Paul Ferraresi

One of my mentors, Jim Rohn, repeated successful strategies I had once learned. This catapulted me to higher levels! Here are some excerpts from his writings….

So, what are some good ideas on developing a plan that will work well and take you to the finish line powerfully and in style? Here are some major points to keep in mind.

Develop the Plan for You. Some people are very detail oriented and they will be able to follow an intricate plan closely. Others are a little more “free-wheeling” and not really “detail” people. That is okay too. In all the years of my speaking to audiences worldwide, people have asked the question, “what plan is the right plan?” And my answer, the plan that fits you. Your plan, the one you develop that is unique to you and for you. You see, each of us is unique and motivated by different factors and you’ve got to develop one that is right for you and fits you. Some plans will not be as intricate as others but we all must have a plan, along with goals in that plan, to move us along the program. If you are a free spirit type, don’t tell yourself you are going to spend 2 hours a day with a book and tapes and journal. It probably won’t happen and you will get discouraged! Whatever your personality, your strengths and your weaknesses, develop the plan around them! This is not a one-plan-fits-all proposition.

Establish Times to Spend Working on the Material. It may be every Sunday night. It may be 20 minutes each morning. It may be in the car listening to the CD’s every Monday, Wednesday, and Friday. Whatever it is, set the times to do it. In your step-by-step plan, put down points that you can accomplish every week. They should be specific and achievable. Develop the discipline and take those steps everyday, which will move you closer to your goals and where you want to be.

Keep a Journal. Take notes. It may be on paper, it may be on micro-recorder. Mr. Shoaff taught me not to trust my memory, but write it down, to find one place to gather the information that affects change. And that advice has served me well all these years. Record the ideas and inspiration that will carry you from where you are to where you want to be. Take notes on the ideas that impact you most. Put down your thoughts and ideas. Brainstorm with yourself on where you are going and what you want to do. Record your dreams and ambitions. Your journals are a gathering place for all the valuable information that you will find. If you are serious about becoming wealthy, powerful, sophisticated, healthy, influential, cultured, unique, if you come across something important write it down. Two people will listen to the same material and different ideas will come to each one. Use the information you gather and record it for further reflection, for future debate and for weighing the value that it is on you.

Reflect. Create time for reflection – a time to go back over, to study again the things you’ve learned and the things you’ve done each day. I call it “running the tapes again” so that the day locks firmly in your memory so that it serves as a tool. As you go through the material in this plan, you will want to spend time reflecting on its significance for you. Regularly set aside time – here are some good guidelines for times to reflect: At the end of the day. Take a few minutes at the end of each day and go back over the day - who’d you talk to, who’d you see, what did they say, what happened and how’d you feel, what went on. A day is the piece of the mosaic of your life. Next, take a few hours at the end of the week to reflect on the week’s activities – I would suggest at least one half-hour. Also during that weekly time, take a few minutes to reflect on how this material should be applied to your life and circumstances. Take a half day at the end of the month and a weekend at the end of the year so that you’ve got it so that it never disappears, to ensure that the past is even more valuable and will serve your future well.

Set Goals. While we are going to cover this soon enough in upcoming weeks, let’s just remember that your plan is the roadmap for how you are going to get to your goals, so you have to have them. Of all the things that changed my life for the better (and most quickly), it was learning how to set goals. Mastering this unique process can have a powerful affect on your life too. I remember shortly after I met Mr. Shoaff, he asked me if I had a list of my goals, and of course I didn’t. He suggested to me that because I lacked a set of clearly defined goals that he could guess my bank balance within a few hundred dollars… and he did! Well, Mr. Shoaff immediately began helping me define my view of the future, my dreams. He taught me to set goals because it is the greatest influence on a person’s future and the greatest force that will pull a person in the direction that they want to go. But the future must be planned, well designed to exert a force that pulls you towards the promise of what can be.

Act. Act on your plan. What separates the successful from the unsuccessful so many times is that the successful simply do it. They take action, they aren’t necessarily smarter than other; they just work the plan. And the time to act is when the emotion is strong. Because if you don’t, here’s what happens – it’s called the law of diminishing intent. We intend to act when the idea strikes us, when the emotion is high, but if we delay and we don’t translate that into action fairly soon, the intention starts to diminish, diminish and a month from now it’s cold and a year from now it can’t be found. So set up the discipline when the idea is strong, clear and powerful – that’s the time to work the plan. Otherwise the emotion is wasted unless you capture the emotion and put it into disciplined activities and translate it into equity. And here’s what is interesting: all disciplines affect each other; everything affects everything. That’s why the smallest action is important – because the value and benefits that you receive from that one little action will inspire you to do the next one and the next one… So step out and take action on your plan because if the plan is good, then the results can be miraculous.

Like we said last week, we are at the beginning of a fantastic journey that is going to help us become all that we want to – so let’s get going!

There are people that get into financial trouble due to outside circumstances. Medical emergencies, loss of job or a family crisis are some reasons. The majority of financial trouble stems from simple over spending.

Spenders who need outside help may benefit from the support of a more frugal friend who would be willing to act as a money mentor or spending coach. If you recommend to a friend Debtors Anonymous, don’t be surprised to hear a quick “no.”

Some people are too ashamed to admit that they may be damaged in this way. You may have to think of other solutions, such as a financial recovery counselor. (Karen McCall and her associates at www.financialrecovery.com and Bari Tessler’s group at www.consciousbookkeeping.com are two valuable resources.)

Two more tips: Once you’ve developed guidelines for an overspending friend, or yourself, take care not to call it a budget – a word that free-living boomers mentally translate as “ball and chain.” Refer to it instead as a spending plan, or a spending, saving, and investing plan, or even a financial growth plan.

Those of you who may be in denial about this I ask you to describe three scenarios: (1) what happens if all your dreams come true; (2) what happens if outcomes are just so-so; and (3) what happens if you have made mistakes that force you to change your lifestyle. What will your life be like? How will you feel? What will your friends and relatives say about you?

I suspect that when you reach scenario # 3 the last question may unleash shame, regret and many pent up feelings. Find out the reasons for overspending. Just like people who over eat, over indulge in alcohol or drugs the actions are symptoms of inner turmoil.

A client, and good friend, S. Fish sent this link to me. The presentation is long, but, it is Really worth watching. No… there aren’t any jokes or “canned” laughter in the program! It is information to add knowledge to you on why oil prices are high. Make the “investment” of your time, digest it, and, gather more information to help you build your opinion. Weed through the promotion, marketing and agenda. You will find knowledge. Seek out professionals in this area and confirm or deny the hypothesis.

http://video.google.com/videoplay?docid=3340274697167011147

Assess the Ultimate Goal

Usually when you ask clients whether they plan to buy a second home for pleasure or investment, the response is “pleasure.” The follow-up questions should then be: “How long do you anticipate owning it?’ Then, “What, if any, growth rate do you expect on the value of the home?” Very rarely are there “rational” responses like “20-plus years” and a “5% or so return” (which is the approximate national residential 20-year average rate of return for a home).

Many buyers anticipate that the value of their second home will double, even though they say it is not an investment.

Often clients will buy on emotional and perhaps irrational factors. They will also base their decisions on some misguided information or misinterpreted facts. The following are some of the more common misconceptions:

A vacation home is a vacation home. A vacation home can be categorized in three different ways: personal, rental, and dual purpose. The one that pertains to your individual circumstance will depend on the days used and the days rented.

I always can deduct my mortgage interest on my second home. With so many affluent clients purchasing McMansions these days, it is not uncommon to see a large mortgage on their primary residence. Remember that you can generally deduct qualified residence interest on up to $1.1 million of home mortgage debt ($1 million worth of acquisition debt on up to two homes plus $100,000 of home equity debt on up to two homes). Any excess interest on home mortgage debt is generally nondeductible. Furthermore, the owner’s overall interest deduction may be lessened due to the itemized deduction phase-out rule for higher-income taxpayers (for 2007 the AGI level is $156,400). This rule is expected to sunset by 2010. As such, if nothing is done, in 2011 it will revert back to full phaseout. (Now there are legal methods that we use with our clients that allow them to deduct interest on well above the $1.1 mm limit).

I always have to report rental income. Rental income is completely tax-free for property that meets the rules for personal-use property, but has a very limited opportunity to generate rental income (generally 14 days or less). From a tax perspective, this can be quite a boon for clients with properties that can be rented at an exorbitant rate for a short time (e.g., properties located near a major golf event, Olympics, or Super Bowl location).

Vacation home donations are always a good idea. Unfortunately, the IRS considers vacation home donation days as personal use days, not rental days, since the owner did not receive a fair market rental for the use if the home. In addition to not qualifying for additional rentals expenses, the owner receives no charitable deduction for donating the use of the home to charity.

I can use the capital-gains tax exclusion ($500,000) upon sale. The exclusion applies only to principal residences.

A 1031 (tax-deferred) exchange can be done on a vacation home. A recent Tax Court ruling (Moore, T.C. Memo 2007-134) disallowed tax-deferred treatment for a personal vacation home. The court held that a couple’s exchange of vacation homes did not qualify for like kind exchange treatment because the homes were not held for investment purposes (as required by § 1031(a)).

Rental income will be offset by cost. With property prices still high, some clients may believe they will offset the cost of a second home by renting it. Unfortunately, clients forget that in order to cover their costs they often will have to rent it out at peak season, coincidently the weeks they want to use it the most.

This is a “business.” Many people say they manage their property and thus “materially participate.” In other words, they are in the business of renting real estate and are able to take losses against other taxable income.

You can go home again. And, finally, do not “impulse buy” while enjoying a vacation. If you have an interest in purchasing real estate at a great place where you vacationed last month, I suggest that you hold off until you have “felt out the neighborhood” for a while, meaning you should visit the location a few more times. You should focus on the commute to work, the community, people, activities, and amenities, and, very important, talk to as many locals as possible, particularly those who have owned vacation homes there for some time. Do you have a similar feeling of happiness each time you visit the location? Are your experiences consistent over time?

The financial ramifications as well as the emotional toll of purchasing vacation homes can be complicated. But understanding these rules and your expectations will open the door to some great discussions with your advisors.

Russ Prince and Lewis Schiff, authors of The Middle Class Millionaire, purport to have uncovered the rise of new class of wealth that is changing the face of America: These 8.4 million households [with $1 million to $10 million in net wealth] make up a new generation of millionaires who began to emerge from the middle class in the late twentieth century. As their wealth has grown, so have both the cost of maintaining their lifestyles and their need for products and services that make their lives run smoothly. This group is helping to bring about momentous changes throughout American society.

Tom Stanley, author of The Millionaire Next Door showed his millionaires were almost retro middle-class, even for the ‘80s. They owned and operated small business-dry cleaners, gas stations, or cement companies. They stayed married to their wives, drove non-descript station wagons into the ground, bought their clothes more often off the shelf than off the rack, and went to church. They worked hard, sent their kids to college, avoided debt, and saved their money. In a word, they were the total opposites of the 1980’s high-flying executives-overspending, conspicuously consuming individuals.

But a funny thing happened over the past 20 years. The Reagan /Bush /Clinton /Bush economic boom (undeterred by the bond and stock market corrections of ’87, the recession of ’92, or the dot.com crash of 2000), fueled by the low interest rates, low taxes, and almost non-existent inflation has, among other things, replaced Tom Stanley’s retro millionaires with a new generation of small business owners who are, if anything, more driven to attain success, far more socially liberal, and cutting-edge consumers of the first order. Prince and Schiff’s book is a study of what it takes to get into that class today.

The authors identify four characteristics that dramatically separate today’s middle-class millionaires from their less successful classmates:

Hard work. While nine out of 10 of respondents to Prince and Schiff’s survey believe that “anyone can become a millionaire if he or she works hard enough,” the average middle-class head of household works 41 hours a week while the average middle-class millionaire puts in 70 hours. The millionaire is also five times more likely to be “always available” via e-mail (76% vs. 16%), four times more likely to work nights (52% vs. 12%), and three times more likely to be in the office or store on weekends (67% vs. 21%).

Networking. Although most middle-class millionaires dislike the smarmy connotations of the term, 62% of them believe knowing many, many people is very important to achieving financial success (vs. 43%), and they are three times as likely to cite networking as a way to connect with people they can turn to for information (83% vs. 29%).

Never giving up. Nine out of 10 of all middle-class survey respondents admitted to having “made a major career or business decision that has a very bad outcome,” but middle-class millionaires averaged 3.1 such incidents vs. 1.6 for the rest of the middle-class. More importantly, the millionaires were five times more likely to follow up a bad business outcome by trying again in the same field, rather than changing fields or focusing on other projects (77% vs. 14%).

Going where the money is. Eighty percent of middle-class millionaires either own their own business or are in professional partnerships. In fact, two out of three of them (65%) consider an ownership stake to be “very important” to financial success, vs. just 28% of other folks in the middle class. That pretty much says it all.

You Are Made for Success!

It has been a busy summer for my speaking schedule. But I love it. People ask me if I ever get tired of traveling around and speaking. The answer? Never. It is something I am passionate about. I know that if my words can help people make a positive change in their lives, they will in turn make a difference in some else’s life. So, here is my request: We are looking to fill in our schedule for the remainder of the year and the beginning of 2009 and we still have a few spots open. I would love to come join your group for one of your events!

Do I speak for corporations? Yep! Do I speak for non-profits? You bet! Do I speak for colleges and universities? Absolutely! DO I speak for network marketing companies? I sure do! Do I speak for churches? Yes I do! Do I speak for lots of other groups I haven’t mentioned? Yes, yes and yes! So, if you would like to have your meeting supercharged, let us know and we will do our best to get there! I would love to include your city on my end of the year list! Email my assistant at Angelique@fgmci.com and she’ll get you taken care of!