How to manage debt wisely
Since the beginning of the year, we have been expanding on the elements of our 2012 Money Manifesto. It is possible to create the financial life that you desire by understanding and following the basic principles of money success. In today’s column, we will take a look at the sixth component which speaks about dealing with debt.
Let’s examine some key do’s and don’ts that can help you to manage debt wisely:
Do: Utilise credit for financial gain
Shakespeare declared “neither a borrower nor a lender be”, but in today’s world it’s almost impossible not to borrow at all. Some forms of debt can be considered beneficial if the interest expense can be justified by some future monetary benefit. It’s as if you are getting paid to borrow, as the returns will eventually pay for the interest cost.
Borrowing for education can be useful if it helps you to get ahead in your career and increase your income. Buying a house with a mortgage is another good debt option as the appreciation in property value will usually compensate for the mortgage interest. Borrowing for business purposes can also be rewarding if the returns on the investment can cover the cost of the loan.
Don’t: Borrow for frivolous spending
Consumer credit is the use of debt to finance spending habits instead of funding investments for your future. This form of debt cannot pay for itself as it is not backed by a growing asset; instead, the interest expense paid is a transfer of your potential wealth to a financial institution. In fact, consumer debt very often lasts longer than the item bought with the loan.
Borrowing to sustain a lifestyle beyond your means will definitely lead to financial challenges. It is impossible to resolve a budget shortfall by borrowing from family and friends, or using payday loans and credit cards. If your income cannot meet your bills, you will only create an endless cycle of borrowing; the only solutions are to increase your earnings or to reduce your expenses.
Do: Use a budget to determine your debt threshold
A borrowing decision should always be made after consulting your budget, to ensure that you can really afford the loan. Put the monthly payback into your budget and see how it affects your ability to meet your other expenses. Most financial institutions require your debt repayments to be no more than 30 per cent of your income; but with today’s economy I would suggest 15-20 per cent.
It’s also important to consider your current financial situation before you decide to borrow. Do you have any additional expenses coming on the horizon? Do you have a consistent income stream? Don’t lock into long-term obligations if you’re unsure about your income or the economy, and don’t depend solely on expected future income to pay your loan.
Don’t: Incur unnecessary fees and charges
If you’ve decided to take out a loan, check around for lending institutions with the lowest interest rates and processing fees. Ensure that you always pay your bill by the due date to avoid late-payment penalties, and if the due date doesn’t fall on a work day, pay it before. If you use a credit card try to pay for all your purchases by the required date, or within the shortest time possible.
Here are some other tips on using credit cards wisely: Call or check on the Internet to verify how much credit you have available on the card, so that you avoid being charged an over-the-limit fee; never use your credit card for a cash advance, because interest will be immediately calculated from the date of withdrawal until the repayment date.
Do: Focus on reducing debt
If you’re over your head in debt, it makes no sense hiding from your reality. If you have multiple loans, itemise them on one sheet of paper, outlining information such as loan balances, monthly repayment amounts, interest rates, time period left to repay and any collateral backing the loans. Download a debt tracker at www.financiallysmart.org.
Find extra funds to pay down your debt, focusing on the smallest loan balance first. You can cut back on non-essential expenses, raise money by having a garage sale, liquidate your collateral assets to get rid of the monthly debt burden, or use a lump sum like a partner draw or bonus to pay off outstanding balances. Consolidating loans may also be an option to reduce high-interest debt.
Don’t: Ignore your obligations
It’s very important for you to have an attitude of urgency when it comes to paying off all your obligations. Too many people are indifferent or insensitive in their approach to debt repayment, making comments like “that person has plenty of money, I don’t need to pay him back,” or “I’m not earning enough so I’m not going to service my loans.”
This mind-set will actually cripple you financially, as there is a universal law that ensures that you get back what you give out to others. If you withhold what rightfully belongs to other people, don’t expect that you will have long-term prosperity. Even if you’re struggling with other expenses, prioritise your debt, make a budget sacrifices and trying to earn more to deal with your obligations.
Copyright © 2012 Cherryl Hanson Simpson. No reproduction without written consent.
Originally published in The Daily Observer, January 26, 2012
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Cherryl is a money coach and business mentor, and founder of Financially S.M.A.R.T. Services. See more of her work at www.entrepreneursinjamaica.com and www.financiallysmart.org. Contact Cherryl
Saving Is Still In Style
If you have made a determined resolution to improve your finances this year, then our 2012 Money Manifesto will help you to chart the course. Last week we looked at the fundamental principle of budgeting, indicating that it was crucial for you to be aware of all your expenses, plan for your spending needs for an entire year, and make the right choices with your money.
Another essential practice required for money success is saving. Saving is the act of putting aside some of your money instead of spending it to buy products and services. When you save you should not be intending to go back for the money a few days later to pay bills; this money should be left to accumulate over time.
Is saving still relevant today?
Unfortunately, while most persons followed the wisdom of saving in the past, too many ignore this vital habit today. This disregard stems from a general unawareness of the importance of saving, having insufficient funds to save, or the view that investing, the active use of money to generate profit, has more significance for wealth creation.
One key purpose of saving is to put aside money for a rainy day. Our Money Manifesto pledges, “I will focus my initial saving efforts on building up a fund to help protect me against possible emergencies such as illness or job loss. I will continue until I have saved at least three to four months of my living expenses, and I won’t use this money for anything except a real crisis.”
Your budget can help you to determine how much money you should target to put aside for your emergency fund. Add up all your basic monthly expenses such as housing costs, utilities, food, transportation and children’s upkeep. Although it is recommended that you put aside at least three months’ living expenses, in today’s economy, I would suggest that you aim for six months’ worth.
In addition to creating a lump sum for emergency use, saving will also allow you to develop a disciplined attitude with money. Many people’s consumption patterns dictate that as money comes in, it goes right out again. Saving changes this negative relationship with money as it encourages you to focus on amassing money instead of just spending it.
Is saving still realistic today?
In a perfect world, we all would be saving regularly to build comfortable rainy-day accounts and abundant nest eggs. Given the current economic realities, with the rising cost of living and decreasing pay packages, many people find it difficult to meet even basic expenses. Does it make sense to strive to save in these tough financial times?
The Money Manifesto makes a solid commitment to the act of saving by declaring, “I will commit to accumulating money instead of just spending it; so my first budget expense will be my own savings. I will make my savings automatic by setting up a monthly salary deduction or standing order to put money into a separate account.”
This pledge takes into consideration the key steps in creating a consistent savings plan. First, it’s vital to make the decision to pay yourself a portion of your earnings before you pay others. Secondly, you must determine a regular amount that should be saved every month. Finally, practise the discipline needed for success by making your savings automatic.
How is it possible to save if your earnings are inadequate or non-existent? The Money Manifesto provides a solution: “I will find and save coins every day if I have no source of income.” Put the laws of accumulation and attraction to work by putting aside loose change every day; do this simple activity for at least three months, and you will see positive developments in your finances.
Is saving still rewarding today?
Some people dismiss the practicality of saving because of the low interest rates available in the financial market today. A common question asked is: “What’s the point of saving when you may only receive two or three per cent return on your money?” Is it better to just enjoy what your money can buy, instead?
The old-time Jamaican proverbs ‘every mickle mek a muckle’ and ‘one one coco full basket,’ are still applicable in today’s economy. If you add together tiny amounts of any item, it will eventually get bigger; small, consistent savings with interest added can still help you to amass a worthwhile lump sum over time.
Can saving $50 a day make a difference in the long run? After one week, you would have $350 on hand, and after a month your total would be about $1500. If you saved that amount every month in a financial institution and earned a net interest rate of three per cent over the next 20 years, you would have created a lump sum of nearly $500,000!
Learn how the combined effects of time and compound interest can boost your efforts to create wealth. Download a savings calculator at www.financiallysmart.org and input different amounts and interest rates to see how you can build a nest egg over time. Next week, we will continue to expand on the other elements of our 2012 Money Manifesto.
Copyright © 2012 Cherryl Hanson Simpson. No reproduction without written consent.
Originally published in The Daily Observer, January 19, 2012
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Cherryl is a money coach and business mentor, and founder of Financially S.M.A.R.T. Services. See more of her work at www.entrepreneursinjamaica.com and www.financiallysmart.org. Contact Cherryl
Budgeting Is A Must
Last week we expanded on the concepts in our 2012 Money Manifesto and explained why focusing on your financial education is the most important investment you could make for your future. If you’re searching to find answers to your money problems, I can assure you that you will find the solutions in books, magazines, CDs, DVDs and Internet sites that deal with financial matters.
The first money success principle that you need to learn and apply is budgeting. Our Money Manifesto states: that “I will no longer be clueless about what I spend money on, as I will take the time to document all the expenses that I expect to come during the year. I will write down all my income sources and then calculate if my earnings can cover my expenses.”
There are two main reasons why budgeting is an indispensable money management tool. Firstly, many people struggle financially because they are unaware of how they use money, and a budget forces them to honestly examine their spending needs. In addition, a budget allows persons to review all their expenses at one time and make informed and appropriate purchasing choices.
Let’s look at the process of creating a practical budget that can help you to take control over your money:
1. Identify all your expenses
Most budgets don’t work because they only itemise bills that need to be paid in a specific month. A budget is actually a spending plan that must cover all the expenses that you expect to occur over the course of a year. If you ignore bills that crop up occasionally during the year, you won’t be prepared when the time comes to pay them. Follow these steps to identify all your expenses:
* Write down all your regular monthly expenses such as groceries, utilities, rent or mortgage;
* Estimate the annual cost for bills that don’t come due every month such as cooking gas, car repairs, or school fees;
* Work out reasonable amounts that you think you can afford to spend on non-essential expenses such as entertainment and gifts;
* Recall what you spent in the past on unplanned costs such as home repairs or medical bills, and assign a monthly amount to put aside for possible emergencies;
* Create a wish-list for things you need to, or would like to spend money on but may not be able to afford now, such as retirement savings, vacation, or charity.
2. Convert expenses into monthly averages
If you have daily, weekly or yearly expense items on your list, you need to convert them into monthly figures before you put them in your budget. If you buy an item every single day, multiply the cost by 30; if you purchase it only on weekdays, then multiply by 20. Weekly bills should be multiplied by four, while you should divide annual expenses by 12 to get the average monthly cost.
Although you don’t actually have a monthly outlay for yearly bills such as car insurance, property taxes or education expenses, you still need to have an allocation for these expenses in your budget. The average amounts will help you to know how much money you should put aside every month to pay these bills when they are due.
3. Record expenses and income
Use a budget spreadsheet to record all your average monthly expenses. You can download a free budget template at www.financiallysmart.org. Next, record your sources of income. Use your salary figure less any statutory deductions, such as income tax and pension payments, but add back deductions for loans or savings. Then, calculate the totals of your expenses and income sources.
4. Balance your budget
Take the total expenses figure and subtract it from the total income figure. This will help you to determine if you are earning enough money every month to pay for all your expenses over the course of a year. If your income is greater than your expenses, you will have a positive balance called a budget surplus, while a negative balance indicates that you have a budget shortfall.
If you have a budget surplus, then you should save that extra cash every month. If you really don’t have additional funds on hand, then check to see if you have any ‘hidden’ expenses such as lending money to friends. A budget shortfall means that you are spending more than you can afford, or that your income is insufficient to pay for your basic needs.
Taking control of your money can be as simple as making appropriate spending choices. This budgeting exercise can help you to identify frivolous spending or conserve on expenses such as utilities and groceries. Declare along with the Money Manifesto: “I will question myself before I make a purchase, to determine if there are better uses for my money than buying that item.”
However, because of the rising cost of living, you may realise that you still have a deficit after cutting back as much as possible. The only remedy for this problem is to increase your income; and the budget shortfall indicates the required amount to earn each month. In an upcoming column, I will look at how to create additional income to meet your budget needs.
Copyright © 2012 Cherryl Hanson Simpson. No reproduction without written consent.
Originally published in The Daily Observer, January 12, 2012
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Wants vs Needs - Can You Have Both?
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Cherryl is a money coach and business mentor, and founder of Financially S.M.A.R.T. Services. See more of her work at www.entrepreneursinjamaica.com and www.financiallysmartonline.com. Contact Cherryl
Make 2012 Your Best Year Ever
At the beginning of a new year most people choose to reflect on the past and make resolutions for things they would like to accomplish going forward. However, despite their grand ideas and hopeful wishes, all too often, the days, weeks and months slip by without any progress being made towards actualising their goals.
Although they may have a good picture of the end result that they want to attain, many people fail to prosper because they really don’t know how to create and carry out an action plan that works. Success is not achieved by a swift arrival at a desired destination; it’s the cumulative result of taking consistent, tiny steps that are headed in the right direction.
Last week we revealed our 2012 Money Manifesto, which incorporates 12 financial commitments that will help you to become successful with money. For the next few weeks, we will examine the pledges in greater detail, and indicate the little action items that you need to take to realise your objectives.
Let’s look at what I consider to be the most important things you can do to make 2012 your best year:
Make financial education a priority
I often encounter persons who are experiencing desperate money challenges or who are confused about how to get ahead financially. Most of them are looking for a quick answer to their money problems or a speedy way to create wealth. Here’s reality check #1 — There is no short cut to financial success.
If you want to be great in your profession, it takes years of study and practice to achieve the necessary expertise. World-class athletes train rigorously for many hours in order to become champions in their field of sport. Being successful with money is no different — you have to commit time and effort in order to learn what’s required to win.
The first item in our Money Manifesto states that: “I will invest in my own personal development by seeking to learn more about money. I will endeavour to read or listen to good financial advice every single day, as I recognise that most of the solutions to my money problems can be found in other people’s experiences in books and CDs.”
Learn about money from other people
Confucius said that there are three methods of gaining wisdom, “first, by reflection, which is noblest; second by imitation, which is easiest; and third, by experience, which is the most bitter.” Learning about money success can be a relatively easy process if you simply duplicate the smart attitudes and actions of financial achievers.
The answers to almost anything you wish to know about money can be found in someone else’s words or stories which are captured in the print or electronic media. Accessing information is now a breeze, thanks to the magic of the Internet; and most times you can get an education at minimal or no cost. There really is no excuse for you to complain that you can’t find the facts you need.
If you wish to start the process of turning around your finances, begin by taking up a book, magazine, CD, DVD or any other resource that presents information about money. You’re never too old to discover something new, and having a ‘know-it-all’ attitude or an overly nonchalant approach to learning about money will only ensure that you remain ignorant for a long time.
Apply the money lessons learned
It’s good to spend time learning about money; but it’s more important to actually put your lessons into action. It has been said that ‘knowledge is power,’ but I like to stress that ‘applied knowledge brings success.’ What you know about money only has the potential to help you; taking immediate and persistent steps will give you the momentum required for achievement.
The final pledge in our Money Manifesto asserts: “I will no longer allow the plague of procrastination to derail my financial future. I will act immediately in carrying out all the steps that I need to take to fix my money problems. I will act persistently and will not let discouragement, setbacks or negative circumstances stop me from progressing towards my goals.”
As you learn different strategies to help you with your finances, start at once to implement the recommendations. If you need to create a budget; begin by tracking your daily expenses. If you need to open a savings account for a specific goal, fill out the required documents. If you need to reduce your debt, assess your obligations and get advice from your lending institution.
Stop merely wishing and hoping for some miracle to transform your financial future; make a firm commitment today to change. There’s a Jamaican saying that advises: ‘Man who have raw meat must look for fire;’ so if you really want 2012 to be your best financial year yet, seek sound advice, and take action!
Copyright © 2012 Cherryl Hanson Simpson. No reproduction without written consent.
Originally published in The Daily Observer, January 5, 2012
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Cherryl is a money coach and business mentor, and founder of Financially S.M.A.R.T. Services. See more of her work at www.entrepreneursinjamaica.com and www.financiallysmartonline.com. Contact Cherryl
Money Manifesto for 2012
As many Jamaicans go to the polls today to select the party, people and policies of their choice, I thought that I would create a ‘Money Manifesto’ containing all the financially smart steps that can help you to shape a prosperous future for 2012 and beyond. The 12 points shared below represent the essential areas that you should follow if you wish to become financially successful.
1. I will make financial education my priority.
I will invest in my own personal development by seeking to learn more about money. I will endeavour to read or listen to good financial advice every single day, as I recognise that most of the solutions to my money problems can be found in other people’s experiences in books and CDs.
2. I will create a budget.
I will no longer be clueless about what I spend money on, as I will take the time to document all the expenses that I expect to come during the year. I will write down all my income sources and then calculate if my earnings can cover my expenses. I will diligently track my monthly spending to determine if my budget is realistic, and make necessary adjustments.
3. I will cut back on buying unnecessary items.
I will examine my budget to see where I’m spending too much money on frivolous things that may contribute to my problems in balancing my budget. I will question myself before I make a purchase, to determine if there are better uses for my money than buying that item.
4. I will save consistently.
I will commit to accumulating money instead of just spending it; so my first budget expense will be my own savings. I will make my savings automatic by setting up a monthly salary deduction or standing order to put money into a separate nest egg account. I will find and save coins every day if I have no source of income.
5. I will build an emergency fund.
I will focus my initial saving efforts on building up a fund to help protect me against possible emergencies such as illness or job loss. I will continue until I have saved at least three to four months of my living expenses, and I won’t use this money for anything except a real crisis.
6. I will reduce my consumer debt.
I will start living within my means and stop using loans to finance consumer items that I can’t really afford. I will create a plan to pay off my existing loans faster, and try to replace my high-interest credit card debt with lower interest options such as a credit union or cash-secured loan.
7. I will design an action plan for my goals.
I will stop merely wishing that I could have things like my own home; instead I will commit to turning my financial dreams into reality. I will set specific and time-bound goals and get assistance from an expert advisor who can help me to create a plan to achieve my goals.
8. I will find ways to earn extra money.
I will seek out opportunities to increase my income beyond my regular pay cheque. I will look for ways to solve people’s problems or fill their needs, and market my God-given talents to make money. I will use my extra earnings to save more, reduce my debt and achieve my goals.
9. I will put my money to work for me.
I will seek to multiply my money by putting it to work in smart investment options. I will learn about investing techniques by reading financial newspapers and online sites, listening to money programmes on radio and TV, and attending seminars. I will not allow greed and ignorance to cause me to risk my funds in unwise schemes.
10. I will make an estate plan.
I will make proper plans to transfer my money and assets when I die, so that I don’t leave my survivors with insufficient funds to pay for my funeral expenses, outstanding bills and estate taxes. I will create a financial legacy of wealth for others to maintain and enjoy for many generations in the future.
11. I will be thankful for all my blessings.
I will not become discontented with my financial status by focusing solely on my material desires. I will resolve to give thanks, every day, for all the possessions and non-material blessings that are currently in my life. I will remember those who are less fortunate and will share what I have with them.
12. I will diligently apply the money lessons I learn.
I will no longer allow the plague of procrastination to derail my financial future. I will act immediately in carrying out all the steps that I need to take to fix my money problems. I will act persistently and will not let discouragement, setbacks or negative circumstances stop me from progressing towards my goals.
Here’s hoping that you will reflect on the many lessons we have shared during 2011, and make every effort to make 2012 your best year yet!
Copyright © 2011 Cherryl Hanson Simpson. No reproduction without written consent.
Originally published in The Daily Observer, December 29, 2011
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Cherryl is a money coach and business mentor, and founder of Financially S.M.A.R.T. Services. See more of her work at www.entrepreneursinjamaica.com and www.financiallysmartonline.com. Contact Cherryl
Giving Thanks for 2011
“It was the best of times, it was the worst of times; it was the age of wisdom, it was the age of foolishness; … it was the spring of hope, it was the winter of despair; we had everything before us, we had nothing before us.” This quote from the Charles Dickens novel, A Tale of Two Cities eloquently expresses some of the conflicting realities of Jamaica in 2011.
As we approach the end of another year, it might be tempting for us to become cynical about our nation’s growth in the past and potential for the future. Politicians, psychologists, financial analysts, civil society groups and ordinary citizens all have varying opinions about the economic challenges that hinder our progress.
With ‘Brand Jamaica’ continuing to ride high, why is it that we couldn’t take advantage of our tremendous popularity and goodwill to reap financial benefits in 2011?
Jamaica is uniquely blessed
I believe that Jamaica already possesses everything necessary for our development. We have natural resources and attractions on par with the world’s best; sports development programmes that continually produce winners; a stimulating culture of music, food and personalities that is appreciated worldwide, among other blessings.
However, until we create an inspired vision, spurred by motivated leaders, committed followers and a collective will to win, then Jamaica will forever remain in the quicksand of financial deprivation. The only solution to our woes is for all of us, individuals and institutions alike, to concentrate our efforts on increasing our productive activities and creating sustainable profits.
Despite the challenges we faced in 2011, there is still a lot to be thankful for. Recognising that the law of attraction states that whatever you focus on multiplies, I choose to concentrate on our blessings instead of complaining about our problems. Here are just a few reasons to look back on 2011 with an attitude of gratitude:
Freedom of labour
“Everything that is really great and inspiring is created by the individual who can labour in freedom” - Albert Einstein
One of the things that we often take for granted is the relative level of freedom that we enjoy in Jamaica; for the most part, free enterprise is respected and encouraged here. Despite the many job layoffs this year, there were still many hardworking business owners who kept the country afloat.
Small business is the engine for our future growth, so more persons need to become a part of our free enterprise system. We need more entrepreneurs to innovatively package what we have in Jamaica and exploit the demands of the global marketplace. Let’s give thanks for our ability to create wealth with our own hands.
Access to the internet
“The Internet is becoming the town square for the global village of tomorrow.” - Bill Gates
In 2011, an unknown resident of rural Jamaica, Clifton Brown, gave a passionate plea on the television news that nobody ‘canna cross’ the flooded river in his community. Within a few days, Brown’s video went viral on the Internet, and he became one of the year’s most notable personalities, gaining fame and fortune in the process.
While many people may use the Internet for entertainment purposes, we must recognise the tremendous potential that it has to create profits. We need to learn how to utilise this medium to reach international markets with our Jamaican products. Let’s give thanks for our ability to communicate with the world.
Unlimited opportunities
“Opportunity is missed by most people because it is dressed in overalls and looks like work.” - Thomas Edison
Over the years, this column has explored hundreds of different options of making extra income that anyone in Jamaica can enjoy. It is often in times of great difficulty that the best opportunities reveal themselves. In fact, in 2011, many of our challenges have presented earning prospects for persons who are willing to commit the time and effort.
Despite the opportunities that abound here, there are still too many people who struggle to make ends meet or find employment. Opportunity does not offer a handout; it can give you a hand up the ladder of success only if you are prepared to climb it yourself. Let’s give thanks for an abundance of opportunities to earn.
The Jamaican community
“Jamaica - To Di Worl” - phrase and pose made popular by Usain Bolt
One of the features that sets Jamaica apart from the rest of the world is our identity as a people. Whether we are illustrating a story with comedic phrases or creating a new trend that will reverberate around the world, we are undeniably unique. There is a certain comfort in the camaraderie that we share as members of the Jamaican community.
We continue to distinguish ourselves around the world in many arenas, including sports, music and the arts. Many Jamaican emigrants have played important roles in developing their adopted lands, but these members of the Diaspora remain committed to the advancement of their homeland. Let’s give thanks for the privilege of being Jamaican!
Copyright © 2011 Cherryl Hanson Simpson. No reproduction without written consent.
Originally published in The Daily Observer, December 22, 2011
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Cherryl is a money coach and business mentor, and founder of Financially S.M.A.R.T. Services. See more of her work at www.entrepreneursinjamaica.com and www.financiallysmartonline.com. Contact Cherryl
The Secret of the Greatest Salesman in the World
A good book can weave a storyline that arouses all of your senses and emotions. Finely crafted phrases can paint a picture as vivid as a Michelangelo masterpiece; create a dish as appealing as the finest gourmet meal; produce a sound as stirring as a Bob Marley classic; and stimulate an aroma as comforting as the smell of a mother’s perfume.
Apart from the sheer pleasure it can bring, reading is also a great medium for learning. I have discovered that all of the important concepts of financial success are laid out in books, readily available for anyone who wishes to grasp them. I frequently recommend persons to search for the answers to their money problems in books.
While some people may think that financial titles might be a little boring, and devoid of intriguing plots that would stimulate their interest, that isn’t always the case. There are several books that present essential principles in very entertaining ways, which can excite your imagination and educate you at the same time.
The Greatest Salesman in the World, an international bestseller by motivational writer Og Mandino, will captivate you from the first paragraph until you regretfully reach the last page. Mandino creates a fascinating tale that takes a mundane topic for many people - sales success - and makes it come alive for anyone to enjoy.
Sales is a route to success
You don’t have to be a professional salesperson to reap the benefits of Mandino’s work. In every area of our lives, we are all involved in sales. Selling is not just marketing goods and services; it also involves promoting yourself. Employees sell their capabilities to get a job; potential spouses sell their marriageable qualities; children sell their parents on why they deserve the latest toys.
To increase your wealth, the reality is that you have to become excellent in the art of sales. If you examine the most financially successful people in history, you will realise that they had a flair for selling themselves and their offerings to reap profit. People who declare that they can’t or don’t like to sell are most likely to be financial underachievers.
When some persons think of sales, they have an image of an overly persistent product pusher, trying to offload something that no one wants. Many people also fear rejection, so in order to protect their feelings they avoid having to sell a product or service. These misconceptions and fears about sales have only served to keep many persons from increasing their earnings.
In search of the secret of sales
If you desire to achieve more out of life, there’s a lot to gain from reading The Greatest Salesman in the World. You might identify with the protagonist, Hafid, a lowly camel boy in the ancient Middle East, who is tired of being poor and boldly approaches his wealthy boss to learn how he can become a rich merchant too.
Hafid’s boss, Pathros, gives him a sales challenge and promises that if successful, Hafid will learn the secret principles of sales. Pathros counsels him to consider obstacles as beneficial, as they will serve to sharpen his skills and strength. Hafid sets off on his journey repeating Pathros’ sage advice, “Failure will never overtake me if my determination to succeed is strong enough.”
Hafid fails miserably at trying to sell the robe consigned by Pathros, but in an enchanted encounter with a needy family he reveals his compassionate nature. After giving away the one thing that would deliver his sales success, the dejected youth returns home. Expecting to be ridiculed after his experience, Hafid is instead reassured by Pathros that he will be rewarded.
Pathros reveals the story of how, as a young man, his own act of kindness to a stranger in distress earned him the privilege of learning the secret of selling. Everything Pathros knows about sales success is written on ten scrolls, which he bestows upon Hafid. With a parting gift of one hundred gold coins, Pathros encourages Hafid to faithfully abide by the instructions in the first scroll.
The secret is revealed
As he reads, Hafid learns that the scrolls will teach him how to prevent failure, which is “man’s inability to reach his goals in life, whatever they may be”. The document explains that the only difference between those who fail and those who succeed are their habits. The principles of success would only work if Hafid chooses to “form good habits and become their slave”.
Each of the other nine scrolls unlocks a key element of sales success. As Hafid reads each one as prescribed and applies the techniques, he eventually blossoms into the greatest salesman of his time. It would be remiss of me to give all the secrets here; instead I invite you to go directly to the source to find the answers.
However, I will share one principle: “My dreams are worthless, my plans are dust, my goals are impossible. All are of no value unless they are followed by action. I will act now.”
Copyright © 2011 Cherryl Hanson Simpson. No reproduction without written consent.
Originally published in The Daily Observer, December 15, 2011
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Cherryl is a money coach and business mentor, and founder of Financially S.M.A.R.T. Services. See more of her work at www.entrepreneursinjamaica.com and www.financiallysmartonline.com. Contact Cherryl
Financial success may be easier than you think
Last week’s column which looked at several ways in which we sabotage our financial future by delaying important activities seems to have hit home with many readers. The quote ‘procrastination is opportunity’s natural assassin’ certainly rings true when it comes to our finances. Recently, I had yet another occasion to reflect on the dynamic relationship between time and money.
It was late Saturday afternoon when I received information that a family friend was coming to visit for a few days and would be arriving in less than three hours. In full-fledged panic mode, I thought about all the things that needed to be accomplished before I would be comfortable with having a guest stay in my house.
As I have acknowledged many times, procrastination has unfortunately been one of my more challenging vices. True to form, I had put off many little household tasks that could easily be ignored by my family alone; but with a visitor almost on my doorstep, these now became critical to my desire to be a successful and sociable host.
Launching an assault on procrastination
With the efficiency of an army strategist, I surveyed my home and zeroed in on all the areas that needed to be addressed for me to win this battle. In short order, I mentally designed a plan of attack to deal with all the unresolved tasks on hand. With precision and persistence, I tackled each chore until my mission was accomplished.
Two hours later, as I inspected my now acceptable home, it occurred to me that some of the things I had put off for months had been pretty simple to fix once I got started. I counted at least seven outstanding items that had been quickly resolved once I determined that they had to be done immediately. “That wasn’t hard,” I thought smugly to myself as I surveyed my victory site.
It then became obvious that the convenient excuse, “I don’t have the time,” that I often use to defend my lack of action, was just a sham. When my back was against the wall, time was no longer an issue, and I just focused on getting the job done. The end result was that I had successfully and effortlessly achieved my goal.
Procrastination is at the root of money problems
I started thinking about my past money problems and some of the issues that still stubbornly haunt me today. It became clearer that my propensity to delay in carrying out crucial tasks had also affected my finances. Too many times I have regretted how long it took me to take action on important goals.
Could our habit of procrastination be a main contributing factor to our economic woes? What if we were magically able to travel back in time and adjust our past so that we acted swiftly and decisively in all our decisions about money? Would this have created the success that we so desperately desire today?
Several months of chores, which had previously seemed almost insurmountable, disappeared with effortless ease as soon as I approached them with a determined work effort. I reasoned that if I consistently tackled all my financial objectives with similar vigour, then financial achievement might be just as simple to attain.
Time to get rid of all the excuses
Many of you may have had similar episodes with the debilitating effects of procrastination. As my recent experience showed, the ‘no time’ excuse can be destroyed if there is a sense of urgency. Put some pressure on yourself; acknowledge that if you don’t get started immediately to earn and save more, you’ll never be able to achieve that home, education or retirement that you desire.
Sometimes we procrastinate because we are waiting for everything to be perfect. “I’ll invest when I have a lump sum,” or “I’ll start my income-earning idea when I get a break at work”; these are only some of the excuses I hear constantly. In reality, there will never be a perfect time; just get started where you are right now, with the resources you have on hand.
Another reason that many of us delay in doing what we need to do is that we really don’t know how to accomplish what we want. You may want to get your finances in order or reduce your debt, but you have absolutely no idea how to get it done. Lack of knowledge doesn’t have to hinder you; seek information and advice from financial professionals, seminars, books and the internet.
Anti-procrastination resolution
Very soon, a new year will be upon us, and most of us will make ambitious resolutions to change for the better. One of the most powerful pledges we can make is to get rid of a major obstacle to our financial success - procrastination. However, let’s not wait for 2012 to make a start; let’s resolve right now to take immediate action to achieve our money goals.
Copyright © 2011 Cherryl Hanson Simpson. No reproduction without written consent.
Originally published in The Daily Observer, December 8, 2011
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Cherryl is a money coach and business mentor, and founder of Financially S.M.A.R.T. Services. See more of her work at www.entrepreneursinjamaica.com and www.financiallysmartonline.com. Contact Cherryl
A Stitch In Time
It ’s amazing how a few minutes’ time delay can make a major difference to an entire day. This realisation struck me on a recent bus trip to the country. The driver of the vehicle turned up about 15 minutes late for work, and in his attempt to make up for lost time, he exceeded the speed limit and was stopped by the highway police.
The driver ended up delaying his journey by several more minutes and received a traffic ticket to add to his troubles. When we finally reached our destination he admitted to his team member that every time he was a little late he got caught by the police! As I left the bus, I reflected on the fact that lost time can also multiply problems in our financial lives.
One of the biggest financial misconceptions that many of us entertain is the belief that we have all the time in the world to do the right things with our money. When we spend our money frivolously or procrastinate on taking action on our goals, we usually think that we will be just fine if we save later or start working on our plans at another time.
Time does not tarry
While the saying ‘it’s better late than never’ will still apply whenever you are ready to take steps to actualise your financial goals, the reality is that it will be very difficult for you to recover from the negative effects of lost time on the growth of your money. Let’s look at an example of how delaying on saving can lead to lost interest income.
Best friends Camille and Sandra both secure their first jobs at age 21 and earn similar salaries. Camille decides to immediately start saving J$5,000 every month and earns an after-tax interest rate of four per cent, compounded monthly. After ten years of consistent saving with this return, she has in excess of J$736,000 in her account, of which over J$136,000 is interest earned.
Sandra figures that she has enough time on her side to enjoy life first and save later. After five years, she finally starts putting aside J$10,000 monthly and earns the same interest rate as Camille. At age 31, her account balance is just over J$664,000, with accrued interest of about J$64,000.
Although they both save the same amount of money, ‘early-bird saver’ Camille gains more than J$72,000 in extra interest than Sandra who delays saving by five years. In fact, after 15 years Camille will have saved $900,000 and earned about $328,000 in interest. At that time, Sandra will have saved more money, $1.2 million, but still earned less interest of around $273,000.
Procrastination creates problems
In everyday life, there are several other instances where a little laziness or chronic procrastination can create bigger challenges. Have you ever had a small tear appear in a garment, or had a shoe tip become loose? Dealing with it right away would take little time or effort; but if you’re like me, you may probably leave it for an extended period without addressing the problem.
If you repeatedly ignore the small damage, it may eventually cause the item of clothing to give way at the worst possible time, such as at an important function! If only you had made that proverbial stitch in time, you could have avoided the ruin of the outfit and possible embarrassment that may have occurred from your lack of timely action.
While overlooking a torn seam or broken heel might be mildly inconvenient, ignoring or procrastinating about important money issues can lead to major setbacks in your financial goals. As we have seen, delayed saving and lost interest can dramatically affect your ability to amass enough money to meet your financial targets.
Just like the extra effort and cost that will be required to fix a large tear in your clothing or a damaged shoe, you will need to put more money aside and invest more aggressively in order to play catchup on your goals. You definitely give up a lot when you lose the advantage of time with your money.
Desperation is destructive
Unfortunately, many people will panic when they realise how difficult it will be for them to achieve their financial objectives in the little time they have left to save. This desperation may lead them to take unwise investing risks; all too often, it results in more loss instead of the intended gain.
Some persons also procrastinate to their detriment with regards to their debt problems. Instead of addressing their inability to meet their loan payments, they ignore the past due letters and avoid their creditors’ telephone calls. This only leads to increased penalties and ballooning debt balances which could have been averted by immediately contacting the lending institutions for a solution.
If you recognise that you have not made the best use of your time, don’t despair. While it’s true that you can’t turn back the clock, you can still wind it up again by making the necessary adjustments to your attitudes and actions around money.
Copyright © 2011 Cherryl Hanson Simpson. No reproduction without written consent.
Originally published in The Daily Observer, December 1, 2011
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Cherryl is a money coach and business mentor, and founder of Financially S.M.A.R.T. Services. See more of her work at www.entrepreneursinjamaica.com and www.financiallysmartonline.com. Contact Cherryl
Three Keys to Saving Success
One of the essential money principles that persons often neglect in challenging economic times is the important act of saving. When there’s not even enough money to pay basic expenses, it’s easy to understand why people will forgo this simple, but fundamental tool of financial success.
Even if they had extra funds left after paying their bills, many people think that it doesn’t really make sense to save, as the money seems too small to make a difference to their financial situation. It’s common to hear people comment that interest rates are too low, and it takes too long for savings to grow, so why bother?
Although some people might think that it’s a futile activity, there still is no substitute for saving, for many reasons. Firstly, it is vital to put aside a pool of money that can take care of emergency situations such as illness or job loss. Apart from creating a rainy-day account, it is also important to save to build a nest egg that can be used for future goals.
While they may recognise the benefits of building lump sums through saving, many people don’t understand that there is a psychological value to saving. To be successful in any endeavour, it is important to be disciplined; one main purpose of saving is to develop the regulated restraint that is required for financial achievement.
In order to save consistently every month, you need to make a savings plan. Let’s look at three key things that you can do to be successful with saving:
Decide to make saving a priority
There’s always some pressing need for money, so saving is often relegated to the bottom of the money priority list. Remember that when you use all your money just to pay bills, then everyone else is benefiting from your hard work except you. At the end of the day, you will really have nothing to show for your effort, so decide to pay yourself first by saving some of your money.
It might seem difficult to save when you have many expenses, but if you are creative you can find ways to free up extra cash. Can you carry food from home instead of buying lunch at work? Can you cut back on entertainment, cable or mobile phone calls? Do you have a loan that you recently finished paying? Instead of spending the money that is now available, how about saving it?
If you are really challenged in finding extra money, then the simple act of gathering loose change in a jar every day can be enough to start your savings plan. I have heard of persons paying school tuition, going on vacation, or even buying cars with the proceeds of coin saving. No matter how small, saving helps you to focus on accumulating and retaining money instead of just spending it.
Determine an amount to save
Saving becomes an easier task when you work out a set amount to save regularly. Instead of making ad hoc allocations to your account, you should use your budget to help you calculate the exact figure that you can commit to saving each month.
While you may decide on a flat amount, it’s even better to save a fixed percentage of your income. It’s generally recommended that you should save at least 10 per cent of your income every month. However, if you put this amount in your budget and find it too hard to pay your other bills, then you can start with a smaller figure such as five per cent.
As you earn more money, you should increase the amount of your income that goes towards savings. Having a percentage allocation ensures that you will remember to boost your savings every time you receive a pay increase.
Discipline yourself to save regularly
One situation that prevents many people from saving regularly is that they may not have the time to go to their financial institution to make their deposits. To ensure that your savings plan stays on target, and that you are not tempted to spend your savings, you need to work out the simplest way to get money into your account every month.
Look for ways to make your savings automatic, and ensure that the process is as hassle free as possible. One direct way to get your money into your account is to request a salary deduction. Ask your employer to take out your savings amount from your pay cheque before you receive it, and send it to your account.
Another possibility is to set up a standing order at your financial institution to transfer your savings amount into a different account that is not used for spending. If you leave your savings in an ATM-accessible account, you may forget its true purpose. If neither of these options is available to you, then simply place your savings into an envelope and put it aside until you can get to the bank.
So make a decision to pay yourself first, determine a fixed saving amount and be disciplined in building your nest egg every month!
Copyright © 2011 Cherryl Hanson Simpson. No reproduction without written consent.
Originally published in The Daily Observer, November 24, 2011
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Cherryl is a money coach and business mentor, and founder of Financially S.M.A.R.T. Services. See more of her work at www.entrepreneursinjamaica.com and www.financiallysmartonline.com. Contact Cherryl