock, for showing us how to eliminate your position.”
As odd as that sentence may sound, hearing that sentence from my boss’s boss, the VP of Finance and Business Development, is my most significant career accomplishment.
I currently work for England Logistics, a Third Party Logistics Company that has gone from 18th in 2007 on Transport Topics’ List of Freight Brokerage Firms to 11th in 2010. We are a $237 million dollar a year company.
I was hired as a credit and claims analyst to process credit requests and claims, but also to tackle inefficiencies in our credit and claims processes. When I started I literally started with filing the claims folders. He then asked me to handle claims under $1,000 then $5,000 and now I handle any claim we have. Some are as high as $50,000 and require a considerable amount of time and effort when coordinating with insurance adjusters, government inspectors, factoring companies, our company, and salvage companies. I also helped create a spreadsheet tool that tracks the progress of cargo claims. This tool enables the company to keep track of the progress of a claim, thus eliminating costs of employees verifying completed steps in the claim process.
An example of tackling inefficiency in the credit request process since my arrival seven months ago is that credit requests now only take an hour instead of five. That is an 80% reduction in time spent approving credit! Once these stopgap measures were in place for claims and credit I was able to focus on other inefficiencies in the company.
At the beginning of my employment the company’s credit risk was about five hundred million dollars. That was the available credit extended to our customers to use (or abuse). My job is to reduce that risk. I analyzed our customer’s shipping needs, how often they ship, and the last time they shipped. I was able to adjust the amount of credit we extended to them and as a result of my efforts we have been able to reduce our credit risk by almost $470 million dollars! We’ve since safely extended another 10.7 million in credit to our customers.
Another fulfilling project for me was Dunn & Bradstreet analysis. I suggested using some university students to do statistical analysis of data we use when deciding on giving credit to a customer or not. This resulted in my supervisor thanking me for thinking outside of the box. That project is still a possibility as we study programming capabilities on our end, plotting of information, and statistical considerations.
My most significant career accomplishment to date though involved another initiative I took in automating the credit approval process for smaller credit amounts. This had me considering the complete automation of my position, resulting in complete elimination of human involvement. This effort is on hold till we hit a certain number of requests per year, which is currently about one half of the needed number in order to automate the process. Till then my position will still exist. My superiors, after reading my proposition said, “Well thank you Brock, for showing us how to eliminate your position.”
As odd as that sentence may sound, hearing that sentence from my boss’s boss, the VP of Finance and Business Development, is my most significant career accomplishment.
I currently work for England Logistics, a Third Party Logistics Company that has gone from 18th in 2007 on Transport Topics’ List of Freight Brokerage Firms to 11th in 2010. We are a $237 million dollar a year company.
I was hired as a credit and claims analyst to process credit requests and claims, but also to tackle inefficiencies in our credit and claims processes. When I started I literally started with filing the claims folders. He then asked me to handle claims under $1,000 then $5,000 and now I handle any claim we have. Some are as high as $50,000 and require a considerable amount of time and effort when coordinating with insurance adjusters, government inspectors, factoring companies, our company, and salvage companies. I also helped create a spreadsheet tool that tracks the progress of cargo claims. This tool enables the company to keep track of the progress of a claim, thus eliminating costs of employees verifying completed steps in the claim process.
An example of tackling inefficiency in the credit request process since my arrival seven months ago is that credit requests now only take an hour instead of five. That is an 80% reduction in time spent approving credit! Once these stopgap measures were in place for claims and credit I was able to focus on other inefficiencies in the company.
At the beginning of my employment the company’s credit risk was about five hundred million dollars. That was the available credit extended to our customers to use (or abuse). My job is to reduce that risk. I analyzed our customer’s shipping needs, how often they ship, and the last time they shipped. I was able to adjust the amount of credit we extended to them and as a result of my efforts we have been able to reduce our credit risk by almost $470 million dollars! We’ve since safely extended another 10.7 million in credit to our customers.
Another fulfilling project for me was Dunn & Bradstreet analysis. I suggested using some university students to do statistical analysis of data we use when deciding on giving credit to a customer or not. This resulted in my supervisor thanking me for thinking outside of the box. That project is still a possibility as we study programming capabilities on our end, plotting of information, and statistical considerations.
My most significant career accomplishment to date though involved another initiative I took in automating the credit approval process for smaller credit amounts. This had me considering the complete automation of my position, resulting in complete elimination of human involvement. This effort is on hold till we hit a certain number of requests per year, which is currently about one half of the needed number in order to automate the process. Till then my position will still exist. My superiors, after reading my proposition said, “Well thank you Brock, for showing us how to eliminate your position.”
Friday, November 25, 2011
Briefly explain how the MBA degree would assist you in your short- and long-term career goals.
This post and the two after are for posterity sake really is all.
As fast as information is promulgating in the world, you cannot know all the answers. As our country becomes more service oriented it is imperative that those in management positions know how to best serve the internal and external customers. A leader best serves their constituencies not by knowing everything but knowing which questions to ask in order to get the correct answers. This applies to both short-term and long-term questions. The ability to drill down to the fundamental issues and ask the right questions is what I hope my MBA education will afford me.
Since getting my undergrad, I’ve been exposed to workplace dynamics and politics. I have seen how those who are qualified will often get passed up for positions or responsibilities because they don’t have the proper letters after their name. I don’t want my lack of education and training to be part of the equation for myself. Receiving an MBA will allow me to get to the table so that I might be able to help my bosses, associates, and stakeholders with my expertise, critical thinking skills, and knowledge.
Going back to school will give me the chance to learn the intricacies of how things should interact with each other in a business setting. This understanding is necessary in managing the course corrections needed to get a business to run efficiently. These skills and understandings are as applicable to running a Fortune 200 company as an entrepreneurial venture. The case studies and coursework of an MBA will help prepare me for the dynamics of business, whether directing a third party logistics company, a laser manufacturer, or a blue jean zipper supplier.
Long term the MBA will help me be a proactive leader rather than being a reactive manager to the dynamic changes that are a trademark of our global economy. A MBA will help me know what needs to be done versus relying on others telling me what needs to be accomplished. Bosses want someone who says, “THIS is what needs to be done next.” Additionally, I have seen how those with the ability to make changes simply don’t either because they do not see the need for the change or they lack the confidence to make a bold move, which could flop, or on the flip side, could benefit the company. A Masters of Business Administration will give me the knowledge and confidence to be proactive in the various roles I will have throughout my career.
I have been impressed by the Apple’s recent success. They are a prime example of having first mover’s advantage. Their competitors are reacting instead of being proactive to their success. Apple’s success is causing “creative deconstruction” to the rest of the PC industry with their “post PC” products. This is just one aspect of business that the rest of the business world is seeing come to light and I hope that getting an MBA will shed light on this and many other practices shared by successful companies that I do not currently know of.
I believe a MBA will make me a more productive employee, a wiser manager, and a more successful entrepreneur. I will always continue to educate myself but the structure and expertise of your MBA program will usher me to a higher level of business practices. This will ultimately allow me to have more to offer my employer, my family and my community.
Thursday, November 24, 2011
Who Moved My Cheese
Who Moved My Cheese
By
Spencer Johnson, M.D.
What I learned from this book is that not only should you open to change, but also you should be looking for it. Once you spot it, you should move forward going after it and try and stay ahead of it. My brother sent me a link to a video describing social media, Facebook, and LinkedIn. It was wild to see the stats flashing across the screen. Basically the point of that video to me was that things are happening in big ways in social media and if you aren’t using it to your advantage via those sites or a blog then you are and will continue to fall behind. If you don’t believe me keep reading.
The average American I just read spends 6.83 hours on Facebook each month. That is over 81 hours a year. That is over 81 hours a year people. 81 hours is two full workweeks! Spent on one social networking website. I’m going to bet that a good majority of those same people also spend equivalent time on Twitter and You Tube and paying their bills online and Pinterest and, and, and. That said we’re talking about a full month (conservatively) spent on social networking sites and if you aren’t there then you’re not anywhere and future employers and schools aren’t in your future either.
Who’s to say that colleges and universities don’t make it a requirement as part of their admissions process that you have a certain number of ‘friends’ or blog posts? Why would they do that? Why would you want to be around someone or let someone into your college club who is socially awkward and doesn’t know how to interact with people and would be more a hindrance then help to your mission?
Think about change and embrace it.
Wednesday, November 23, 2011
The Big Short
The Big Short
By
Michael Lewis
The one thing that I picked up from this book is that “If you want to predict how people will behave you only have to look at their incentives.” In the book it mentions several examples of this, but one that stuck out to me was of Xerox. They had made a better machine, but because their salesman were getting less commission off of them they actually sold fewer machines than was normal and kept selling the older and less dependable machines to increase their commissions.
There are a plethora of things that could be taken from this and implemented in my life. In my personal life with my wife I could change or implement structure in how I interact with her so that we both mutually benefit from an increased love for each other since the incentives are properly placed. One way of doing that change is doing activities together that we both like to do.
In business if I don’t like how I’m being compensated I could ask for a change in how my pay or bonus structure is so that achieving those incentives is challenging, exciting, and rewarding. Who really wants to do a job they know they can’t get done no matter how hard they try? Let me answer my own question since it is my blog. Nobody. In fact over time I bet that people will naturally tend to work less and less diligently if that is their particular situation.
Recently my company rolled out a program for the bonus structure that almost completely rules out getting your full bonus potential. It is possible to get, but it is very difficult. I spoke up in the meeting saying that the new program didn’t quite feel right and after the meeting (nobody else spoke up about it until I had and they almost closed the meeting until I piped up) several people, including my own boss, said that they didn’t like the structure and that they were glad that I said something.
We could also implement incentive changes in government. To be honest I’m not really sure what would be the best way to change things. What if we disallowed somehow that a private sector individual could not become a public sector representative and vice versa? This would avoid people being manipulated by lobbyists since they wouldn’t receive later benefits based on how they voted. There a million ways I’m sure we could change the incentives of our elected that would be for the better of our country, but changes could and should occur based on our current issues we face as a nation.
Tuesday, November 22, 2011
1031 Exchange
Who cares about this and why is it important to make the leap to big investment money? A 1031 Exchange is a tool you can utilize to avoid paying taxes on the gains from selling your property. You have to roll it into another property within a certain period of time and it has to be into another property of similar use. This allows you to capture the gains instead of losing them to taxes and roll those gains into another place as an investment.
What’s great about this is that you can take a property that you’ve fully depreciated throughout the years and sell it with its value also having appreciated and roll those gains into another property. There are many reasons to do a 1031 exchange. The following are just a few reasons why you’d want to. Upgrade or consolidate property, relocation to another area, and change ownership of property types, i.e. change from owning residential real estate to commercial or retail.
Ultimately my goal is to own enough rental property or businesses that allow me to live comfortably on the monthly cash flow in retirement. This exchange allows me the ability to potentially grow my investments exponentially through economies of scale. That is what I’m excited about in the future. This is what Robert Kiyosaki did with his wife when they were starting out in rental properties. They were able to take their 20 or so rental properties, sell them, and traded up for 2 bigger apartment complex units. What is nice about this is the track that it leads them down. Eventually with enough experience/success larger investors will start to come at you with deals that you’d be able to finance or find financing for that would lead to infinite return deals using OPM (Other People’s Money), which is the best possible way to maximize your returns.
What’s great about this is that you can take a property that you’ve fully depreciated throughout the years and sell it with its value also having appreciated and roll those gains into another property. There are many reasons to do a 1031 exchange. The following are just a few reasons why you’d want to. Upgrade or consolidate property, relocation to another area, and change ownership of property types, i.e. change from owning residential real estate to commercial or retail.
Ultimately my goal is to own enough rental property or businesses that allow me to live comfortably on the monthly cash flow in retirement. This exchange allows me the ability to potentially grow my investments exponentially through economies of scale. That is what I’m excited about in the future. This is what Robert Kiyosaki did with his wife when they were starting out in rental properties. They were able to take their 20 or so rental properties, sell them, and traded up for 2 bigger apartment complex units. What is nice about this is the track that it leads them down. Eventually with enough experience/success larger investors will start to come at you with deals that you’d be able to finance or find financing for that would lead to infinite return deals using OPM (Other People’s Money), which is the best possible way to maximize your returns.
Monday, November 21, 2011
Infinite Return
If I have zero dollars invested in an asset and I receive $1, a return on zero is infinite. How is this possible?
In real estate they way it works is you buy something and force appreciation through improvements to the dwelling, at which point you would then refinance the property and since it is refinanced it is tax free the amount you get out of the refinance. Once that is done you can then roll the proceeds into another property via a 1031 exchange, but you still get to keep the first asset, which means you have an infinite return on the first property since you technically have no money invested in the property.
In real estate they way it works is you buy something and force appreciation through improvements to the dwelling, at which point you would then refinance the property and since it is refinanced it is tax free the amount you get out of the refinance. Once that is done you can then roll the proceeds into another property via a 1031 exchange, but you still get to keep the first asset, which means you have an infinite return on the first property since you technically have no money invested in the property.
Friday, November 18, 2011
Paradigm Shift for me on Economics 101
Talk about a paradigm shift for the econ 101 guy here. Man here is another reason to invest in commodities. Just this week the Japanese said they’re going to devalue their yen as it appreciated to record post World War II highs against the dollar.
GOLD AND THE ONGOING CURRENCY WARS
by Jeff Nielson of Bullion Bulls Canada
We live in a world almost entirely populated by economic charlatans. Nowhere is that indictment more blatantly apparent than in the world of international trade. For proof, look no further than the ongoing attempts by governments to win export market share by devaluing their currencies - also known as the "Currency Wars."
To see why these measures hurt all involved, the reader must understand why countries (and individuals) trade. It is elementary economics that profitable trade is founded upon a single principal: the doctrine of comparative advantage. It states that nations produce what they are especially adept at producing, and then trade those goods to other nations for the products which they can produce with greater efficiency.
Put another way, if Nation A can produce computers 10% cheaper than Nation B, but Nation B can produce automobiles 10% cheaper than Nation A, then both nations will be better off if they begin trading computers for automobiles. If we assume two equally-sized economies, and balanced trade, we essentially multiply our efficiencies by a factor of three: each nation produces twice as much of what it is good at, while also avoiding squandering resources by producing goods it is not efficient at producing.
Governments have throughout history attempted to interrupt this mutually beneficial arrangement in order to "protect" local industries from competition. While the old weapon was the tariff, the new weapon is competitive devaluation - and like the atom bomb, it's destructive power is orders of magnitude larger than the old weapons.
"Devaluation" means to drive the value of one's currency toward zero. "Competitive devaluation," then, is a race between governments to see which one can drive its currency toward zero the fastest.
As a result, instead of nations only producing goods which they are efficient at producing, and trading those goods for the efficiently produced goods of other nations, we have an entirely different paradigm. We have nations driving the wages of their workers toward zero in order to export goods at which they are entirely inefficient at producing.
And they're competing to see who can get to economic ruin first!
It gets worse. To maximize our losses on this inefficient trade, much of what is produced is heavily subsidized - meaning even before we factor in the damage of falling wages, we are selling these goods at an economic loss. We are totally impoverishing our own populations in order to inefficiently produce goods, which we then sell for a loss.
Among the infinite list of negative consequences from this economic folly are a steadily declining standard of living and vastly increased demand for government entitlements. Transforming the US middle class into the working-poor has resulted in close to 50 million Americans relying upon food stamps, and the numbers continue growing each month. Meanwhile, these subsidy-dependent, unprofitable businesses are very vulnerable to any downturn that might hurt their bottom line. There is no cushion of profitability to prevent massive layoffs at the first sign of trouble.
Meanwhile, with less and less real wealth off of which to leach, Western governments are making themselves more insolvent by the day. Thus, the only question which bond-holders should be asking themselves is: what will drive the value of government bonds to zero first, competitive devaluation or formal default? Yet, despite this very real and indisputable threat to investors, the media seems obsessed with speculating whether precious metals - perhaps the only constant in a world gone mad - are in a "bubble."
To understand the lunacy of the Currency Wars is to understand why gold and silver prices are skyrocketing. Driving the value of a currency down means exactly the same thing as driving-up the prices of real assets denominated in that currency. So, as governments engage in competitive devaluation, of course gold is going to rise in price. The new price just reflects that there is still the same amount of gold floating around while there are tons of new dollars/euros/yen.
Even absent competitive devaluation, there are a plethora of fundamental reasons for investors to hold a significant allocation of precious metals in their portfolios. With competitive devaluation, I find it difficult to get myself to hold anything other than gold or silver. And to the hordes of bond-lemmings out there, I can only say, "caveat emptor."
Jeff Nielson studied economics and law at the University of British Columbia, obtaining his degree in 1989. He came to the precious metals sector in the mid-'00s as an investor and quickly decided he wanted to make it the focus of his career. He is the co-founder of Bullion Bulls Canada, a precious metals website with a global audience which provides economic analysis, commentary on precious metals, and detailed information on more than 100 North American-listed mining companies.
Since starting Bullion Bulls Canada, Mr. Nielson's work has been widely published on sites such as Seeking Alpha and TheStreet, along with dozens of precious metals websites. For more of Jeff's insights and analysis, visit www.bullionbullscanada.com.
GOLD AND THE ONGOING CURRENCY WARS
by Jeff Nielson of Bullion Bulls Canada
We live in a world almost entirely populated by economic charlatans. Nowhere is that indictment more blatantly apparent than in the world of international trade. For proof, look no further than the ongoing attempts by governments to win export market share by devaluing their currencies - also known as the "Currency Wars."
To see why these measures hurt all involved, the reader must understand why countries (and individuals) trade. It is elementary economics that profitable trade is founded upon a single principal: the doctrine of comparative advantage. It states that nations produce what they are especially adept at producing, and then trade those goods to other nations for the products which they can produce with greater efficiency.
Put another way, if Nation A can produce computers 10% cheaper than Nation B, but Nation B can produce automobiles 10% cheaper than Nation A, then both nations will be better off if they begin trading computers for automobiles. If we assume two equally-sized economies, and balanced trade, we essentially multiply our efficiencies by a factor of three: each nation produces twice as much of what it is good at, while also avoiding squandering resources by producing goods it is not efficient at producing.
Governments have throughout history attempted to interrupt this mutually beneficial arrangement in order to "protect" local industries from competition. While the old weapon was the tariff, the new weapon is competitive devaluation - and like the atom bomb, it's destructive power is orders of magnitude larger than the old weapons.
"Devaluation" means to drive the value of one's currency toward zero. "Competitive devaluation," then, is a race between governments to see which one can drive its currency toward zero the fastest.
As a result, instead of nations only producing goods which they are efficient at producing, and trading those goods for the efficiently produced goods of other nations, we have an entirely different paradigm. We have nations driving the wages of their workers toward zero in order to export goods at which they are entirely inefficient at producing.
And they're competing to see who can get to economic ruin first!
It gets worse. To maximize our losses on this inefficient trade, much of what is produced is heavily subsidized - meaning even before we factor in the damage of falling wages, we are selling these goods at an economic loss. We are totally impoverishing our own populations in order to inefficiently produce goods, which we then sell for a loss.
Among the infinite list of negative consequences from this economic folly are a steadily declining standard of living and vastly increased demand for government entitlements. Transforming the US middle class into the working-poor has resulted in close to 50 million Americans relying upon food stamps, and the numbers continue growing each month. Meanwhile, these subsidy-dependent, unprofitable businesses are very vulnerable to any downturn that might hurt their bottom line. There is no cushion of profitability to prevent massive layoffs at the first sign of trouble.
Meanwhile, with less and less real wealth off of which to leach, Western governments are making themselves more insolvent by the day. Thus, the only question which bond-holders should be asking themselves is: what will drive the value of government bonds to zero first, competitive devaluation or formal default? Yet, despite this very real and indisputable threat to investors, the media seems obsessed with speculating whether precious metals - perhaps the only constant in a world gone mad - are in a "bubble."
To understand the lunacy of the Currency Wars is to understand why gold and silver prices are skyrocketing. Driving the value of a currency down means exactly the same thing as driving-up the prices of real assets denominated in that currency. So, as governments engage in competitive devaluation, of course gold is going to rise in price. The new price just reflects that there is still the same amount of gold floating around while there are tons of new dollars/euros/yen.
Even absent competitive devaluation, there are a plethora of fundamental reasons for investors to hold a significant allocation of precious metals in their portfolios. With competitive devaluation, I find it difficult to get myself to hold anything other than gold or silver. And to the hordes of bond-lemmings out there, I can only say, "caveat emptor."
Jeff Nielson studied economics and law at the University of British Columbia, obtaining his degree in 1989. He came to the precious metals sector in the mid-'00s as an investor and quickly decided he wanted to make it the focus of his career. He is the co-founder of Bullion Bulls Canada, a precious metals website with a global audience which provides economic analysis, commentary on precious metals, and detailed information on more than 100 North American-listed mining companies.
Since starting Bullion Bulls Canada, Mr. Nielson's work has been widely published on sites such as Seeking Alpha and TheStreet, along with dozens of precious metals websites. For more of Jeff's insights and analysis, visit www.bullionbullscanada.com.
Thursday, November 17, 2011
Video Games and Rated R Movies
Ah yeah its time to talk about video games if only briefly though. The other day my wife, my brother, and I were driving to watch the 7th game of the World Series and we were talking about stuff when my brother said he was impressed about me returning a certain game due to the amount of cussing in the game. I said I couldn’t take all the recognition as my wife had gently guided me in the right direction. What followed were lame excuses from yours truly for why it was fun and ok to play those games. My wife then said that the games were worse then rated r movies cause they have more violence and more cussing and hot chicks with big boobs then rated r movies. The logic was and is undeniable and has officially been duly noted.
Why this even matters is cause I am a Latter-day Saint and don’t watch rated r movies. I was being a hypocrite by playing those games. That is why it matters. The point is…this story is just another example of why it is a good thing to be married. I get free coaching from a beautiful girl.
Why this even matters is cause I am a Latter-day Saint and don’t watch rated r movies. I was being a hypocrite by playing those games. That is why it matters. The point is…this story is just another example of why it is a good thing to be married. I get free coaching from a beautiful girl.
Wednesday, November 16, 2011
Commodities and Bubble Mania
Commodities started a bull market in the early 2000’s to 1999 timeframe. China and India are both going through their industrial revolutions and as such the demand for commodities from that region will be high for the foreseeable future. Countries that export large quantities of commodities will fare better than those who do not in the upcoming downturn, but make no mistake that they also will feel the pain of a global economy in turmoil. The key is finding who is going to e hurt the least if you’re looking for something or somewhere to invest your money. Reason I even mention somewhere is because the US is uniquely positioned to be completely stripped of its title of THE world superpower due to its excess and from my studies I’m finding that commodities in all its forms are what are going to do well in this coming downturn.
Countries that have a strong export presence and low unemployment will be good places to look at. Recently Peter Schiff and Axel Merk did an interview where they commented on their five favorite currencies to invest in. That is a good place to start if you are planning on investing abroad as they give insights to not only economic issues, but political issues, which as we can see with the Eurozone and Greece right now is a big deal for investors domestically and abroad.
I love Peter Schiff’s commentary on bubbles. If you notice on any of the news agencies they call bubbles all the time. Lately it is more prominent in commodities due to their meteoric rise over the last decade. What’s sad is that there are those who correctly predicted and profited off of the last bubble bursts of the last few years and they’re saying that we aren’t close to popping in commodities.
For example, throughout time the gold to silver ratio is around 12:1. Now it is about 51:1. Over the last century, when we were on the gold standard, the ratio was around 47:1. Historically the Dow to gold ratio has been about 4:1, but right now the Dow is overvalued at a ratio of about 7:1. If you are familiar with statistics and means this means that gold is undervalued and the Dow and even real estate are overvalued. To get back to the mean we have to shoot past the mean in either correcting direction in order to get back to the mean (average).
An interesting sign with bubbles is the speculation that occurs with companies involved in the underlying asset that is in its bubble mania. For example, the Internet was invented/gained traction and revolutionized communication. The Internet didn’t really hit a bubble though, as far as investing in companies on the web is concerned at least because certainly it is still growing, until people started speculating on the companies involved in the Internet, hence the dot.com bubble and subsequent burst.
We’ll know we’re in bubble territory for commodities once speculators start going nuts for commodity producing companies. This means for gold specifically we’ll know that it is in a bubble when people are buying into gold stocks just like they bought into dot.com stocks in one of the last bubbles that occurred in the stock market. People will speculate on the different types of gold mining stocks and some will be good bets and others not so much. When taxi drivers and the average joe start buying gold and silver you’ll know it is in a bubble and that is far from the case right now. Central are barely becoming net buyers instead of net sellers of gold right now. What would be interesting to find out is if those big investment banks ever offer any CDS on the speculative or even large gold mining companies.
Specifically with gold and silver these still have a ways to go till they top off because of demand. Silver is the most widely used commodity in the production of goods with thousands of different uses, some of which will continue indefinitely as some are related to medicine, batteries, and mirrors. As the BRIC countries continue through their industrial revolutions demand for all commodities are going to continue up. To ramp up production though requires a lot of capital-intensive investment, which takes time. Limited supply of a commodity then will lead to increased prices in the underlying asset, which in turn leads to more demand, which leads to more investment in production until demand falls, at which point production capacity will have been over extended and some of those companies that were great will turn out to be duds and the bubble will start to fall for the equities and commodities involved.
This blog post makes me want to learn more about oil. Peter Schiff says that oil should be about 1/10th the price of gold. Well gold is about 1750, but oil is only around 90 bucks a barrel. We also know the 7 billionth baby was born recently and so demand for oil is going to go up. I wonder what huge macro economic consequences are going to result from HUGE increases in the price of oil. To be continued…
Countries that have a strong export presence and low unemployment will be good places to look at. Recently Peter Schiff and Axel Merk did an interview where they commented on their five favorite currencies to invest in. That is a good place to start if you are planning on investing abroad as they give insights to not only economic issues, but political issues, which as we can see with the Eurozone and Greece right now is a big deal for investors domestically and abroad.
I love Peter Schiff’s commentary on bubbles. If you notice on any of the news agencies they call bubbles all the time. Lately it is more prominent in commodities due to their meteoric rise over the last decade. What’s sad is that there are those who correctly predicted and profited off of the last bubble bursts of the last few years and they’re saying that we aren’t close to popping in commodities.
For example, throughout time the gold to silver ratio is around 12:1. Now it is about 51:1. Over the last century, when we were on the gold standard, the ratio was around 47:1. Historically the Dow to gold ratio has been about 4:1, but right now the Dow is overvalued at a ratio of about 7:1. If you are familiar with statistics and means this means that gold is undervalued and the Dow and even real estate are overvalued. To get back to the mean we have to shoot past the mean in either correcting direction in order to get back to the mean (average).
An interesting sign with bubbles is the speculation that occurs with companies involved in the underlying asset that is in its bubble mania. For example, the Internet was invented/gained traction and revolutionized communication. The Internet didn’t really hit a bubble though, as far as investing in companies on the web is concerned at least because certainly it is still growing, until people started speculating on the companies involved in the Internet, hence the dot.com bubble and subsequent burst.
We’ll know we’re in bubble territory for commodities once speculators start going nuts for commodity producing companies. This means for gold specifically we’ll know that it is in a bubble when people are buying into gold stocks just like they bought into dot.com stocks in one of the last bubbles that occurred in the stock market. People will speculate on the different types of gold mining stocks and some will be good bets and others not so much. When taxi drivers and the average joe start buying gold and silver you’ll know it is in a bubble and that is far from the case right now. Central are barely becoming net buyers instead of net sellers of gold right now. What would be interesting to find out is if those big investment banks ever offer any CDS on the speculative or even large gold mining companies.
Specifically with gold and silver these still have a ways to go till they top off because of demand. Silver is the most widely used commodity in the production of goods with thousands of different uses, some of which will continue indefinitely as some are related to medicine, batteries, and mirrors. As the BRIC countries continue through their industrial revolutions demand for all commodities are going to continue up. To ramp up production though requires a lot of capital-intensive investment, which takes time. Limited supply of a commodity then will lead to increased prices in the underlying asset, which in turn leads to more demand, which leads to more investment in production until demand falls, at which point production capacity will have been over extended and some of those companies that were great will turn out to be duds and the bubble will start to fall for the equities and commodities involved.
This blog post makes me want to learn more about oil. Peter Schiff says that oil should be about 1/10th the price of gold. Well gold is about 1750, but oil is only around 90 bucks a barrel. We also know the 7 billionth baby was born recently and so demand for oil is going to go up. I wonder what huge macro economic consequences are going to result from HUGE increases in the price of oil. To be continued…
Subscribe to:
Posts (Atom)