There is a massive stigma about bankruptcy in our society. Most people are embarrassed by the very prospect of being on the brink of bankruptcy, and rarely discuss it even within their own families.
Personally, I consider bankruptcy to be one of the single most intelligent financial decisions I’ve ever made.
Yes, I’ve been through bankruptcy, and I’m happy I did it.
In the summer of 2007, I was flat broke. I was unable to pay my bills, including the mortgage. This was the beginning of the real estate bust, and definitely the end of my career as a real estate broker. By January 2008, I had swallowed my pride and accepted an entry-level administrative job at a tax firm in Denver (an hour commute each way). By April 2008, my home was foreclosed on, and I filed for Chapter 7 bankruptcy protection the next day.
For a divorced guy that eschewed material possessions, I had an enormous amount of debt. In my bankruptcy, I flushed a high six-figure amount of debt that I had amassed over the course of my adult life.
In August 2008, when my bankruptcy was discharged, I was floating on a cloud. Why? Because the burden of being massively in debt was suddenly lifted off my shoulders.
Also, by this time, I had made myself significantly more valuable at the tax firm I worked at, and was well on my way to obtaining my Enrolled Agent license from the IRS.
In other words, being broke and having to do what I had to do in order to stay afloat directly lead me to where I am today. In other words, going belly up directly set the stage for finally finding a career I truly love, and living a lifestyle that I wanted to live.
The single biggest benefit to filing bankruptcy is that the stress of dealing with bill collectors suddenly goes out the window, because they can’t call you anymore. Reduction in stress lets you focus on other things, and work towards being successful in other words.
If bankruptcy is something that’s crossed your mind, sit down with an attorney and discuss your options. It may be a discussion that you wish you’d had much sooner.
I’m sort of a cheapskate when it comes to automobiles, so I *never* buy new cars, and actually tend to buy fairly cheap vehicles. I recently purchased a 2000 Dodge Durango after only having a motorcycle for the past year. I’m fairly adept personally at looking over a car, and when you buy cheaper vehicles you have to make allowances for what you are willing to repair/replace on the vehicle both immediately after buying it and what you want/can budget for in regards to major repairs in the near future. For example, I got an incredible deal price wise on this Durango, but I went into the purchase knowing common problems with this make and model (such as engine oil sludging and transmission problems), and I therefore took immediate actions to evaluate the level of oil sludging (there was none) and prevent it, and also am budgeting for a transmission replacement in the near future. But even with a new tranny, I’ll come out ahead on this car financially, because I made a good purchase evaluation before I even bought it.
Here are some things to consider when you find a used car you’re interested in.
1. Examine the car’s exterior thoroughly. Look for rust, dents and evidence that portions of the car have rusted out and been repaired with body putty (tap with knuckle — sound is different).
2. Look under car for breaks in the frame and signs that frame has been welded.
3. Check for excessive rusting of frame.
4. Examine condition of muffler, tailpipe and exhaust pipe.
5. Look for signs of oil or transmission fluid leakage under the car.
6. Check for signs of fluid leakage from shock absorbers.
7. Examine condition of tires, including inside surfaces.
8. Look for signs of brake fluid leaking on the inside of tires.
9. Walk around the car and check the condition of window glass.
10. Examine the condition of lenses of all lights – front, back and sides.
11. Test all lights to make certain they are functioning – headlights, taillights, flashers, backup lights, brake lights, turn signals, etc.
12. Push down on the corners of the car, front & back, to check the shock absorbers. If the car bounces up & down several times, the shocks are worn.
13. Stand back and see if the car is level. If not, the springs may be weak.
14. From a distance, look for evidence of an accident, dents, paint that doesn’t match, ripples in the fenders, etc.
15. Check the spare tire. If it is cupped or worn unevenly, something may be wrong with the front end and a front tire is being used as a spare.
16. Make sure the car has a jack and that it is in good working condition.
17. Lift the hood of the car & examine the condition of the belts & hoses.
18. Check the battery to see if it is cracked.
19. Pull out the oil dipstick to see how dirty the oil is. Rub your fingers across the oil — feel for any metallic particles in the oil (this is very, very bad).
20. Check stickers (on doorposts or under hood) to see when the car had its last oil change & lubrication, and whether it was serviced regularly.
21. Examine the upholstery, safety belts and carpeting.
22. If the car has seat covers, look under them for wear, tears, dirt.
23. Badly worn carpeting or upholstery may be a sign of heavy vehicle usage.
24. Check the break pedal for free play. Brake check the vehicle when you test drive on an empty street or a parking lot.
25. Turn on all the lights one at a time and check to see they are working.
26. Take the car for a test drive over various types of roads. Get it up to highway speed — do not let a salesman talk you out of doing this. Excessive vibrations that are indicative of major problems often don’t show up until higher speeds.
27. While on the road, test the brakes for pulling.
28. Be alert for vibrations during the drive, for signs of front-end trouble.
29. If the car has manual transmission, be alert for excessive play, grabbing or rattling of the clutch.
30. Look for vibrations or unusual noises from the engine, transmission, rear end or wheels, that may be a signal of trouble.
31. Push the gearshift through its various positions and see how the car reacts.
32. Let the engine idle and be alert to noises or vibrations that could indicate a badly tuned engine or one with bad valves.
33. Be alert for any unusual odors. These could tell you that all is not well. The Durango I just bought had a horrible smell inside, and the sales rep said the interior was trashed when it was traded in. To be honest, it smelled like baby puke. It’s taken some extensive measures to get the smell out, but I knew that going in.
34. If the automatic transmission doesn’t shift smoothly or is there is hesitation when it shifts, the transmission may be in need of repair work.
35. When test driving, step on the gas & look into the mirror for smoke from the exhaust. White or bluish smoke may mean an overhaul is needed.
36. Check to see how much power the car has on a hill.
37. Turn on the heater to see if it works.
38. Check out the air conditioning to see if it is working.
39. Turn on the radio.
40. Try the windshield wipers.
41. If possible, run the car through a car wash to see if it leaks.
42. If possible, before you sign on the bottom line, have your own mechanic check out the car or take it to a diagnostic center.
43. Never buy a used car at night, in the rain or when you are in a hurry.
44. If buying from a dealership, have the sales manager put in writing & sign all promises BEFORE YOU BUY!
Hopefully, these tips will help you avoid a lemon or a bad sales deal!
Robert Kiyosaki talks about the importance of “financial education” over and over and over again. And the reason he talks about it so much is because he’s right – financial education is the most important type of education to have if you ever want to get out of the “rat race” and become financially independent.
People need to understand basic financial terms, how the money and banking system works in their country, and how credit, income, and other factors all interplay to produce a person’s overall financial status. Even if people are in a bad financial status and already know that, it’s important to understand how they got there, what all the good and bad stuff means, and how to start making changes.
The absolute best resource that I have ever found on the Internet for basic personal finance information is at http://www.GetRichSlow.com. Seriously, you can delete all your bookmarks to CNN/Money, Kiplinger’s, Motley Fool, and all the other personal finance portals out there and learn everything you really need to know from GetRichSlow.com. The beauty of this web site is that it was put up in 1996 and literally has not been updated since then. This makes all the examples on mortgage rates, housing prices, salaries, college costs, etc. a bit outdated, but the principles themselves are still valid and probably will be for as long as we have our current style of economic systems in capitalist countries.
So, if you’re just starting out, read GetRichSlow.com….every page. It’ll take a couple hours for the average person, but it could quite likely be the most valuable reading you ever do, in financial terms.
Now, when it comes to financial education and business, we enter the world of a very, very, very broad range of things. Here are just some of the things that a new business owner has to think about: how to set up your business entity, how to get paid and accept payments (credit cards, merchant accounts and other methods), how to deal with inventory or drop shipping, how to deal with websites, web hosting, domain names and e-mails, accounting and taxes, business plans, affiliate programs, start up money and financing options, cost analysis, insurance, budgeting, record keeping, licensing concerns, setting goals, staying motivated, and marketing.
Look at it: That’s a boat load of stuff!
And once you start learning all this stuff, it can become overwhelming. The sheer number of books, tapes, courses, gurus, etc. that are out there trying to teach all this stuff is phenomenal. Weeding through it all can itself become a full time job.
Every business owner needs to understand the basics of all those things, too. But where on Earth do you start???
First off, visit your local library or bookstore and grab the most generic looking book you can find about starting a small business. There are some good titles in the “…for Dummies” and “Idiot’s Guide to…” series. Barron’s also publishes a great series on business startup and small business topics. I would also encourage you to look up your local Small Business Administration (SBA) office and see what seminars they have in your local area. They are often free or very low cost. Your local Chamber of Commerce can also be a great resource.
Once you have the basics of all those areas covered, and even after you’ve become proficient in a number of areas, you need to ALWAYS be learning. Continueing education is a requirement in many professions, and it should be important to you as a small business owner, also.
Here’s an example. I like to consider myself fairly intelligent and pretty well educated on the basics of most business topics. When I got into real estate investing a little over 4 years ago, I had to overcome a steep learning curve about real estate, and I continue to learn more and more about real estate and related areas of the process.
Along the way, I took the class to become a licensed real estate broker. I also took a loan origination course, became a certified housing inspector in a very niche specialty, and am also contemplating taking the registered appraiser course next year.
People ask me why I do these things. These courses, certifications, and licensing are all mainly part of continueing my financial education, but they also bring certain perks. For example, being a real estate broker allow me to have direct access to the MLS, quicker comps, and certain databases that my local MLS service subscribes to for agent’s to use. On top of that, it’s a great side income.
Although I don’t actually originate loans, it’s nice to be able to keep up on the changing scope of interest rates and products without constantly bugging my own mortgage broker. In addition, if I ever find a deal that I really want to do for some reason, and saving money on origination fees and closing costs makes the difference between being able to buy the property or not, I can originate my own loan myself and save quite a bit of money.
Being an insurance hazard inspector and now a certified federal disaster housing inspector has taught me many things about what to look for in a property that I didn’t know 2 years ago, and has also provided a steady source of income that helps me get through the ups and down of my other business operations.
And why take the appraiser course? Not to become a licensed appraiser, but to get a better idea of where appraisers are coming from when they do MY appraisals.
All of these things contribute to the overall picture of real estate investor education. I would encourage you to seek similar continueing education in your own area of business. While continueing to learn your trade or business, you might also pick up industry certifications, licenses, etc. along the way that open doors to increased credibility, special resources, and additional revenue sources that might not have existed before.
After a personal financial disaster, most people are left wondering what to do next. In fact, significant financial loss is such an incredible psychological setback to some people that they feel there is nothing they can do to recover from it. Divorce, suicide, and other tragic events occur every day because Americans find themselves in financial ruin.
This is going to be a multi-part series of articles discussing the process of financial recovery. I will be basing this series on both my own experience with financial recovery, which is just beginning as I write this, and the lives of people that I have entered due to their quest for tax debt relief.
The first place to start is to define financial disaster. Just because you’re deep in debt doesn’t necessarily mean that you’re in complete financial ruin. Different people are all going to have their own interpretation of what it means to be financial ruined, but for the purposes of this series of articles I’m going to use my own definition. Here are the things I classify as financially destroyed:
- Straight up insolvency.
- You qualify for chapter 7 bankruptcy.
- You just lost your primary residence to foreclosure (or eviction because you couldn’t pay rent).
- Creditors have seized assets, levied bank accounts, and garnished wages.
There are probably more things I could put on this list, but I think you get the idea. This situation can be created by any number of factors, too. Business failure, expensive medical problems, divorce, inability to pay tax debt, extended job loss, poor money management, stupidity…all of these can contribute to being broke and belly up.
Also, you don’t necessarily need to be homeless and jobless to be financially ruined. There are very high income earners that get deep into debt, just as there are low income earners that turn into millionaires over time.
After defining financial disaster for yourself, the next important step is to take a reality check and admit to the fact that you’re there, or are approaching it. People tend to live in denial when it comes to their financial situation, if they even know what their financial position is at all. It’s important to take stock of where you, including analyzing your income and expenses and looking at your assets and liabilities. If that starts to sound like a budgetary counseling session in progress, it’s because it is. Your finances are one of those few things about yourself and your life that you can distinctly quantify, and you can’t figure out how to get where you’re going if you don’t know where you are.
In the next article in this series, we’ll get into the process of figuring out where you are and making decisions about your plan for financial recovery.
To your success,
This post is just kind of a random rant. Welcome to a tour of my brain for the evening. This whole thing probably falls into the “too much information” (TMI) category. But, meh, overshare is just generally part of what I do.
I just got home from the grocery store, and my shopping bag has quite a few things that I never have in my fridge. These things include
-whole wheat crackers
All the fruit is made up of those pre-cut plastic buckets of fruit. Why? Because I’m lazy, and that’s the only way I’ll end up eating it.
So, why on earth was this the summation of my shopping trip?
It has a lot to do with the reason I’ve made more progress in the past 12 days towards my Bronze test judge appointment in figure skating than I’ve made in the past 9 months.
First, a few of my all time favorite quotes:
“Successful people do the things that unsuccessful people are unwilling to do.” -John Maxwell.
You don’t need someone else’s permission to become successful. – Dan Kennedy
The path to success is to take massive, determined action. – Anthony Robbins
“The key to success is discipline. What is discipline? Discipline is self-control.” Gunnery Sgt Phil Yoho, USMC, my NROTC officer instructor
People that meet me generally think I’m one of those super-motivated people that takes massive action, and that’s the reason I’ve done so many things in life and had so many opportunities. People that REALLY know me, however, know that simply isn’t reality. By my very nature, I am a lazy, unmotivated, slacker. I am capable of taking massive action, and have a long track record of doing so, but I do it in crazy spurts of productivity that generate necessary results, and these spurts of activity are spurred only when the pain caused by inactivity exceeds some threshold. It’s like rolling a boulder uphill – it’s not gonna happen unless there is sufficient reason to do so. Otherwise, why bother?
There is really only one glaring exception to this generality about myself: I’ll go out of my way simply to find out where a road or trail goes, or to see what’s around or over something. I’m the one that pushes the button to see what happens, and opens the box just to see what’s inside. I’m the cat that curiosity killed.
OK, so what the heck does this have to do with figure skating, or grocery shopping?