Most people use of tax-advantaged plans such as IRAs to save for retirement. These retirement accounts use mutual funds, stocks, and bonds as investment tools. These tools have no guarantee for investors. All funds placed into these tools may be lost.

When I ask people if they have ever considered any other investment vehicle, most aren’t aware of alternatives. Even if they are aware of them, most people think that traditional investment strategies are the only ones that are safe. I’ve already explained that traditional investment tools aren’t safe. Even if safety wasn’t an issue, there is another reason I don’t like those tools. I can’t control the investment results.

I believe wealth creation is a personal responsibility. Therefore, I believe investment results are a personal responsibility too.
When I consider an investment, I look at how much control I have over the management of that investment. I evaluate the investment. I consider the risk and rewards.

I can’t do this when I’m investing in large companies, governments, and banks.

I can do this when I’m investing in real estate and private companies, including those I control.

As I said in a previous post, I believe private lenders are a great source for consolidating debt. So, of course, I think private business is a great source for retirement investing.

Since most of the companies who handle IRAs want to see the money stay with them, they don’t give you the option of investing in private business. However, you can get around this and avoid paying tax penalty for early withdrawal by finding a bank or trust company that allows you to set up and manage a self-directed IRA.

Once the self-directed IRA is in place, you rollover the funds from your current retirement account into the self-directed IRA and invest as you please.

If you are investing in investment real estate or personal business, I recommend contacting a tax advisor for the best way to do this. However, in most cases, it may be as simple as setting up an LLC or Corporation and investing in that entity from your IRA.

I believe private investing and lending is a powerful tool to use in our current economic situation. It allows commerce to operate without funding those large organizations that refuse to be fiscally responsible.

In addition, by placing it into private business, it offers an extra layer of protection from a potential government plan to force you to do something foolish when you reach retirement age.

I’ll write about that in my next post.

By the way, if you don’t have a retirement account, you can still build wealth using this strategy. The retirement account may be helpful to avoid paying current year taxes. However, that may or may not be a good thing. I’ll explain that in my next post too.

Wealthy individuals often use creative financial strategies to accomplish goals. When these strategies cross legal boundaries, the media has a field day discussing the morality of creative financial strategies and their danger to investors. However, many of the common, everyday “legal” strategies are just as creative as the illegal ones and, in my opinion, just as dangerous.

For example, many people use of tax-advantaged retirements plans such as IRAs. This system doesn’t work as intended for employees planning for retirement. Retirement accounts use mutual funds, stocks, and bonds as investment tools. These tools have no guarantee for investors. Most of these investments have lost value in the past several years. The truth is that all funds placed into these investments may be lost.

In spite of this, America’s employees continue to put retirement funds into these accounts.

I scratch my head at their logic but I understand why most people defy sound financial advice and continue to throw “good money after bad.” They’ve been programmed to do so.

Banks and investment firms invest millions of dollars in advertising to influence investment decisions. Well-meaning teachers and parents teach us to “save for a rainy day.”

Financial “experts” such as insurance agents, investment brokers, government officials, bank officers, and Certified Financial Planners (CFPs) advise to save for the long term and watch your money grow.

These firms, banks, and agencies have a vested interest in retirement funds. They use them as the lifeblood of their businesses. Therefore, they do not have to be profitable. (Think about it. Would it be easier to manage your finances if you had an influx of other people’s retirement funds into your bank account on a regular basis?)

The banks, businesses, and governments you save your money with use that money to run their organizations. They have no obligation to make money for you and there is no guarantee you will ever see your money in the future. This is by design.

Retirement accounts including Social Security, IRA’s, 401(k)s, Roths, and similar vehicles were dreamed up by large organizations to create funding for their organizations. The Federal Government uses Social Security taxes to fund other government programs. Corporations use stock investments, including mutual funds, to fund their business ventures. Governments at all levels use bond investments to fund their outrageous spending habits.

These strategies are legal because it is in the government’s financial interest to make them legal. That doesn’t mean they are safe for investors. The reason is obvious. The governments and businesses manage those funds to benefit governments and businesses. If these actions benefit investors, that’s a bonus; not a priority.

While it may have worked for employees to invest in these tools in the past, I believe it is time to move past this strategy and into something new. It is time to take full responsibility for all investing, including retirement investing. Those who don’t may soon find themselves with a retirement account emptied by someone else’s financial interests and mismanagement.

I’ll write about what I believe is a better strategy in my next post.

My experience is that private lenders are a wonderful source of capital, especially in today’s economy.

Who are private lenders? They are individuals who have a cash account receiving a miniscule return on investment if it is making anything at all!

They would like to receive a guaranteed return on investment so they don’t put their money into the stock market. Usually, they have their money in a bank earning less than one percent interest.

They carefully look for other places to put their funds.

We have used private lenders to purchase a house, fund a business, and consolidate debt. In addition, we have been private lenders to help other people purchase homes, cars, and business.

The key to successfully using private lenders is to show them you are interested in their financial well-being.

Zig Ziglar said, “You can always get what you want in life if you’re willing to help enough other people get what they want.”

This applies to working with private lenders as well. Private lenders want a guaranteed return on investment. They want to know the borrower has a plan to pay back the money.

For example, when I approach a private lender for debt consolidation, I show them my complete financial situation, including a copy of my latest credit report. I express my Desire to be debt free and show them my plan. I explain that their loan will help me accelerate a plan that is already working. I show them how I have the cash flow to make the payments to them. I offer them an interest rate that is significantly more than what they are earning currently. If a private lender has money in an account paying .75 percent, they are grateful to earn 5%.

That may sound like a lot of work to you. However, any lending institution asks for the same thing. The difference is that I’m volunteering the information rather than waiting for the lender to require it. In addition, I’m showing the potential lender how this will help them.

If you’re thinking, “That’s OK. I’ll just stick with the regular way of getting financing. It is tried, true, and tested,” I encourage you to read my next post when I explain the real motivation behind the traditional financial tools we use today, including retirement plans. There, you will discover exactly why banks, governments, and large business are so interested in your “saving for a rainy day.”

“Matt, this is the way I stay motivated to make money: I run up huge amounts of debt and then, I figure out how to pay it.”

I thought my client was kidding the first time he told me this. However, after doing his accounting for several years, I discovered that was his philosophy; and he was good at it. He repeatedly ran up tens of thousands of dollars of debt and then, made the money to pay it.

I once asked him why he didn’t reverse the order. His answer surprised me. “I’m not motivated to make money unless I have pressure on me.”

I won’t recommend my client’s strategy as a path to wealth because he often created bad debt as opposed to good debt. However, I did learn something from him about how to pay off debt.

The first lesson is that all debt is honorable debt. In other words, if I willingly agree to take on the debt, I need to find a way to pay it.

My clients often ask me about bankruptcy. I never recommend it. My lack of recommendation has nothing to do with whether or not bankruptcy relieves the pressure of debt payments or removes the debt. It is a spiritual recommendation.

In most cases, the motivation behind bankruptcy is not to pay as previously agreed. This motivation hinders an individual’s ability to create wealth. In addition, because abundance is a normal part of nature, the bankruptcy process blocks the flow of abundance. This creates significant and dramatic challenges. (See my Living the Southwest Lifestyle information on The Law of Abundance for more information.)

Once I establish that all debt is honorable debt, my plan for paying debt is simple.

1. List my debts, including the monthly minimum payment amount.
2. Pay the minimum on each one.
3. Pay extra funds on the debt with the smallest balance until it is paid.
4. Do the same with the next smallest balance.

When I share this plan, I’m always asked, “Shouldn’t I pay off the debt with the highest interest rate first?”

That is one option. However, I don’t use it. Instead, I find another lending source for those loans. There are several options for this.

1. Contact the lender and attempt to renegotiate to a lower rater
2. Open a credit card account at a lower interest rate and transfer the balance due.
3. Pursue other funding sources, including private lenders

My experience is that private lenders are a wonderful source of capital, especially in today’s economy. I’ll write more about this strategy in my next post.

I believe that thriving in our current financial environment requires us to watch trends, understand them, and respond accordingly.

One of the current trends is the shrinking of the middle class. By middle class, I mean those who are neither wealthy nor poor. Today, the number of wealthy people is increasing and the number of poor people is increasing. The number of middle class people is shrinking.

I may write about the factors causing this at another time. For the purposes of today’s post, let’s just recognize this trend and determine which class we Desire to join. Since I teach and write about the Law of Abundance in Living the Southwest Lifestyle material, our family decided to become wealthy.

Once we made that choice, the next step was to do what wealthy people do to create that wealth.

This is where good debt may play a role. It certainly has for us.

As I wrote in my last post, we first learned about good debt (debt that makes money) in the late 1990s. We used it to acquire businesses, real estate, and other assets. We amassed seven digits in debt.

On the surface, this may appear foolish. However, because of that debt, we increased our income one thousand percent.

I realize these numbers sound too good to be true so this post includes two examples of how we used good debt to increase our income during 2009.

We were able to acquire a small piece of real estate for no down payment and a monthly payment of $320. We had to pay $2000 to repair the plumbing and do some other minor repairs. We easily sold the property within 6 weeks. We received a $5000 down payment and now receive a $500 a month payment. Yes, we increased our debt. However, we made $3000 in the short term and make approximately $200 per month each month afterwards.

We were able to acquire 120 hours of college level training for one of our businesses that immediately increased our revenue $300 per month. This training was expensive, more than $20,000. However, we were able to acquire funding for this training by refinancing a business loan we already had in place that only increased our monthly payment by $100. The additional revenue more than covers the additional monthly payment. Now, a year after the training, the monthly revenue for this part of the business has almost tripled and it continues to grow.

We recently determined we have enough revenue to support the lifestyle we Desire. Our next step is to pay off the debt quickly. As the debt payments exit our budget, we enjoy prosperity and generosity at unprecedented levels.

I’ll explain some steps to doing that in my next post.

I grew up without gaining much understanding of debt. I knew my parents used it to buy our house. However, I didn’t understand it.

I had my first personal experience with debt when I took out a couple of small loans to help with college.

I started paying on those after graduation. That same year, my church taught me that debt was evil so I purposed to pay everything off quickly and I did so.

When someone asked to borrow money, I used it as an opportunity to demonstrate gifts were better than loans and, if I felt inclined to help, I gave the money instead of loaning it.

When it came time for Sheri and me to purchase our house, we wrestled with the idea of debt. After weighing all the options, we plunged into a mortgage.

We worked furiously to pay off a 15-year mortgage in less than ten years and were completely debt free when we learned the concept of good debt versus bad debt.

Good debt makes money. Bad debt costs money.

We went on a whirlwind tour of accumulating good debt by investing in real estate and in our own businesses.

After ten years, a dozen real estate investments, two business failures, and three business successes, we had one million dollars of good debt, along with 1.25 million dollars of assets.

The seven-digit debt was intimidating, especially when we considered that part of it was the result of two failed businesses.

Initially, the emotions of the situation were tough. We watched as some of our former business partners declared bankruptcy. We decided to take a different road.

We reminded ourselves that the education process is expensive whether it is college or real life. The important thing is to learn and improve.

We reminded ourselves that acquiring debt indicates confidence in the future. This is not a “hope for the best” confidence. It is confidence that we will create and establish a way to use the debt to create wealth.

Because of this experience, we were able to refine the Living the Southwest Lifestyle teaching of The Law of Abundance. We learned that everything reproduces through multiplication over time to produce resources sufficient for all Desires.

We saw that we need certain skills to manage this law to our benefit. This includes increasing capacity by handling larger and larger sums of money.

We saw that if we are resistant to handling large amounts of money, we take on debt to learn the skill. Once the debt is there, we have to determine our response. We can declare bankruptcy, skip the responsibility of repaying the debt, and repeat the story-loop or we can repay the debt.

We chose to repay the debt. We began to create resources through businesses and investments.

We determined how to manage the repayment of the debt so we could do it quickly.

I will write about those techniques in my next post.

My life is a series of changes.

I started preparing taxes because I had to fill out my parents tax returns so I could get financial aid and go to college.

I did taxes for friends while pursuing my degree in music education. I got my degree and taught private music lessons for ten years while doing my taxes and taxes for friends.

One day, I realized I could make more money preparing taxes than teaching music lessons so I changed professions.

I did that for almost ten years when one of my clients offered me a marketing job for his business. His sales doubled from one million to two million during my first year on the job. He didn’t want to continue growing at that rate so we formed a company I could run without him.

I changed and changed and changed. I learned marketing skills. I recognized the power of the internet. I watched trends.

I got my license to sell stocks, bonds, and mutual funds, did that for a couple for years and realized that is no place to put my money or anybody’s money so I got out and jumped into real estate. I learned how to make money there and started a couple other businesses. I kept changing, kept learning.

In early 2009, it all came together into Massive Action for our family.

I finished my book and decided to pursue my passion of coaching.

We attended training so my sons could expand their mobile detailing business.

We set up marketing systems on the internet so that people could easily contact us.

We found competitors we could collaborate with and mutually benefit.

We discovered opportunity within the current economy. I did scores of tax returns for people to get the homebuyer’s tax credit.

I’m not a fan of government healthcare. However, there is great opportunity for me there because the IRS will enforce the insurance regulations and I’m an expert on dealing with the IRS. I talk to them at least once a week.

OH – and if the IRS tightens the regulations on tax preparers and makes it tough for me to continue doing what I do, I have a backup plan, I’ll quit tax preparation and expand the business and life coaching part of my business.

My point is this. You probably won’t be able to do business or work a job as you’re doing today and maintain the lifestyle you’re currently living. If you are going to thrive in today’s culture, you must know what is going on in it and be ready and willing to change to take advantage of those changes. 

For me, one of the major changes has to do with the perspective of money, including debt.

I write about those changes in my next post.

Napoleon Hill, author of Think and Grow Rich says that “Every adversity, every failure, every heartache carries with it the seed on an equal or greater benefit.”

I agree completely. I’ve built my life on the thought that every time I see failure, it is a clue to search for the opportunity within it. I can always find it.

Now is the time for our society to find the opportunity within the challenge we face. The first step requires each person to take 100% responsibility for the results in his life.

We can no longer afford to blame other people or other situations for our challenges. These challenges come to us at this time in history because we are ready for them.

With this responsibility fully in hand, the next step is to ponder on the question “How can I?”

Our family doesn’t have many rules about behavior and speech. We make agreements and live within them. However, we have one hard and fast rule about language. We don’t allow the use of the word “can’t.” We may say, “won’t.”  However, “can’t” isn’t allowed.

We believe that any person can do anything by answering the question “How can I?”

For example, in January 2009, our family was 8 weeks behind with some of our bills and we were carrying over a million dollars in debt.

We had a family meeting to discuss the situation and make a plan. Were we going to sell our dream house or take massive action to make significant money?

We made a decision to take massive action. We said “How can we (I) make significant money?” We put together a marketing plan. We cut out the things that didn’t make money. We decided to work only in areas that produce significant revenue. Five months after we made that decision, we were no longer 8 weeks behind on our bills. We were 2 weeks ahead of schedule.

At that point, we once again asked “How can we (I) improve this system?” We made other decisions, we decided to expand one business and close another. We gained clarity on what we were doing. We easily saw what was working and what wasn’t working.

In other words, we CHANGED what we were doing! That may seem remarkable. It is not. Change is the necessity of life. Our five senses work off the principle of change. Your eyes naturally follow motion. Your nose automatically picks up new scents and forgets old ones.

If you eat the same food every day, it becomes tasteless. If you see the same thing every day, you quit noticing it. If you hear the same thing over and over, you quit hearing it.

Change is how we live. It is how we thrive.

I’ll tell you more in my next post.

Solutions to any problem require change. If we keep doing what we’re doing, we’ll keep experience what we’re experiencing. There are changes needed for our current situation.

These changes include the idea that current government and religious structures are no longer necessary. These institutions no longer serve our society. They no longer work. In fact, they never worked as intended and they are now broken beyond repair.

For example, the policy of United States Federal Government produces an environment that rewards inefficiency and curtails personal initiative. In January 2010, USA Today reported that 12% of the American population (37 million out of 310 million) receive government financial assistance in the form of welfare or food stamps. Government websites report that another 2 million Americans work for the Federal Government and that does NOT include the 2.4 million serving in the military, or the 8 million working for the United States Post Office.

According to the US Census Bureau, another 19 million work for state and local government.

That means at least 68.4 million people or 22% of the population is dependent upon the government for financial provision. I say “at least” because my numbers do not include Social Security recipients and retired government and military employees.

In addition, many religious and tax-exempt entities receive direct or indirect support from government grants. These fund ministries, charities, and universities and provide jobs for several million people.

It doesn’t take much to realize that most of these jobs are not income producing jobs. Therefore, they are inefficient. They create an atmosphere of entitlement without responsibility for results.

The only way to continue funding these jobs is to increase taxes. As taxes are increased, the greatest income producers figure out ways to avoid the taxes. If the taxes are not collected, the jobs are not fundable and the government runs out of cash.

This causes governments to take radical steps like reducing all employees to minimum wages like California may do or quit paying bills altogether like Illinois.

My aim in providing this information isn’t to cause a panic. It is to observe what is happening in our world, anticipate what may happen in the near future, and provide a plan that brings Peace of Mind.

As I said in my last post, in his book, The Tipping Point, Malcolm Gladwell tells us there are levels at which the momentum for societal change becomes unstoppable. His studies show that it only takes about 10% of the population to teach the “tipping point.”

My observation is that we have surpassed that level for change within our current society. All we need now are catalysts to cause this change. I believe the difficulties facing government and religion are these catalysts.

It is not too far a leap to believe that this change may be what is built into the Mayan calendars and Biblical prophecies that point to 2012 as a key time for change, especially within government and religious institutions.

Since this time is just around the corner, I believe the message I have is vital for each of us to survive through this anticipated change. In fact, I believe we can do more than survive. We can thrive.

I’ll tell you the first step in my next post.

As promised, in today’s post, I provide a radical, relevant, and real solution.

Downsize all government agencies with the goal of eliminating most of them. This solution includes greatly reducing taxes. It includes privatizing government and religious services, allowing the market place to regulate itself.

I admit this is not an original idea.

One country has operated this way for more than 60. Costa Rica abolished its military in 1949. Today, the county thrives by using funds previously allocated for military spending for humanitarian purposes.

Former Beatle, John Lennon, wrote and sang about the idea in his hit “Imagine”. Lennon recognized the basic truth that religions and government categorize people. This magnifies our differences so that we don’t recognize the concept of unity.

Since religion and government do the categorization that lead to disunity, Lennon reasoned that if we remove them, we take a step closer to unity.

If I’m not categorized as American, Mexican, Christian, Arab, Jewish, Moslem, Black, or White, I have fewer reasons to disagree with other people and I can more easily remember that we are all one.

This reasoning is consistent with the teachings of great thinkers and philosophers throughout the ages. The message of unity permeates the teachings of Jesus, Buddha, and native tribes. The Butterfly Effect demonstrates our interconnectedness by showing the impact one little change by one little insect has on the entire world.

Each person I have talked to about this subject innately understands the truth of unity.

My observations tell me we are on the threshold of a major societal change.

Consider the popularity and staying power of Mr. Lennon’s song. Originally released in 1971, “Imagine” continues to receive awards and attention. In 1999, BMI named it one of the top 100 most-performed songs of the 20th century. In 2004, it ranked #3 on Rolling Stone’s list of the 500 Greatest Songs of All Time. In January 2005, the Canadian Broadcasting Corporation named “Imagine” the greatest song in the past 100 years as voted by listeners.

Former US President Jimmy Carter said, “In many countries around the world—my wife and I have visited about 125 countries—you hear John Lennon’s song ‘Imagine’ used almost equally with national anthems.”

Obviously, the song’s message resonates with a significant part of the world population.

Malcolm Gladwell , in his book, The Tipping Point, tells us there are levels at which the momentum for societal change becomes unstoppable. Surprisingly, this number is smaller than we might anticipate. His studies show that it only takes about 10% of the population to teach the “tipping point.”

My observation is that we have surpassed that level for change within our current society. All we need now are catalysts to cause this change. I believe the difficulties facing government and religion are these catalysts.

I’ll continue these thoughts in my next post.