Here lies the issue at hand. If you have a new car, we all know that as soon as you drive it off the lot you will suffer 20-30% depreciation on the value of your new vehicle. Thus one of the reasons you will find the strategy to buy a two year old vehicle in several of my books. I like new cars and I have new cars, but I also use leases to my advantage, and I also buy used as well.

So back to my buddy, he was in an accident where someone hit his new truck. Insurance will cover the damages but what about the fact that his new truck now has a negative carfax, a history of repair and accident that will affect the long term value of the truck even after it is fixed. That is unfortunate and in most cases people just take it for what it is and move on. Later down the road a few years when they try to sell the vehicle the accident comes back to haunt them and the seller of the vehicle will suffer monetary loss because of the previous accident. The accident simply lowers the long term value. So what can you do?

Well you can buy Gap Insurance which will cover the difference in your new vehicle when you drive it off the lot and remain in effect until your car is worth the same or lower than your loan payoff thus the “GAP” or you can file a diminished value claim against your insurance company. I would suggest that if you buy a new vehicle that you look into gap insurance, some policies have it included and others you will need to add it on. Keep in mind that you can get Gap insurance at many places not just thru your insurance company and certainly don’t take the Gap offered by your dealership when you buy your new vehicle. There are also alternatives to Gap insurance such as new car payoff options etc, you can discuss with your auto insurance company.

Since my buddy is filing a diminished value claim let’s look at what and how the claim works.
Let’s say you are like my buddy and were in a recent accident with your vehicle. – The first thing you are going to do is file a claim with your insurance company for the damage to the vehicle – The initial claim will only cover your damages minus your deductable of course – But what about your Diminished Value, this is going to be what your new vehicle is worth if you sold it now with the repaired damage vs selling the same new vehicle now with no damage. You need to be familiar with the three (3) types of Diminished Value . . .

1.   Immediate Diminished Value is the difference in resale value of a vehicle immediately before damage has occurred and immediately after damage has occurred (prior to repair). Most jurisdictions (courts) will use this standard as the primary measure of damage when courts are employed to seek reimbursement for damage from a negligent party. As courts are rarely the chosen venue for recovery of property damage, the standard of “Immediate Diminished Value” is rarely employed in resolving Diminished Value Claims . . .

2.   Inherent Diminished Value assumes optimal repair quality has been achieved and is defined as the amount by which the resale value of a repaired vehicle has been reduced simply because the subject vehicle now has a significant damage history. “Inherent Diminished Value” is the most widely recognized and accepted form of Diminished Value. It is also the basis upon which any supplemental form of Diminished Value would be added. A common “Supplemental” form of Diminished Value is “Repair Related Diminished Value” . . .

3.   Repair Related Diminished Value includes any additional amounts by which the resale value of a subject vehicle may be further reduced because of less-than-optimal repairs. This could include anything from minor cosmetic imperfections to major structural defects.

Determining diminished value takes basic common sense, the newer your vehicle the more likely the value would be diminished if it were in an accident. If you find yourself in a position that you think you may be looking at a diminished value situation, you will need to find a D/V appraiser, this type of appraiser has really taken off recently but you will need to be careful as some of them are not as professional as others, you may just want to ask your insurance company for the name of one that they recommend.

Do not fall prey to contingency type diminished value companies. These companies will tout that they can get you money from the insurance company for the vehicles diminished value on a contingency basis, meaning that they take their money out of the claim when paid by your insurance company. There are numerous scams out their reported with this type of business activity so just avoid them.
If for some reason you have difficulty with trying to collect on a diminished value claim from your insurance company you may need to find an attorney to assist you with the claim, in most cases your attorney fees can also be incorporated into the claim.

If you don’t receive your diminished value claim or as much as you feel you should have you still can recoup some of the loss on your taxes, Please take note that in no way do I offer tax advice, nor am I a tax attorney, please seek professional tax advice when doing your taxes.

IF you itemize your deductions, you can use Line # 19 of Form 1040 – Schedule “A” to deduct your unrecovered Diminished Value. If you have an unrecovered Diminished Value of say $ 1,500 and a tax rate of 20%, you can Reduce Your Tax Obligation by almost $ 300.00.

Yet another financial strategy that can be used to help you and your family achieve the financial success you deserve.

Happy Investing!

James Dicks

Some people don’t seem to have this instinct at all, and this doesn’t bode well for the long-term health of the American economy. Just in the last two years people have started to really slow their spending down and foremost their spending on credit. It may have a negative effect on things for now, but in the long run we will be far better off.

(We have the lowest savings rate of any developed nation, which is a worrisome thing.) But the rest of us experience this self-protective instinct to put something aside for a rainy day. For some people, this means setting aside a small amount of money for less fortunate times. For still another group, the fear becomes extreme—even irrational—and leads to the unnecessary hoarding (and often counting) of money.

For me having to review this lesson is key; even writing it makes me think. My first time out I made lots of money, but I was over leveraged and in the end lost everything and had to start over again. The second time around I was not as over leveraged and saved money for a rainy day, problem is it seems as though it has been raining for a long time. However saving money for the rainy days has proven to be very wise. The next time around, I plan on having zero leverage, and living completely debt free. That is really the key to success, eliminate the credit and live on what you make and save, use a debit card instead of a credit card.

Let’s acknowledge first that saving money for the future is important. Having said that, the inevitable question that follows is, how much is enough? Setting aside a little money isn’t difficult, but since small amounts can seem so insignificant, it’s easy to lose the discipline to continue. But it is that very discipline that makes saving work. Well, discipline combined with the almost magical power of compound interest.

Compound interest is the key to building wealth. Simply put, it means investing some money, earning interest on your investment, and then leaving both the interest and the principal in place so that you begin to earn interest on your interest (as well as on your principal).

In other words, first your original money earns money, and then the money your money has earned earns more money. This goes on year after year. After years of compounded growth, the annual earnings reach an acceptable level. Eventually, if you’re original investment was large enough, if your rates of interest were competitive, and if you wait long enough, your nest egg will grow large enough to produce an acceptable outside income.

I can assure you that those of you that are a little older know exactly what I am talking about. There is a life time line where you got have more more more. I have had all the cars from a Cavalier to a convertible Murciélago Lamborghini, Bentley GT, big and fast boats etc. Now I am more focused on what counts most to me. How do you really know what is important to you? Simple, focus and take a few moments to work thru this and other mental exercises to help you laser in on those really important things. I can tell you this to accomplish your goals you must be willing to give up the not so important things, be willing to sacrifice to accomplish your truly important goals.

What 10 things would you do if you had unlimited time and money? Give yourself a few moments to come up with 10 answers, but not ones that are too long. Please write them down, either here or on a separate sheet of paper, seriously you need to do this, write it down, if you just do it on paper you won’t be able to burn the image in your subconscious which is the key to positive imaging, making the dreams become reality. Well, what did you find out about yourself? One thing many people discover, as a result of this exercise, is that listing 10 items is not as easy as they assumed it would be—even with unlimited time and money. If you found that to be true—if numbers 9 and 10 came hard— then you need to dream more. Have at it! You are now free to dream.

1. YOUR MISSION TO WEALTH TO-DO LIST 1. DEVISE A PLAN FIRST, AND THE STRATEGIES WILL FOLLOW. -You must come up with your plan first. Hildebrant’s principle applies here: “If you don’t know where you’re going, any road will get you there.” Wandering aimlessly will get you nowhere fast.

2. TRUST YOUR MENTORS.- To get the most out of this exercise, you must put your trust in people you don’t know. So I ask you to suspend disbelief. I ask you to think of me as someone you know and trust as you progress through my blogs. (There’s no downside and plenty of upside.)

3. CHANGE YOUR MINDSET.- Accumulating wealth is as much about mindset as it is about net worth. It may sound simple or even naive, but without the proper mindset, you almost certainly will not achieve your financial goals. If you do somehow achieve them, they’re likely to come undone quickly.

4. DARE TO DREAM. Dreaming is one of the first steps on the journey to financial independence. Think of Roger Bannister’s four-minute mile. Think of John F. Kennedy’s challenge to Americans to get to the moon before the end of the decade. You must first envision the future before it can become a reality. That may sound like another simplification (and indeed, it’s only part of the story), but that’s exactly what worked for me.

Don t skip this exercise. I actually sat down and did this when I was 15, as fate may have it; I found my list that I wrote some years back and realized that writing this down really helped and made the difference between success and failure. I actually wrote all my goals down, both short and long term, then I did the dreams as this exercise suggest. Over time my short term goals were all accomplished, my long term goals were really more short term and all accomplished, and my dreams became long term goals and then short term goals and then I achieved all the dreams that I had written down when I was 15. Two points here, one, do this, two update it yearly as your life’s values and what’s important changes and you want to be writing these changes down so that you can achieve them.

You need to be systematic and thorough in your approach to these eight principles. If you follow just some of them, you may still become financially free. (Yes, they are that powerful.) But your foundation for long-term success will be more solid if you internalize them all.

Let’s take another short step in your journey toward financial freedom. Yes, we’re going to do some more dreaming. If possible, you should find some quiet place where you can be by yourself and not have to worry about being self-conscious. But if you can’t, don’t worry about it. Just do the best you can. If you’re not happy about the results the first time, consider repeating the exercise again later in a more private place, and see if the results are the same.

So get comfortable and relaxed. Close your eyes for a moment, and allow yourself to dream. Let your mind roam as if you were a little kid in school, bored by some dull assignment. Give yourself permission to do what people have told you not to do your entire life: daydream.
Let your mind wander, and think happy thoughts—thoughts about things you would really like to do. Places where you’ve always wanted to travel. People you’d like to meet. Whatever comes to your mind, allow yourself to let go and dream, even if it is only for a few moments. Once you complete this brief exercise—and only after you have done this—continue on.

Did you do it? Great. I hope you enjoyed this moment with yourself. It’s a good start, and it’s something you should do more often. At first, your conscious brain—the scolding part, the part that Freud called the “superego”—will resist your attempts at daydreaming. And let’s face it, you’re out of practice. You haven’t done it since you were a kid, and even then, people were telling you it was a “waste of time.”

Nothing could be further from the truth. Dreaming puts you in touch with your inner self. It allows you to contemplate what is going on in your life, and what you want to do about it. It is a restful time—a time that allows you to recharge your batteries and rejuvenate yourself, mentally, physically, and spiritually. Entire civilizations in the East endorse meditation as a positive habit to develop.

I do, too—although I prefer to talk about dreaming, rather than meditating. I believe that a focused kind of meditation, a dreaming of your future, is critically important.

My Best
James Dicks

In order for life to work, we must all be different. We must have different dreams and different aspirations. But this very variety means that these dreams can all be fulfilled—assuming that each of us is honest with himself or herself and finds his or her true dream.
Not someone else’s dream—your dream.

Financial freedom is your dream. As long as you can dream, you can continue to succeed. Show me a person who has no dream, and I will show you someone who is poor. A millionaire dreams, and then sets out to make those dreams real. Once you stop dreaming, you stop the magic. That’s because you have created the world you wanted. You stop moving forward, because your dreams have ended. Either you are content to live with what you have or you are constantly frustrated because you don’t have enough—or you learn to dream again.

Think about this for a moment. Look around you at the people you know who, when measured in terms of financial prosperity, have a successful life. Inevitably, the ones who are the happiest are the ones who are still dreaming. Those who have stopped dreaming become overly concerned about the money they have. They begin to hoard their wealth in a way that restricts even their own pleasure.

It’s a sad predicament: to be snared by your failing or extinguished dreams. As my grandmother always said, “Be careful what you wish for, because you may get it.” In other words, be ready to handle the consequences of what you think you want, because you may indeed get it. Money without a plan is worthless. That is why the first step should be to create that plan.

You must be ready for your wealth before you get it. The plan you develop for financial success will be based on sound fundamentals, rather than on some pie-in-the-sky, get-richquick scheme. You can build the wealth you seek. It won’t come overnight, but once you master our method, you won’t care. You will be systematically working toward your long-term goal, while at the same time earning money and enjoying the journey. Isn’t that what you really want? Satisfaction today, and financial freedom tomorrow?

Don’t miss my next blog in which I will discuss the principles of wealth creation.

My Best
James Dicks

Follow up to previous blog post.

Once you have actually seen yourself spending and enjoying your newfound financial success, you can move on. Please don’t fudge—OK, let’s move on together. Let’s change your visual focus. Where do you live in your new life of prosperity? What does your house look like? How many bedrooms does it have? Can you see it? If you can see it, spend a few minutes creating details. If you can’t see it, spend a little more time with the exercise until you can.

Someone once said that what the mind can see, the body can achieve. I believe it. I go a step further. I believe that the mind must see it before the body is able to work for it. Look at another realm of human endeavor: sports. When Roger Bannister broke the four-minute mile, he saw it long before he did it. Over and over in his mind, he later recalled, he visualized doing what had been deemed to be impossible. Interestingly enough, once Bannister did what no one else had ever done before, others quickly succeeded in doing it. Why? Because in minds all around the world, mental barriers had been broken. People understood that the impossible was now possible.

The same analogy applies to wealth creation. There is a process one must go through to achieve it. Bill Gates, in his best-selling book The Road Ahead, writes about his “play” with computers in high school. Even then, when computers were the size of large rooms and far less powerful than our miniature hand-held PDAs, he dreamed about what they would be able to achieve in the future.

His dream was so strong, in fact, that he feared missing out on the revolution he saw in his mind. He dropped out of Harvard University—dropped off the safe path he was on—to get a quicker start. There was simply no way that he was going to let the software revolution start without him.
Bill Gates saw the future of computers in his mind long before it became a reality. He saw a role for himself in that future. He dreamed the dream, developed plans to fulfill that dream, and then took action. This could be called the “science of success.”

It’s not restricted to Roger Bannister and Bill Gates. It’s something that each of you can participate in and benefit from. But before you can do it, you have to knock down the mental barriers to your financial success. You must learn to envision your achievements. Once you do, the achievements will follow. So far, so good? Are you beginning to see the mindset you need to have if you are to achieve financial freedom? Let’s go a little further.

What about a family? Will you have a spouse? Children? What will they be like? These are extremely important thoughts to consider and plan for. You must see it before it happens, but once you do; financial freedom will be more than one step closer.

All of the questions I have posed to you so far will become an important part of creating your dreams and ultimately achieving goals based on those dreams. Now that you see the process unfolding, you can also see how the end results will be different for everyone.

More to follow don’t miss reading the most important aspect of how this exercise can make such an impact on your financial life.

My Best
James Dicks

With all of the frustrating economic events going on in the world today, starting a home based business could possibly be the only way to solidify your financial future. If legitimate home business opportunities were straightforward and simple to deal with, everyone would succeed. I have to be honest – many new businesses fail. It’s going to take a lot of hard work and long hours to get your new venture off the ground. If you are willing to do the work and learn a few things, you can truly excel at it.

Lots of people have started working for themselves simply because they didn’t have a choice. The traditional methods of making a living have all but disappeared in today’s fragile economy. While I’m sure this has caused a lot of anxiety, many people have found working for themselves very liberating. You set your own hours, you set the limits on how much (or how little) you make, and most people have found that for the first time in their lives, they are enjoying the day- to-day routine. They have found that they are now doing something they want to do….not something they have to do.

Once you get all the preliminaries out of the way (determining what it is exactly you want to do, legally developing your company, creating a website), you just might find that you were made for entrepreneurship. Hey, it’s not easy and takes a lot of work. And remember, have a plan. No matter how large or small a company is – a business plan to a must. It’s your map to success and a requirement.

There are plenty of resources that you can tap in to help you through the beginning year of your new venture. The U.S. Small Business Administration is a must. Visit an SBA office or just go to their website. There is so much information available online to help guide you through many of the questions you will probably have in the beginning.

Make sure you spend some time networking with other entrepreneurs in your local community. There are always other people out there who have gone through the very same things you’re trying to accomplish. These individuals will offer you valuable information that will no doubt save you time and money. Pick their brains and get all the information you can before going one step further.

Networking can be accomplished online through various social media sites, going to physical training classes, or finding local business gatherings. Sales are frequently developed through these personal sessions by creating personal relationships with others. You must make this a priority. If you don’t feel comfortable socializing, it’s time to try and develop your skills in interpersonal communications. Effectively talking to people can make or break the effectiveness of your new business. Sales is about touching people’s needs and desires at a very personal level so it’s important to develop your sales skills to a point where you are comfortable interacting with potential customers.

You’ll probably find that you’ll be putting on more than the 40 hours you’re used to, at least at first. But I think you’ll also find that you will be enjoying the time spent. This new business belongs to you and you’ll be surprised at how fast you’ll catch the entrepreneurial “fever.”

Start using your personal and professional skills to your benefit…who knows, you might enjoy it.

There are numerous methods of determining the best methods of handling our money that didn’t exist a decade ago.  Most of us have personal computers at home that can be used to assist your financial development.  There are many software programs that can help guide you by showing where your money is currently going.  These programs can help you determine the best methods of using your cash to enhance your investments.  Determine how much is coming in, how much is going out and establish where the money is going.  It’s really that easy.  Once you know those facts, you can make your adjustments.

One question that you really should ask yourself is whether the investment methods you use are actually working for you to build financial wealth.  If there have been problems, changes in the market trends, an alteration in your personal lifestyle (a new baby, a recent move, a new job, you’ve just married, just divorced) then make the necessary changes to make sure your money is working to fit your life’s changes and goals.  Interest rates are down today and it may be time to consider refinancing your home but only you know whether that’s something you should do or not.  Plus, make sure you build at least three to six months worth of living expenses, if you don’t already have that amount put away safely. 

Other areas of interest to your personal financial life include your insurance coverage.  If your agent hasn’t called you recently, pick up the phone and dial your agent’s office and request that you take an inventory of your coverage (home, life, auto) and adjust where needed.  For goodness sake, examine your credit report at least once a year.  It might be a good idea to actually contact the credit agencies twice a year, especially if you are about to make a major purchase.  

Just as you need to develop and then redevelop your short and long term goals throughout the year, so it goes with the state of your financial well-being.  This should not be an unpleasant chore but rather something enjoyable.  Remember, by conducting these occasional checkups, you are insuring that positive financial results are more likely to be attained. 

Anything can happen throughout the year (as this year has shown), which can force you off your fiscal course.  Events that can make a difference in your life occur at a moment’s notice.  Just make sure that when unforeseen events occur, you make the needed corrections that will rebalance your financial life.  Plan to make a quick check every three months or so.  This is all part of goal setting that I believe is so important to leading a balanced and prosperous life.  Stay focused and make sure you perform your personal checkups on a regular basis. 

One of the most profitable times in my life was during my dedicated real estate career; I say that because, at the time, that is all I did.  That period also taught me about diversification and the importance of good money management, but that is another story.  Anyway, during this time (the late 90′s) I began to invest in real estate.  The market was a good buyers market so there were lots of opportunities, however interest rates were a little higher and I had pretty bad credit.  As I was growing up through high school and after my graduation, I didn’t maintain my credit as I should have.  Contrary to what people believe, think or say, you can fix your credit. I did but it took many years.  I was able to eliminate all the bad and replace it with all good. Yet again, that’s another story but you can do that to.

As far as this story goes, I identified a great place to make money in the real estate market place, most specifically rentals, and investor rehabs.  The problem was I didn’t have any extra cash and poor credit. So, I set out to accomplish my goal. I had to use private money; in fact I was paying interest as high as 18%, one year notes and five points.  Yikes, you say.  Me too!

The difference was this; if you aren’t putting any money down or little money down then your return is infinite regardless of what you are paying for the use of the money.  I always get the terms of the money first then I look for a deal that fits within those parameters.  That way I can still make money paying whatever the terms are.  That’s what I did.

I bought literally hundreds of properties and then started buying multi-family properties.  As I have written before, you need to move the ball along.  I was able to eventually find better pricing that was still high but not as high.  The point of all this is to show you that credit and using private money is a possibility that you can consider and today’s financial landscape offers a great opportunity to go out and find deals.

Let’s talk about no money down deals and better yet getting money back. First, there are lots of them out there. Maybe not as many no money down deals as in the past but certainly little to no money down deals are still available.  When I first started out I was able to do a lot of deals that actually paid me when I closed.  The key is to find someone that will deal with you.  Do your homework and keep moving the ball forward.