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January 2010 |
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SUPER
INVESTING newsletter series |
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7 New Year's Resolutions for 2010-Part 5 of 7 Hello Rogue Investors, Welcome to issue number 5 of 7 New Year’s Resolutions for 2010. I apologize for the delay in my resolutions. I just spent a wondrous week in the Dominican Republic. Of course it had its moments, like my one-hour delay in Miami due to the earthquake in Haiti. As many of you know, Haiti and Dominican Republic share a border on the island of Hispaniola. Haiti occupies about 1/3 of the area on the west side, while Dominican Republic occupies the rest. My friends in Dominican felt the quake, but had no problems. On my way back home, it was great to see rescue teams from China, America, Italy, France and many others at the airport. Due to the difficultly of flying into Haiti, many rescue teams took advantage of a friendly neighbor willing to help with its airports and infrastructure. That brings me to another prediction. Although this disaster is horrific, I believe the silver lining is two-fold. First, Haiti will be rebuilt with newer and better standards. Haiti’s infrastructure (roads, electricity, water, telecommunications) will be reborn. Haiti’s government will be held accountable on a world scale. You can imagine that if our donations are going to the Secretary of Tourism’s new Mercedes and palace, then the outcries will be loud, global and deafening. Corruption will be much more difficult at least in the short term. The second overlooked benefit is the neighboring country, the Dominican Republic. I believe the coming boom in infrastructure projects for Haiti will benefit its neighbor. Businesses associated with construction, materials, equipment, agriculture, well drilling, and engineering are poised to boom. Already, the Dominican Republic is building, improving, revamping and moving forward with a spirit of entrepreneurial fervor. I always tell people who visit me in the D.R. to look around and tell me where the recession is located. I can’t seem to find it. In fact, during the global economic bust of 2008, this country still managed to grow at a pace of 5.5%. That’s five times faster than the U.S., Canada, and Europe for the same time period. Many Dominicans are driving better cars and living in nicer homes than we are. Of course, there is still a huge disparity of wealth and poverty, but I see one economy booming and my own economy languishing. If you have ever thought about diversifying into an emerging economy, helping rebuild Haiti and spending some time in a beautiful part of the world with some of the friendliest people, keep this in mind. In order to rebuild Haiti, the airports, shipping ports, telecommunications, construction materials, engineering staff and local food will be needed from the Dominican Republic. The ripple effect will increase salaries, decrease unemployment, increase property values, increase trade and generally result in a boom. So how can you get involved? Of course, I believe in direct contributions to charitable organizations helping in this disaster. That is really step one. Next, if you have skills or expertise in helping rebuild or if you have access to inexpensive materials, I have the contacts in the D.R. to help. I believe it is possible to jump-start your own business in this market. Now the possibilities are endless. Reminder: In only two weeks, I will be teaching a one-on-one tax lien workshop in Sedona, Arizona. Please get in on the special pricing before the end of January. As a special bonus, anyone who attends will receive information on how to set up a company in the D.R., obtain full-time residency and get involved in the rebuilding boom that is now! Call now to reserve your spot – 1-913-381-4520. Now back to my resolutions: I will clean up and get organized.I will review my assets and investments.I will set aside extra money in an emergency fund.I will review my insurance needs.I will pay down debt using the stacking idea.I will finish my estate planning.I will give back with greater purpose. Resolution Number 5: I will pay down debt using the stacking idea. This is a simple idea that is powerful. First, take all of your debt like dominos on a table. Line up your debt and look at each one. Let’s say you have seven dominos on the table. One domino represents your mortgage, another domino is your student loan, three dominos represent credit card debt, another domino is your furniture loan, and another domino is your car loan. The idea is to start with one debt at a time. Most financial advisors recommend paying down credit card debt first, then debt on depreciating assets, and finally debt on appreciating assets. Each domino has a payment that you must pay so the idea is to chip away at one debt first, pay it off and then take that same payment and apply it to the next debt in line. This is called stacking. Imagine taking the first domino and stacking it on top of the second domino. You now have a stack of two dominos plus five additional. Because you are paying extra on the second debt it will be paid off quicker and eventually you will stack the two dominos on the third domino. In the end, you will have a stack of dominos, but only one payment. The point is to continue paying the same amount even when one bill is paid off. The difference is you are compounding your ability to pay down the debt. Example: Starting Scenario Domino 1 (Credit Card): $75 per month Domino 2 (Credit Card): $150 per month Domino 3 (Credit Card): $80 per month Domino 4 (Automobile): $400 per month Domino 5 (Furniture): $215 per month Domino 6 (Student Loan): $375 per month Domino 7 (Mortgage Loan): $1200 per month Stack 1 Domino 1 (Credit Card): Paid off Domino 2 (Credit Card): $150 + $75 per month Domino 3 (Credit Card): $80 per month Domino 4 (Automobile): $400 per month Domino 5 (Furniture): $215 per month Domino 6 (Student Loan): $375 per month Domino 7 (Mortgage Loan): $1200 per month Using this example you will first pay off Domino 1 and take the extra $75 per month and apply it to Domino 2. After Domino 2 is paid off, you will then apply the previous two monthly payments to Domino 3. Stack 2 Domino 1 (Credit Card): Paid off Domino 2 (Credit Card): Paid off Domino 3 (Credit Card): $80 + $150 + $75 per month Domino 4 (Automobile): $400 per month Domino 5 (Furniture): $215 per month Domino 6 (Student Loan): $375 per month Domino 7 (Mortgage Loan): $1200 per month Final Stack Domino 1 (Credit Card): Paid off Domino 2 (Credit Card): Paid off Domino 3 (Credit Card): Paid off Domino 4 (Automobile): Paid off Domino 5 (Furniture): Paid off Domino 6 (Student Loan): Paid off Domino 7 (Mortgage Loan): $1200 + $375 + $215 + $400 + $80 + $150 + $75 per month I think you understand the concept. The secret is to set up your personal cash flow or budget and be diligent about paying the extra to your new debt. If you are interested in software or other systems that help automatically guide you, please contact me. I will be sending out information on some systems that I think are wonderful. The best system is your own tenacity or stubborn determination to pay down debt and not be held hostage by creditors. We are supposedly free, right? Freedom includes removing the money shackles. Join me in 2010. Let’s take off the creditor shackles, reach up to the heavens and feel truly free.
All the best,
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SUPER
INVESTING newsletter series |