Archive | Personal Development

8 Keys to Financial Success Cont.

This article is a continuation of my previous post: “8 Keys to Financial Success.” If you haven’t read the previous post I suggest visiting http://www.jacobspaulsen.com/personal-development/8-keys-to-financial-success and catching up on it now. The 8 Keys to Financial Success are designed to help people with an existing stream of monthly income to achieve wealth and financial freedom. In the previous article I outlined keys 1-4. Here I will outline 5-8.

  1. Let Money Work For You. Now that you have began to build your emergency fund and have paid off any credit card debt you will begin to have excess cash-flow. This “excess” cash-flow can now be channeled towards investing. How much? No less than 5% of your monthly income should be put toward investments and after your rainy day fund is built and your credit card debt is gone you should be contributing between 10-15% of your income every month toward investments. Where & What? You need to purchase assets. Assets are investments that put money back into your pocket. Your job is to find assets that will increase your monthly cash-flow and bring you closer to financial freedom. If you are wondering which investments are safe, the answer is that only the investments you are totally familiar with and comfortable with are safe. The risk of the investment is based on your own knowledge of it.
  2. Multiple Streams of Income. No one source of income in this world is 100% solid. You could loose your job or main source of income at any time and it therefore becomes necessary to have a back up stream of income. It also goes to reason that the only way to come closer to financial freedom is to work harder at your current job or to get a second income source. I am an advocate for owning your own business instead of getting a second job. Only by owning your own business are you creating leverage and potential residual income which is the base of true financial freedom. Look for opportunities or ideas that will allow you to build a side-income. Don’t be afraid to invest some cash and some time into the success of a side business since it may become your greatest asset.
  3. Automate Your Finances. The reason a lot of people don’t achieve their financial goals is due to a lack of discipline. Even after you begin to track your finances and set goals it can take a lot of work and discipline to carry them out. Learn to automate everything possible about your money to guarantee achieving your goals. If you can set up an automatic transfer from your checking each month to your rainy day fund, or a auto-pay on all your bills do it. Take human error out of the picture as much as possible to ensure achieving your goals.
  4. Educate Yourself. The last key to your own wealth is education. In order to be worth more you must first become more and in your financial stewardship this can only be done by increasing your financial education. Read business and investing books. Study the industry of your side-business and seek out advice from successful people in your family and in your industry. Learn everything you can about different investment strategies such as stocks, bonds, real estate, hard money, etc. Attend local seminars about wealth building and investing. Teach what you learn to all those around you.

If you can harness these 8 keys of financial prosperity you can achieve any financial goal you choose. You aren’t limited by your income but by your own financial intelligence and skills. Learn, Plan, Do.

Jacob Paulsen

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8 Keys to Financial Success

Now for the purpose of this article I want to assume that you currently have a steady stream of monthly income. I am going to discuss the Paulsen 8 Keys to Financial Success but in order for these 8 keys to truly bring you success it is necessary that you already have a consistent income. For 95% of America financial problems do not come from the lack of a strong income but the lack of skills necessary to manage their income. You see we spend the first 25 years of our lives being taught how to go into the workplace and make money, but nobody ever teaches us what to do with money once we have it. That is where the 8 keys of financial success come into play.

A quick disclaimer: I did not invent these 8 ideas and I don’t lay claim to any of this content. From all my study I have simply organized my favorite and key concepts into these 8 Keys. In this article I’m going to discuss the first 4 of the 8 keys to success. Stay tuned for the last 4 keys in a future article.

  1. Track Your Finances. This is the first step because it makes everything else possible. What is measured can be improved and studies have shown that even corporate executives who look at financial statements everyday tend not to know their own financial situation. You must know where your money comes from and where it goes, what assets and liabilities you own, and how your current performance lines up with your financial goals. Very few people have the accountant like skills necessary to do it themselves and so to those I recommend hiring someone to do their book-keeping. Once you have a handle on your own finances the true work can begin.
  2. Have a Cash-Flow Budget. This is a two sided coin. First you need a budget which is a simple idea of where you want your money to go. How much do you want/expect to spend each month in dining, gasoline, groceries, etc. Second is to work on your cash-flow. How much is left over each month? How much do you spend vs bring in? This is called your Profit vs Loss in the business world and knowing that number should be your life. The other part of your cash-flow is your  Assets vs Liabilities/Expenses. This number will show how close you are to retirement. Assets are things that bring you income without any work on your part. Liabilities and Expenses are everything that take your money away from you. Once your assets bring in enough each month to cover all your expenses and liabilities you can stop working your day job and retire. Making that number positive is your number one goal. To start working on your cash-flow now download this sheet from JP2.
  3. Create a Rainy Day Fund. Before you begin investing your money into assets or toys your number one priority is to put some cash away into a 100% liquid account with the highest interest rate return possible. MMA, or money market accounts offer the best solution. In this account you need to have enough cash to cover a minimum of 3 months of expenses and liabilities. Get this account filled as quickly as possible. You shouldn’t be sleeping well at night if you don’t have this cash set aside. Once you hit the 3 month goal continue to contribute a little each month until you reach at least the one year mark. As your expenses go up in the future you need to make on going adjustments to this fund. One year may seem extreme but this cash fund is vital to your long term financial stability and success.
  4. Use Credit Cards like Debit Cards. Credit Cards were designed to hurt you. If used properly however they will bring you more freedom and success. Credit card debt is never, never, never acceptable. The interest rates are way to high to justify carrying any balance at all. Many people will tell you that it is necessary to carry a balance in order to build credit but that is a only myth. If you think of a credit card the same way you do a debit card you can win the game. Never charge your card unless the cash is already in the account to cover the charge. By paying off your card each month you will slowly build strong credit over time. Also if you get a good rewards card you can accumulate points and cash back rewards that will put extra in your pocket.

Until soon,

Jacob Paulsen

UPDATE: Part 2 to this article here: http://www.jacobspaulsen.com/personal-development/8-keys-to-financial-success-cont

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You Must Become More to Get More!

Ultimately you must become more if you want to earn more. In the insurance industry there is a term called “Human Life Value.” It seems almost wrong that anyone can assign an actual dollar value to our lives but this is necessary in when determining what kind of life insurance policies you can buy.

For purposes of this article when I refer to your “Human Life Value” I’m not talking about your insurance life value, but instead how much value you create for the world. As you work hard to become more, you in turn are able if you chose to contribute more to the world. As you actively create value for those around you, your true Human Life Value
increases. Your human life value is tied directly to your wealth. As your Human life value increases your wealth must also increase. Understand that the term wealth doesn’t always apply to money. Wealth can be a great number of things including strong & fulfilling relationships, inner peace & satisfaction, etc.

There are three distinct lessons we must take from this truth:

1. Our skills and knowledge alone do not create value for anyone. Only the application of skills and knowledge with correct direction can begin to create value for those around us. Therefore our Human Life Value only increases when we create value for others.

2. It is only in creating value for others that we can increase our own wealth. Since all our wealth is a direct reflection of what we receive from others and from society it is only in creating value for others that we can experience an increase.

3. Only through exchange can value be created. When you sell a good or service both parties become wealthier for having made the exchange even though the amount of goods or services exchanged remained the same. If you hug your 2 year old child both of you are wealthier for the exchange even though the hug was constant.

Understanding these principles, we can begin a discussion about how your Human Life Value affects you in Marketing. The first applied lesson to learn is that if you want to sell more goods or services you must become more. This is true both because your overall attractiveness affects your ability to sell and because your ability to create value in the life of your client is increased. Of course when speaking of attractiveness we aren’t referring to your physical attraction, but the
overall impression that you carry with you everywhere you go.

How do we become more? Allow us to separate your person into 4 common categories. Physical, Mental, Emotional, & Spiritual. To become more physically we must exercise and eat well. To become more mentally we must expose ourselves to new ideas and concepts. We must study and strive to learn more about more. To become more emotionally we must
interact with people. We must understand people. To become more spiritually we connect with an inner purpose and divine potential ever striving to follow our creator.

All four of these categories are inseparably connected. As you grow in one you must grow in the other. This isn’t to say that we are all balanced all the time but simply put they are connected and how you grow or don’t grow in one area will have an impact on the other four.

Becoming more is the end purpose of everything we do. As you increase your ability to serve your fellow man, or put differently create more value for society you in turn increase your own wealth. Ironically it is the only way to do so!

Jacob Paulsen

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Dark Knight Inspired Thoughts

On Friday of last week Ami and I went to see the newest Batman movie, Dark Knight. To read my movie review please visit my Flixster profile. The point of this post however is not to talk about the movie but the thoughts it inspired in me.

When I was young I watched heroic movies and dreamed that one day I could be a hero like that.
When I got older I realized that heroic movies are entertainment and nothing more.
Now I’m beginning to think that heroic movies while entertaining do, and should inspire us to be heroes.

Each of us has a little hero in us. A desire to be a cause for good in society, and a means to ending evil and inspiring love and kindness. Little heroic inspirations are necessary to bring out the hero in each of us and movies do a great job of that.

You see I believe that each of us has a calling on this earth. A purpose, which in its own right is a form of fighting evil and inspiring good. Everyone from school teachers, artists, doctors, professionals, business owners, mothers, computer programs, salesman, and even lawyers in their own way have an opportunity to make a difference. It is in this pursuit of creating greater value in the lives of others that we ourselves can be blessed, and in a literal sense become more powerful. That is what makes a Hero. Many of us have heroes in our lives to which we look up to.

Just like Harry Potter taught us that ultimate power comes from strong, loyal, and sincere relationships, the hero in each of us strives to become an asset to those he/she cares about. Most unfortunately the villain in each of us fights this cause. The villain doesn’t want to care about those around us and all his thoughts are self-centered and selfish. The villain in us inspires us to take from others and society creating value for ourselves only. The villain encourages us that our only purpose is to serve ourselves and those who rely on us. The villain feels no need to create strong relationships except out of a selfish need to leech off of others.

I am grateful for the heroes in cinema, literature, and real life all around us that inspire me to strenghten the hero inside of me by serving others, and becoming stronger myself only in turn to be a greater asset to all those for whom I care.

Feel free to share your favorite heroes and what you have learned from them.

Jacob S Paulsen

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Recent Reads

Recent Reads

In the last month I have been able to read (actually listen) several new books that I have enjoyed. I wanted to take this post to talk a little about each of these recent reads.

“His Excelency George Washington” really blew me away. I always knew George Washington had to be a powerful and unique person but this really got me pumped. I learned a lot about this amazing man and it inspired me to memorize all the U.S. presidents and eventually I would like to read a biography about all the US presidents. George was a unique and powerful hero. He was the very first person to put his life on the line of American Independence and he knew it. His general lack of military experience and general failure in warfare during the war go to prove that his success was due to the principles he lived by and “providence itself.”
“The 5 Lessons A Millionaire Taught Me” had great, but unoriginal content. I was dissapointed in how obviously copy-cat the material is. I realize that there is only so much content to be taught in reference to wealth principles but Richard Paul Evans even goes so far to quote George Clason’s “Richest Man in Babylon” in almost every chapter it seems. I’m super glad I read it just the same because we all need on going reminders of what we need to be doing and how true wealth is
created. Richard Paul Evans is a great author and it show in this work. It was very easy to read and he is a great teacher.

I have always been a fan of Robert Allen as a person but his book Nothing Down turned me away a little because it was just hard for me to get through. I enjoy real estate but I’m not super passionate and toward the end I just wanted to be done. This book on the other hand really held my attention. Both Authors do a good job of teaching principles of business, investing, and wealth. They laid it out in two different formats which helps different types of people who learn
differently and that is something I really liked.

If you want to see my other book reviews please visit my profile on goodreads.com

Jacob Paulsen

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Back to the Center Line

This week I am working hard to bring myself back to the center line. I am talking about a recurring pattern/principle that exists in life. It seems that when we set out to do something it doesn’t take long before we are falling off track of hitting our goal. This is always true no matter what the end objective/goal is. It becomes necessary on occasion to re-align ourselves with our goals. The greater our tendency to fall away from the line the more often we need to re-align with it. This week I realized that I have come away from the center line of many of my goals. I have put a large white board up in my office with a list of my goals and other things I’m working on. This will hopefully help me come back to where I want to be. I figure that even the auto-pilot system on planes is nothing more than a constant re-aligning mechanism. We all need similar systems in place to help us come back to full focus.

On a side note I had my best day of golf so far today. I had 57 strokes in 9 holes which is sadly my very best so far. I didn’t keep track my first time out, and since I’ve golfed 69 and 61 so I think it’s fair to say I’m improving. Today on the 9th hole I asked a friend to video my stroke for all of you to see. That would have been great but he decided to make a really loud noise right during my swing and it totally threw me off:(

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