Stay Broke Not Poor

Stay broke! You heard me, stay broke but not poor. What is the difference? Broke is a temporary situation. Broke people have money they just misuse it. Poor is being destitute or lacking sufficient resources. I got this from Grant Cardone’s, The Millionaire Booklet. It also aligns with Dave Ramsey’s concept of naming every dollar.

This is about increasing cash flow and wealth building. Staying broke is a financial strategy to help you reach financial freedom. What does staying broke not poor really mean? First, it means having a monthly cashflow plan (budget). Second, you are practicing delayed gratification. Third, reinvesting your money into yourself and your business.

This is for wealth builders. Those entrepreneurs who are not playing average. The average business owner in the United states makes less $25,000 per year. 91% of all small businesses earn less than $250,000 per year and 80% of entrepreneurs are failing within 18 months of start-up. Playing average sucks. So don’t play average.

Perfect Examples

You see examples of entertainers and athletes who get paid big and a few years later are filing bankruptcy. There is no shortage of stories of athletes or entertainers that have filed bankruptcy or have became broke after a big payday. Top draft picks start buying toys, living lavishly, or make bad business decisions. Entertainers throw big parties, “buy” the bar, and get into debt buying things they can’t afford.

You check out Wikipedia for the statistics of famous people going broke or filing bankruptcy. These are prime examples of people who got big paychecks but did not stay broke. Athletes have a short career. There is a short window for them to produce a huge amount of income. Entertainers have to stay relevant in their industry before the well runs dry. You, as an entrepreneur, have the ability to continue to produce.

Stay Broke

Understand that I am not telling you to cramp your current lifestyle. Staying broke requires discipline. It is making sure that you focus 95% of your time building your biggest assets. Which is you and your business. Grow faster by staying on a budget and reinvesting in your business.

People underestimate how long it takes to be successful in generating positive cashflow. They do not prepare for the peaks and valleys that are going to occur. Furthermore they are not ready for the lean times or when a part of their business fails. But staying broke can help you weather the storm that comes.

5.5 Aspects of Staying Broke

1.Cashflow Plan – In order to stay broke you have to know where your money is going. Everyone needs a cashflow plan. Know where every dollar is going. Give every cent an assignment. Money that doesn’t have an assignment tends to get lost. Tracking your dollars keeps you out of financial trouble. Money that hangs around with no purpose gets spent, wasted, or blown.

2. Delayed Gratification – I made this mistake often. I would spend my bonuses and every huge increase. I was naive to think it will always come in. I didn’t save or reinvest into my business. Thus I became broke and homeless. “Ballin” is stupid. Especially when you don’t have the assets to support it. Leave the flashiness behind. Forget impressing people and being “turnt up”.

That big client you just landed doesn’t signal it’s time to spend and get stupid with the new increase. Delay that impulse. Put that money back into your business to create more revenue. Go land some more big clients. Delay indulgence now so you can indulge later when you are financial free.

3. Increase Income – Income is king and this is the only thing that matters. Remember, we are not playing average. Businesses succeed when revenue increases. Incremental increase is key. Going from $4k per month to $4 million over night is nearly impossible. Look to double your income over the next several months. Always look to increase revenue. More sales = success.

4. Sacred Accounts – Put all that extra income into Sacred Accounts. When something is sacred you do not touch it. You don’t violated it. This money is for future use to help create more assets. I have a real estate account which I haven’t touched in years. I put a portion of my income into it every month. All of my extra cash goes into that account and I don’t touch it.

You are saving to invest. Not saving to save. This money is designated to a future purpose to create more income. It could be a second business, real estate, or something else that will increase your income flows. The key is… you are not just saving. You are studying while you are saving and learning about your next investment.

Understand it could be years before you pull the trigger. I have saved in my real estate account for 2 years. I am studying and active in the areas I want to invest in. Study while you save.

5. Reinvest Your Profits – A part goes to your sacred accounts. Reinvest the rest after all your necessities are taken care of. Put that the money back into your business and yourself. Need to invest in coaching to get better? Then do it.

5.5 These Things Take Time – Idea + Hard Work x Time + Discipline = Success. Are you committed to getting rich? How serious are you about creating wealth? I don’t know how long it will take you to produce a six figure income. I do know it takes work, time, discipline, and access to capital. My mentor went from welfare to earning $10 million dollars in less than 3 years.

Game Time

Success takes time. Stay broke and continue to grind. The choice to stay broke is yours. You are voluntarily choosing to build your business so you can be financially free later. “Pay the price now so you can pay the any price later”.-Grant Cardone

Charles Fitzgerald Butler, is an author, entrepreneur, and expert in internet marketing. Charles has a passion for helping people start and run successful home businesses. You can partner with Charles and start building multiple income streams from your home. Charles’ goal is to help all who partner with him achieve cash flow and profits from their business.

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Trading Trilogy-3: Money Management

30 feet-the old Kilo Class submarine dives deeper onwards to 100 feet-200 feet-400 feet-600 feet-800 feet-an explosion occurs, maybe the batteries were faulty? The submariner notices the creaking sound of the extremely high pressure of water against the submarine hull. Water rushes in. Automatically the high-tech systems of the submarine seal the flooded chamber. Luckily the engine room is intact, and the submarine painfully tries to resurface from the depths of the Pacific Ocean. The remaining compartments are dry, and the incumbents are safe.

You must be wondering whether this is a prelude to a thriller short story, or an article on money management, in trading. This had to be made dramatic because your money, that is, your capital is like blood in your body. Your body needs blood to survive; in the trading scenario, your account needs money for you to survive in trading, so treat it very carefully, like a mother lioness takes care of her cubs, without letting go for a moment.

Like a submarine, you’ve got to divide your capital into equal compartments, or parts, so that if one compartment gets flooded, that is, if one trade goes bad, your chances of recovery will be good. Remember, however good you or your method may be, the markets are not always conducive to trading. If you get shortchanged multiple times in a short period, step back, analyse whether the problem is with you, and your method, or the markets in general. If it is with you, course correct, trade with smaller amounts till you get the confidence back, or stay out till you get in sync with the markets. If the markets are finicky, and non-tradeable, stay out till some semblance of sanity returns, then re-enter.

Do not trade without stop-losses;most experts advocate putting them in the system, some traders write them on paper, and execute the trades manually. Do not keep a position open, if accessibility to the trading terminal is an issue.

It’s your take, what methodology you would like to follow. Keep the stop-loss to not more than 5% on every trade;when your account size grows, limit it to 1% to 2%. You have to live to trade another day. Trade with the amount you are comfortable with;do not try to emulate others. It has been noted that when one crosses one’s personal threshold, the subconscious mind tries to sabotage the effort, because it is uncomfortable with larger than normal amounts allocated to trading. The Peter Principle comes into play, that is, the person rises to the level of his/her incompetence. If it so happens, cut down on the account size, and trade similar sizes till you get into the flow.

Always keep a record of the amount left after every trade. It is a barometer as to how you are doing as a trader. Ignore this at your own peril. A rising equity curve suggests that you are on the right track to becoming a successful trader. Remember, money flow in trading equals blood flow in the human body. Your survival as a trader finally depends on it, and is not to be taken lightly.

I would finally like to acknowledge Dr Alexander Elder, the legendary teacher of traders who has written books which delve into the various aspects of trading-the mind, the method, and the money management, as he puts it.

Afterlude: The old submariner had done well for himself. After the miraculous escape from the Kilo Class submarine, he retired from the Soviet Navy and went into trading with his meagre retirement benefits. He decided that if he were to grow his capital, he had to learn the lessons from his previous vocation. He divided his savings into two parts: 80% he put into fixed income instruments; he traded with the remaining 20%. That 20% he divided into 10 parts like the compartments of his submarine. He followed Dr Elder’s methodology-he risked no more than 2% of his capital on a single trade, and if he lost 6% of that compartment(trade), he would stop trading for that month. His account grew gradually, so did his peace of mind. He would no longer be among the traders, whose account equity lay deep down, caressing the dark depths of the Pacific Ocean.

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Eight Complex Inheritance Problems

When there’s a death in the family it often brings up conflict. People can feel jilted when they didn’t get what they wanted or expected out of the will. And often this leads to complex inheritance fights that rarely end up going the way anyone had hoped they would go when everything began. So here are eight complex family situations that can make dealing with inheritance difficult.

1. Sibling Rivalry

When parents die, lots of tension can arise between siblings – especially if they weren’t very close to begin with. But even when there’s a good relationship there can often be hurt feelings during the distribution of an inheritance. Oftentimes people can’t let bygones be bygones, and past wrongdoings end up coming into play and causing an even bigger rift.

Or sometimes, it’s the expectation that one sibling has to pay more for the cost of the funeral expenses because other family members are unable to contribute. Then when it comes time for inheritance, some think they are more deserving of the piece of the pie than others.

If you hire a fiduciary to be the trustee, this can help keep everything equal. This person has no stake in the family issues whatsoever and can mitigate the effects of the estate.

2. Different Socio-Economic Backgrounds

When you have heirs of the inheritance who come from all different socio-economic backgrounds, you can often feel that one should get more than another person because they are more in need. And the one who has greater needs gets angry at the one with more substantial means because they don’t understand the situation.

Even the most tight-knit families might not be able to survive the complexities of a financial inheritance. A wealthier heir might want to keep something like a house, whereas other heirs might want to sell for quick cash.

This can be avoided if there are clear instructions in a will that states how the property is to be divided and managed (i.e. sold and profits split equally).

3. Co-Trustees

It’s hard for more than one person to make decisions together in many cases, but especially in the case of splitting up a loved one’s estate. Quick decisions must be made when it comes to distributing an estate.

It’s much better if there’s only one executor of the will. You might not want to seem like you’re taking preference over someone, especially parents who have more than one child, but in the end it’s just better to have one trustee appointed. Giving specific instructions for that person to follow might help ease some of the other blows mentioned in this piece.

4. Dependency or Mental Illness

When a beneficiary has some sort of dependency or mental illness, this often causes lots of strife.

The best that can be done for substance abuse concerns, is to have provisions in the will that the beneficiary has to be clean and sober for a certain amount of time to receive the claim. For mental illness, a trust can be established that allows the beneficiary to receive trust disbursements, but still be able to qualify for government assistance.

5. Elder Abuse

As someone grows older, their caretaker can have a lot of influence over a person and can convince them to do things. It’s important for family to be as involved as possible in the care and as equally as possible to avoid any undue influence.

6. Estrangement

Disinheritance is a common thing. And it might be truly warranted, like in the case of an heir who abused the deceased in some way. In this case a disinheritance will hold up in court, but anyone who’s left out of the will that truly believes they are entitled to an inheritance is going to contest it. So it’s important that you don’t disinherit someone just because you’re mad at him or her.

Things get even more complex when you have blended families. The law only recognizes certain people as heirs so it’s important that you make sure you have an updated trust. You should have your trust reviewed every 5-7 years to make sure you take into account any new or changing laws that might apply after you die.

7. Marriage/Divorce

Marriage and divorce is always complex, but when you have exes and new spouses or you get married late in life, perhaps to someone younger, there is often a lot of questions about who should receive the inheritance. And heirs often resent a new spouse when you get married late in life.

It’s important, especially in this case, to have a clear trust established with instructions of who is to receive what. This will help avoid some of the conflict that could arise.

8. Advancements of Inheritance

Sometimes people will give part of their heir’s inheritance as start-up funds for a new business or something similar. But then later there are hard feelings when going through probate and it’s discovered that a portion of the inheritance was already given out. The gift should be notated in the trust if it was an advance of the inheritance so it doesn’t appear that someone is double dipping on the inheritance.

Hopefully preparing in advance and giving clear instructions of how an inheritance should be distributed will keep the fights at bay after your death, at least over inheritance. Money does do strange things to people, so you never know what will happen.

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