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

Many retailers attribute 25 to 40% of their annual sales to “Black Friday” (the Friday after Thanksgiving), which is normally a fairly solid gauge as to what the rest of the holiday shopping season will look like. In addition to “Black Friday,” we now recognize the following Monday as “Cyber Monday,” as the beginning of the online shopping season. For many retailers that are already close to ruin, the 2009 holiday shopping season is very likely to tell the story. It could be the final blow for a number of the nation’s retailers and mall operators, already feeling the negative influence of a diminished year for retail sales.

As I shared with you recently, the national spending habits of American consumers have certainly been altered over the past 18 months and the traditional attitudes that the buying public had in the past are forever changed. This means that the nation’s retailers will also have to make some changes in order to cater to the newly formed buying habits of their customers. The plans at the retail centers for this holiday season appear to be centered on traditional values and bringing family together since that appears to be the major desire of the typical shopper this year. Smaller holiday gift giving and more time focused on the important things in life – time with family.

Stores are still hurting from last year’s’ holiday shopping season, which economists say was the weakest buying period since 1967, when the Commerce Department started collecting such data. The feeling is this year could be worse. Consumers with worries about being laid off or reduced hours at work plus lower credit lines are contributing to the dwindling consumer interest in spending this holiday season.

The retail centers will be displaying more things like gingerbread houses while using the traditional red, green and gold holiday colors to touch the current mood of today’s consumer. We’re all looking back when life was easier, safer, and perhaps even happier; those are the values that will certainly attract this year’s holiday buyers.

And according to a recent survey by Information Resources Inc (IRI), about 77 percent of American holiday shoppers said that while they didn’t spend much on the holidays last year they are more willing to open their wallets a little wider this year. The respondents added that they will continue to search for discounts whenever possible. According to IRI “functional gifts such as iPods, Blu-ray players for less than $99, Smartphone’s and clothes such as sweaters and jackets will likely top gift lists.”

There are indicators that suggest the U.S. economy may be coming to the end of its worst days, many consumers remain concerned by limited credit, high unemployment and home foreclosures. The new American consumer continues to save at historically high levels while paying their down debt. Just examining those concerns imply that we could experience yet another challenging holiday season for the nation’s retailers.

The ability to really enjoy your life doesn’t take an infinite amount of money but it does take a desire to develop a list of goals and the capacity to apply your personal drive to guide your daily existence.  There are many people we use as role models.  I prefer to look at several people and take a little expertise from each.  I have definitely learned how to apply some of these important ethical values from my relatives and some from people I’ve become acquainted with through my business or personal life.  

What you do in your professional life helps pay the bills but you should also allow it to feed your spirit.  The key thing I’ve learned over the years is to push myself.  It’s very important to make an effort to achieve the unimaginable and solve problems that are more complex than you ever expected you could successfully complete.  That adage has served me well and has seriously helped me to recognize the balance of my life and put it into the proper perspective every day.  What about you?  Have you chosen what it is you’d like to accomplish in your life?  There’s no time like the present to come to some conclusions. 

All of us can accomplish our innermost desires if we first define our dreams and then go after them aggressively.  Ultimately it’s entirely up to each one of us to shape and develop a constructive pattern for our life.  There’s no right or wrong; there’s no black or white.  Occasionally you should try not focus so much on your abilities or on your resume.  Instead, center more on your passions.  Determine what it is you really love to do.  If you don’t have the knowledge you need to reach your objective, make it a major priority to begin filling the cracks and learn.  It’s all about education.   

There are plenty of different avenues to explore to get the information you need to succeed.  Call your local college or find out what training or educational opportunities your company offers.  Access to learning has never been easier.  Most of us actively use the Internet and that’s a great place to start.  You can actually sign up for online courses that you can accomplish at your own speed – right from your home.  The more you learn the easier it will be for you to adapt to new situations and increase your personal level of confidence.  During this rough economic period, lots of people are going back to class to earn an advanced degree or to take vocational courses to actually change careers.   

There’s no time like right now to start the process.  I know that making changes in your life can be very scary to some, but use the adrenalin to actively pursue the things your really want out of life.  Don’t be timid, don’t waste time.  Just do it.  Actively seek out others who share your passions and don’t lose sight of the dream.  But always remember; be thankful for what you already have in life.  Count your blessings daily and enjoy every moment of the ride.  There’s no place like the present to begin to experience a great deal of pleasure in your life’s journey, both on and off the job.

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.

Whether or not you are behind on your mortgage, you can ask your lender for a mortgage modification. Remember, if you are not behind on your mortgage you can still ask for a modification.  Rest assured you will be told that there is nothing they can do for you until you are late.  Do not fall into that trap!  I personally know many people that have gotten mortgage modifications after they were told they could not.  The lender told them they would have to be at least 90 days late.  I know for a fact they have never been late and had their balances lowered, the interest and/or payments lowered, forgiven or waived.  But you simply can’t take “no” for a answer

If you are late – same thing; don’t take “no” for an answer!  Just keep asking until you get the answer you are looking for.

Here is the first thing you need to do – whether you are late or not.  Call your lender and specifically ask for the Loss Mitigation department.  Again, don’t take “no” for an answer.  You may have to call multiple times, but you will find someone to answer the phone who actually cares and that can get you going in the direction you need.  What you will find out is that you will receive as many answers to the same questions as the number phone calls you make.

Once you get Loss Mitigation, let them know your situation.  Let them know whether you were laid off, fired, had a pay cut…whatever. You have to let them know your financial situation has changed from when you first purchased your home, including the fact that your home is probably worth 30 percent or less than when you initially bought it.  In fact you might even consider giving the keys back to the lender and just buy the house next door for 50 percent less.

I can tell you that the banks – all of them – need to cut deals to sell their real-estate owned and/or non-performing assets.  In fact, many of the banks are encouraged or even rewarded by the government for getting rid of their non-performing assets.  That translates into working deals out with you.

If the bank reworks your loan and makes it current, then the bank will be able to move that loan off their non-performing assets list.  They are very motivated to do this.  The longer the property takes to foreclose, the longer it takes the bank to free up the money they have tied up on the non-performing asset, thus they want to cut deals and modify loans more than ever before.  So don’t be the one reading this saying I already did what you are saying and was told “no.” If you are saying this, you will lose.  The banks are changing their minds daily.

After you have started the process with your lender, you can go to “Hope Now” online.  They may tell you that you cannot file with them, again don’t take “no” for an answer; insist that they do.  Hey, even if you get denied – so what.  I know people that have been denied numerous times by their bank and by the “Hope Now” program only to actually get approved many “no’s” later. And that goes for people that have never been late before.

Okay, this is especially for you former Countywide people out there.  I have heard that Bank of America is so far behind that they are suspending actions of foreclosures on their Countrywide loans until they get caught up.  Furthermore, I specifically know someone who has a loan with Countywide that is currently going through the modification program.  They were about 90 days late as of February and called Bank of America to request a mortgage modification; they also filed with “Hope Now.”  Here is what has happened so far.   Nothing!  I mean nothing!  Well, except they haven’t made a payment and their loan is current.  What the bank did was tack the past due payments of the loan to the backend and then made the loan current.  They then said that until they get caught up to review the modification request no payments would be due and that the loan would stay current. So each month they get a statement from the bank giving them the loan balance and showing that they are current with nothing owed.  It has been months since the modification request. If you have an old Countrywide loan, start making your calls now requesting a mortgage modification.

I hope this helps you and don’t forget you must have faith above all things.  Don’t give up or as my uncle says, “don’t take yourself out of the game, it always gets better and as long as you move the ball along, things will change.”

All my best –

James Dicks