First things first. Don’t panic. Sit back, take a deep breath, and let’s take a
look at where you are right now so we can figure the best way to get to where you
want to be. Okay? Let’s start with your budget. I know that most of you don’t have
one so maybe it is time to see where all that money is going and that is what a
budget will tell you. I believe that everything boils down to “cash flow”. Is it
flowing to you or is most of it flowing into some else’s wallet? Once you know that,
you can then start making changes to improve your cash flow.
Under this category are credit cards.
CREDIT CARDS: Unless your picture is hanging up in a post office, your rate should
not be over 12%. If it is you have not called them and demanded a reduction. 65% of
those who do get a reduction. Make a list of all of your cards including the amount
you owe, credit limit, current interest rate, and the “800 number” to call them. Now
see what cards are “costing” you the most because of the high interest charges.
Armed with that info, it is time to make some calls. Once this is finished, you
might need to transfer those costly ones to lower rate cards.
Now it is time to take a good look at your debt.
DEBT: Not just a “four-letter” word. You need to understand debt and how to work
with it since you will be dealing with it for the rest of your life. Don’t be in
such a hurry to become “debt-free’ since most that are also “asset-free” as well.
Analyze your debt and see if you can re-structure it to improve cash flow and save
money too.
MORTGAGES. The best bargain! The cheapest money you will ever buy. Take full
advantage. Don’t be in such a hurry to give the bank all of the money so they can
lend it back to you at a higher rate. One of the few tax deductions that we still
have available.
Time to tackle a big one; your bank.
BANKS: Banks are not your friend! Robin Hood stole from the rich to give to the
poor. Banks steal from everyone and keep it for themselves. No matter how much
money you have being held as ransom at your bank, you are still paying more in fees
than they are paying you in interest. You need to sit down and have a long talk with
your bank and tell them that this mis-treatment is no longer acceptable. If
necessary, you may need to go shopping to see which bank really wants your business.
Another area under banks is looking at your cash.
CASH: Is your cash working as hard for you as you work to get it?
Checking accounts. Do not keep a large balance in your checking accounts. Money is
lazy enough. It will just rot there.
Savings accounts. Almost as bad.
CD’s. Almost as bad. A little more interest but your money is tied up and if you
need it you lose most of the interest.
Money markets. The best place to keep “short-term” cash but not at your local bank.
You would be better off moving it to a money market sponsored by a mutual fund.
Ready to deal with a very complicated issue?
INSURANCE: What about your coverage? Are you getting your money’s worth? Let’s
see.
Life insurance. Do you have “life” insurance or “death” insurance? Do you know the
difference?
Umbrella. Do you have an umbrella liability policy? You should ask your agent why
you don’t.
Deductibles. Use them to lower your premium outlay. With a low deductible on your
auto policies you would never turn in a claim for a minor fender-bender, so why have
a low deductible? You know if you do they will either increase your premium or drop
you. You will save enough in a few years to cover the difference when you do have a
claim.
Package policies. These can save you money and also give you expanded coverage. Ask
your agent for a summary of your coverages listing what they are for, premium and
mode and when due, deductibles, and if it is deductible as a business expense.
Cull. Review at least every 2 years and get rid of what you don’t need.
This will help you make sure you are getting your money’s worth.
Do you have any retirement plans?
RETIREMENT PLANS: Are you sure that you have the “best” plan for you? Do you know
all the options that are available to you? Are you happy with what your plan earned
last year for you? Are you happy with the fees you are paying for your plan? Are
you happy putting away money for ALL of your employees, including the ones that you
wish were “x” employees? Have you taken a good look at what a non-qualified plan can
do for you? Maybe it is time that you did.
EDUCATIONAL FUNDING: Got a 529 Plan? Happy with it? Do you understand what
happens if your child decides not to go to college? Have you considered putting your
child on the payroll? You do have alternatives. Time to explore them all. Time to
make sure you are getting your money’s worth.
EMPLOYEES: You have more employees than you think. Everyone you write a check to
is an employee and needs to be evaluated every year. You need to decide whether to
“re-hire” or fire. By the way, your patients do that every time they come in to see
you. If they don’t come back, they fired you.
You have a lot to do but you need to totally understand what is going on in your
financial world.
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