The James Dicks Blog

Welcome back.

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

I know it’s been tough the past couple of years and you’ve probably experienced some financial losses along the way, which could include a loss of equity in your home (or the loss of your home through foreclosure), your investments have probably taken a beating, and your 401(k) is no longer a viable option for your retirement future. If you were saving for your children’s education, that may have been put on hold, at least for the foreseeable future. Vacations? Forget about it….at least for now.

Remember, you may be down but you’re certainly not out by a long shot. Time to start the rebuilding process and the sooner the better. The faster you start, the more time you’ll have to put away the cash, the assets, the peace of mind before you really need it. But what to do first?
You might look back and try to remember where you started when you first left home or when you first got married. Chances are you began by putting away what you could in a bank savings account. That is probably a good place to start now.

Recently an economist said that average U.S. household wealth is down almost 20 percent from its pre-recessionary financial crest three years ago. There has been no reduction of U.S. household wealth in the last 50 years that has even come close to touching this loss. Many of those who supposedly know (government officials, economists and the like) are starting to believe that the “Great Recession” has probably seen its worse and investors are beginning to get restless about standing on the sidelines. But, many more are not yet interested in getting back in yet. There are fears that they might run into a second phase of this recession period and take another big hit. And others are getting nervous about the possibility of losing out on something big when things do begin to look clearer economically.

So what should we do? The answer to that question is very personal – it’s your money and that means its entirely your decision. But let me just throw out a few facts that may help you make some very important decisions.

Many people I talk to are ready to jump back into stocks. The negative or positive activity experienced by the stock market is normally guided by the strength or the weakness of the U.S. economy. When our economy begins to expand and the chances of inflation are relatively slim, the stock markets tend to thrive. Today, I don’t think we know the answer to either of those questions because growth and inflationary questions remain persistent today.

I don’t know about you, but I’ve been hearing lots of advertisements about investing in commodities these days, specifically gold. During periods of inflationary pressure, the commodity sector has been where many people go to find a financial refuge. Although gold has been showing some considerable strength, it has also shown itself to be rather stagnant over the last few months – not gain or losing much in the process. The Fed has stated this year that if inflation begins to show itself while our national economy continues to be on the mend, they will pull back some of the liquidity they’ve put out there in order to slow it down. This will indeed have a great impact on commodity pricing.

So where to go? Back to that savings account at the bank that hardly pays anything as far as interest is concerned. Or maybe its time to remain on the sidelines and get involved in CD’s or other interest rate vehicles. While these types of investments aren’t very lucrative, you can be sure of one thing…you’re probably not going to lose in the process either.

Are you in a mood to take a chance or are you in preservation mode right now? Remember the old adage – “You pay your money and you take your chances.” But the chances we are experiencing today are not like anything this generation has ever seen. Getting back in or staying on the sidelines is a decision that each one of us must make independently and not by the flipping of a coin. Get educated and make sure the decision you ultimately make is one you can personally live whether your investments go up or whether they go down.

We are approaching the final quarter of the year and I just want to remind you about something that I consider a very important aspect of any well-balanced financial life.  Make sure that you accomplish frequent financial checkups to ensure that you are on the proper path to develop your assets effectively.  Situations can change very quickly in life and you must consider, on a regular basis, the composition and structure of your personal financial goals, tools and investments.  There are many issues to consider.  Things like getting rid of unnecessary debt, developing proper spending habits, checking your insurance needs, examining your taxes, and determining whether or not you need to rebalance your portfolio. I’m sure you could come up with a number of other areas that, on a personal level, will positively or negatively affect your financial life.  Check it all.

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. 

Whenever I speak to customers and investors at my conferences or while traveling I always seem to get the same sort of objections.  I am always telling people how I am no different than anyone else; I made money and I lost money, more than once.  The difference is….I learn from my mistakes and the next time I don’t make the same mistake. 

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. 

Enough is enough.  Credit is killing us…literally.  Now credit has been around forever and we should remember that the number one reason for credit is to make the lender rich.  I know I have written about some of this before but I can’t say it enough.  Credit is probably as much an addiction as anything.  People get so addicted to it they can’t control themselves.

I am not a doctor but I would imagine that the simple reason some people get so over extended is that they run their credit cards up and then the interest literally chokes them.  What happens is that people get depressed.  When that happens, some people will go out to the mall or wherever and buy something, anything that doesn’t matter.  That immediately makes these individuals feel better, at least until they get buyer’s remorse.  Shopping for clothes, electronics, cars or whatever, is normally associated with a good feeling, so the next time you feel down you end up going shopping to buy something to make yourself feel better.  There are two problems with this; I doubt that many of you pull out cash to purchase these items, and you no doubt use a credit card.  If you don’t pay it off at the end of the month, you start to get hit with interest which is usually so high that it is hard to ever get ahead.

Second, the purchases get bigger; you will ultimately have to spend more and more to feel better.  This is a losing proposition all the way around.  What we need to do is eliminate credit all together.  We need to start paying for our purchases outright.  Yes, credit cards are okay, but you must use them wisely and pay them off at the end of each month.  So what else do you need credit for?  Maybe for a car or a home.  You can always a buy a used car and save money.  You can develop a strategy concerning your home loan by paying off extra principal every month. My point is, if you use credit, you have to have a plan to pay it off and get it paid off as soon as possible.

Credit only exists for one reason and that is to make you a slave to it and make the lender rich.  Everyone in America should start taking conscious control of their outstanding debt and begin to eliminate it.  Let’s make the lending institutions suffer a little, let’s make them squirm when they wake up one morning and realize that we have all decide to take back control of our finances.  Remember that if you are saving money you are making money.

Start calling all your creditors and ask them for an interest rate reduction, don’t take no for an answer.  You may have to talk to several people but you will find one that can help you lower your interest rate.  Not everyone at the bank will even know that they can lower your interest rate but they can and they will, if you are persistent enough.

If you are skeptical just know this, in one of our worst financial times I can remember the banks are doing everything they can to make more money at our expenses, so much in fact that the president has to get Congress to put restrictions on what they can and can’t charge for.  The banks are adding new expenses and fees to our accounts, they are raising interest rates faster then we can pay our bills.  Why? Because they are greedy and want to make sure we don’t get off their credit “drug,” so to speak. our society has become credit junkies.  It’s time to quit and start living debt free.  As a nation, we are spenders…not savers.  This paradigm has shifted over the last 40 years.  And we are bigger spenders than our brothers in the East. Asia, for instance, saves much more than we do and that has a global affect on our economies.  With financial times as tough as they are now, people are realizing that saving is something we all have to get back to. 

Let’s do it debt free.