Wednesday, January 20, 2010

Wealth and the Recession

Back in the day there used to be all these sites about Bill Gates and how much money he has.
The best information came from:

He has always hovered around the 50 Billion dollar mark, but in 1999 he was worth a whopping 89 Billion. To put 56 Billion dollars in perspective:

Lets compare his wealth to yours. Let’s say you are worth $70,000. Mr. Gates' worth is 800,000 times larger. Which means that if something costs $100,000 to you, to Bill it's as though it costs 12 cents. So for example, you might think a new Lamborghini Diablo would cost $250,000, but in Bill Gates dollars that's 31 cents. Can you believe that? A nice home in a rich town like Palo Alto, California? Two dollars. That nice mansion he's building estimated at 55 Million dollars? A more reasonable $63 to him. You might spend $50 on tickets, food and parking to take your date to see an NHL hockey game. Bill, on the other hand could buy the team for 50 Bill-bills. You might buy a plane ticket on a Boeing 747 for $1200 at full-fare coach. In Bill-bills, Mr. Gates could buy six 747s (Not tickets, the planes themselves). Two for him, two for Melinda and two for young Jennifer Katherine.

Now with big money comes even big losses. Here is how some people lost big this year.

Look at these staggering numbers:

Down 4.5 Billion
Rate of -$513,000 per hour!

Down $7 billion
Rate of -$800,000 per hour!

Down $8.2 Billion
Rate of -$940,000 per hour!

-$10 Billion
-$1.1 Million per hour!


Wednesday, January 13, 2010

It takes Money to Make Money

We always hear that it takes money to make money right? Well here is a perfect example, and another reason not to spend your money on CRAP. Let me just clarify the last point. There is a certain percentage of our population who can buy CRAP, but if you are not living on interest from investments, if you have any credit card balances that are not going to be paid off in the next 30 days, and if you are working a 9 to 5 then you are not a part of that small percentage.

Why? How come you can't buy CRAP? Because when opportunity knocks you have to be ready to greet it at the door, welcome it with open arms! Most of the time that means you need two things: Money and knowledge. You should be getting more and more knowledge everyday because it's FREE. Reading this blog is knowledge, the internet if full of free knowledge, so stock up. Money on the other hand is in short supply. I think when Christmas rolls around we forget what short supply really means. Just look at your credit card notice, these bastards are jacking your rate up to 29.99%! That’s short supply. It’s easier for me to date Halle Berry then it will be to get a business loan for the next two years so that means your own cash is extremely valuable right now.

Here is a great example why:
As you well know, I run a string of small businesses. Wash and Roll has been on it's last leg, a victim of local economy (located in Southfield, MI) and a victim of the recession. We have little to no operating capital. At the end of every month our account balance is zero to negative.

Well things that we have done last year are starting to pay off (something to remember: what you do today affects everyday of the rest of your life). So we recently got a contract, A huge contract by our standards. It’s a trucking company with enough rigs where I have to hire another person. Yeah baby!! We were and are elated. Everyone is excited, this is something that we have been waiting for and working for.

After the bottles are popped and the joy dies down I have to figure out how much will this new contract cost me?

That’s a weird question, but if you own a small business you know exactly why I ask this. Here’s why: The job is going to pay roughly $450 per week. Nice!! But here’s the rub, the job costs me $275 (in labor and supplies, so I have to spend $1100 every month. Plus we need a specialty piece of equipment that will cost about $600. So after the first month I'm out $1700.

But wait there’s more,

I send them the first monthly bill after 4 weeks of work, but they have net 60 Payment terms. That means that they pay 60 days after they receive the invoice. Ouch!! Translation: $1100 for two more months plus another $550 just in case the check is late.

So when I get the call I’m happy, but in the back of my mind I know that I’m out $4500 bucks – or $4450 to be exact! Money that I won’t see back for some time. I will get it back, but at the rate of $175 per week starting in 90 days.

Double Ouch! So the moral of the story is I have the $4500 bucks. Why? because I did’t go to Vegas with my boys, Why? Because I didn’t spend more then $200 on Christmas gifts, Why? Because that is how I roll!!!">You tell me what's better, opening the door when opportunity knocks or that $4000 HD 48inch HDTV with Dolby Digital surround sound?

On 2nd thought, Don't answer that!, The thought just makes my old school 17 inch feel that much smaller.

Hey if the TV is too loud, I might not hear opportunity knocking on the door!!

All in for 2010. What are we waiting for!!

Friday, January 01, 2010

Resolution Talk 2010!!

Let’s talk about resolutions. If you read this blog, then you know we are here, not only to get rich but to be the best "us" we can be.

Getting rich is not about the money you make, but about what it makes of you. It's about the person that you evolve into as a result of the journey to becoming rich. Society is our worse enemy for self improving and becoming this person, becoming the best “us”. We are cuddled and coddled into thinking that average is OK. Below average is something society laughs at and doesn't accept, but average is OK for some reason.

I have given this many hours of thought. Why is average OK. Why? Why don't your friends push you to excel, why after a certain age your parents, who pushed you everyday as a kid, all of a sudden become satisfied with you being average. This is a very complex issue, here is my take on the subject:

Part of it is jealousy. We all feel it at times. We all feel a certain pang when someone hits the number and you don't, when someone wins at the Casino and you lose, when someone gets a promotion, or a new car and it appears your life is standing still. I use that pang as fuel for me to work harder and become more focused. Others use it for hate & envy resulting in jealousy. If you are on your way to being great, and you know it.....I mean really really know it, then you have no problem with pushing other people to be great. These are the people that you should be surrounding yourself with. Imagine if you were surrounded by people who were over achievers and pushed you to over achieve. How great could you become? Freshman year in Engineering, when I was surrounded by people getting D’s and F’s, my C+ was great. Junior year all of the underachievers dropped out of Engineering and now my C+ was surrounded by B+ and A’s. Time to step up my game.

The second reason is that generally we are a society of over sensitive wimps. It's apparent in my generation and the generations that follow. When we're being raised as kids, we are taught that it's not if you win or lose, it's how you play the game. Why play if you are not playing to win? We learn that getting a participation trophy is a reason to celebrate. I think that needs to be taught to small children, but as we get older we should learn to try and fail. We should learn that failure is real, it’s tastes terrible and you can work hard and still fail, but the harder we work, the less likely we are to fail. When we enter high school we don't want to do anything that we might fail at, so we don't try.

A great example of this is "The Biggest Loser". This show is remarkable for a few different reasons. First of all, these people lose a ridiculous amount of weight in a short period of time. Some people actually lose over 40% of their weight. The physical transformation that they go through is incredible. If you would have talked to these people before they went on show, they would have told you that they CAN'T LOSE THE WEIGHT. You might even be convinced yourself that they can't lose the weight. They are big boned, or predisposed to genetically being fat are excuses that would seem to be very real; but they actually lose it. They get muscle tone and almost turn into different people.

At the end of the show they go from being morbidly obese, to average. That is no small accomplishment, but after the show, very few people improve. A matter of fact, most of them get worse. Here is my point......When these people get home, I bet there is no one pushing them to be RIPPED. Pushing them to be able to get into a bikini and be hot. Who would dare do that? That would be mean, Come’ on they just lost 100 lbs last year. Instead we look at them and say, "Congratulations, for being slightly chunky". “Congratulations for being too chunky to wear a bikini on the beach”. “Congratulations dude, for not being able to take your shirt off in front of women and feel good about yourself” Yeah, you are not going to die, but you are still not at your best. You are king at fat camp, but when you are in the real world, you still can’t take your shirt off. Just because you came a long way doesn't mean you are at your best and you don’t have the right to stop trying and pushing yourself.

Neither of my parents graduated high school so by me graduating college appears to be a great accomplishment; but guess what? That's just average. My sister could have stopped at graduating college because after that, no one pushed her. Instead she decided to get her J.D. and practice law; and I guarantee she won't stop there.
As this applies to resolutions; you will hear all this babble about not setting yourself up for failure. Make resolutions that you can accomplish so you can feel good. @#$ that! Make resolutions that are going to force you to work your a$$ off to accomplish your goal. Make resolutions that are in line with your vision of success, resolutions that will make you great. Not average, but great.

Weak Resolution: To lose 15 lbs,
Strong resolution: To lose 25 lbs and be ripped. To wear a bikini and look extra hot on the beach. To look hotter then my friend Sarah this summer on the beach.

Weak Resolution: To do more at work
Strong Resolution: To work the hardest at work. To work harder then anyone who's ever hired in at that job. To answer and read every email before I go home everyday. To get in an hour earlier every day.

Weak Resolution: To spend more time with the family,
Strong Resolution: To be home in time for dinner every night even if it means going back to the office after dinner. To Plan vacations where the kids can learn; coach my kids soccer team, take ball room dancing classes with my wife.

Don't be average man, or average girl be SUPERMAN and SUPERGIRL!!
2010 - All in. Game on!
Get inspired.