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Real Estate – The Velocity of Money

This lesson is really adapted from Robert Kiyosaki’s book, “Who Took My Money?” I strongly encourage investors to read this book. He writes that the Velocity of Money is the one reason why rich get richer and the average investor risks losing it all. I agree. From Robert’s book, he writes “As a professional investor, I want to…

1. Invest my money into an asset.

2. Get my money back.

3. Keep control of the asset.

4. Move my money into a new asset.

5. Get my money back.

6. Repeat the process.”

When I teach my homes buying homes investment strategy, I am teaching Robert’s velocity of money concept. I read Robert’s book in the summer of 2005. Little known to me, I was already teaching the velocity of money and didn’t really realize it. Thankfully, I was already utilizing it with my investing.

To give you an example: Let’s assume you purchase a nice single-family home for $200,000. To purchase this home, you use a 5-percent down payment loan program and invest approximately $10,000. You use a fixed, interest-only loan program and your total monthly payment is, say, $1,400. You offer this home on a Rent to Own Program. Your new tenant/buyer gives you $6,000 up front on this lovely home and picks a program paying you $1,695 a month in rent.

After collecting your up-front payment, you would still have $4,000 invested in this property ($10,000 down payment less that $6,000 upfront payment received from your tenant/buyer). Your monthly cash flow would be approximately $295. (Rent of $1,695 less your payment of $1,400) It would take you another 13 1/2 months to recover your remaining $4,000 invested. ($4,000 divided by $295 monthly cash flow) In this example, it would take you around 14 months to complete steps 1, 2 and 3 above. You would have invested in an asset, gotten ALL your money back and kept control of this same asset. Now you are on to step 4, which is move your money into a new asset. Robert continues his teaching as follows:

“A professional gambler wants to be playing the game with house money as soon as possible. While in Las Vegas, if I had put my money back in my pocket and only played with my winnings that would have been an example of playing with house money. The moment I began betting everything, I lost the game because I lost sight of my goal, which is to stay in the game but to play with other people’s money, not my own money.”

When you come to a point in your investing at which you have gotten all of your money back and still own the asset, you are playing with house money. In this example, after Month 14, you would still receive a cash flow of $295 a month until the property sells. This is all house money. Now let’s move on and assume that the your tenant/buyer doesn’t purchase your home during the …

Russian Attitudes Toward Money

Lynn Visson's "Wedded Strangers" explains:

"For Russians, the ultimate sin is being stingy.

Russians and Americans have vastly different views of money. This is understandable considering that Russians were under the Soviet system and Americans were raised under a capitalist system.

Under the Soviet system, Russians had money in their pocket, but no place to spend it. Jobs, medical care, apartments, pensions – the basic necessities that one needed for life – were provided by the state.

The problem was that the state decided what to produce. Choice in goods was unavailable. That was if the product was even available. Goods were scarce. You could not compare shop even if you wanted to.

You did not have to worry about spending too much money because there were not too many goods to spend money on.

There are stories to illustrate life during the Soviet times. When you walked down the street and you saw a line of people, you got in line, even though you did not know why the line was forming and what you were waiting for.

Whatever it was, it was scarce and people wanted it, so it was better to get in line before you missed out.

Conversely, Americans have more money, but they have a thousand choices on how to spend that money. The whole American consumption system is designed to get you to spend money on whatever product is advertised. They supplement the myriad choices with easy credit.

The trick in the American system is to figure out what it is that is really important to you. It becomes important to make wise choices because there are so many choices available. Shopping for bargains and good value becomes imperative to survive American capitalism. Your choices are virtually unlimited. You could spend hundreds of thousands times your income in America without giving it a second thought.

The problem is that you would soon find yourself wallowing in consumer debt.

Americans value their ability to negotiate a good deal and to find a bargain. They brag about the great deals they get. They are proud of their ability to get the most for their money. To live at the highest standard of living possible is the goal of America's consumer society.

For that same reason, American men are proud of their success and the assets they have accumulated. They think that they can attract a Russian woman by telling her about their ability to provide for her.

They brag about their income and their wealth to impress her and then they turn around and tell her about what a good negotiator they are in exacting the best price for things.

These tracks are valuable in American society. But all that talk about money makes them sound like Ebenezer Scrooge to the Russian woman they are trying to impress.

To a Russian, who earns one dollar for every fifty dollars an American earns, an American sounds incredibly cheap when they talk about what a hard bargain they …

Insurance As a Device For Handling Risk

The real nature of insurance is often confused. The word “insurance” is sometimes applied to a fund that is accumulated to meet uncertain losses. For example, a specialty shop dealing in seasonal goods must add to its price early in the season to build up a fund to cover the possibility of loss at the end of the season when the price must be reduced to clear the market. Similarly, life insurance quotes take into consideration the price the policy would cost after collecting premiums from other policyholders.

This method of meeting a risk is not insurance. It takes more than the mere accumulation of funds to meet uncertain losses to constitute insurance. A transfer of risk is sometimes spoken of as insurance. A store that sells television sets promises to service the set for one year free of charge and to replace the picture tube should the glories of television prove too much for its delicate wiring. The salesman may refer to this agreement as an “insurance policy.” It is true that it does represent a transfer of risk, but it is not insurance.

An adequate definition of insurance must include both the building-up of a fund or the transference of risk and a combination of a large number of separate, independent exposures to loss. Only then is there true insurance. Insurance may be defined as a social device for reducing risk by combining a sufficient number of exposure units to make the loss predictable.

The predictable loss is then shared proportionately by all those in the combination. Not only is uncertainty reduced, but losses are shared. These are the important essentials of insurance. One man who owns 10,000 small dwellings, widely scattered, is in almost the same position from the standpoint of insurance as an insurance company with 10,000 policyholders who each own a small dwelling.

The former case may be a subject for self-insurance, whereas the latter represents commercial insurance. From the point of view of the individual insured, insurance is a device that makes it possible for him to substitute a small, definite loss for a large but uncertain loss under an arrangement whereby the fortunate many who escape loss will help to compensate the unfortunate few who suffer loss.

The Law of Large Numbers

To repeat, insurance reduces risk. Paying a premium on a home owners insurance policy will reduce the chance that an individual will lose their home. At first glance, it may seem strange that a combination of individual risks would result in the reduction of risk. The principle that explains this phenomenon is called in mathematics the “law of large numbers.” It is sometimes loosely referred to as the “law of averages” or the “law of probability.” Actually, it is but one portion of the subject of probability. The latter is not a law at all but merely a branch of mathematics.

In the seventeenth century, European mathematicians were constructing crude mortality tables. From these investigations, they discovered that the percentage of …

The Insurance Agency Elevator Pitch

An insurance agency elevator pitch is a succinct summary used to quickly describe your insurance agency, products and services. It should include your unique agency value proposition, and must be delivered within the time span of an elevator ride, in about 30 to 60 seconds. This can be much harder than many agents might initially think, and should be scripted, vetted, rehearsed, and timed. The elevator pitch is a truly important and fundamental component of your insurance agency marketing and insurance agency prospecting efforts.

A great exercise for agents or agency executives is to ask a variety of people in your agency to tell you their version of the agency elevator pitch. Don’t be surprised if the pitch varies dramatically from person to person. Does the pitch adequately describe your value proposition? Does it highlight the products, services and solutions which best showcase your agency expertise? Did the litany of pitches even sound remotely alike?

Some years ago, I met with the executive team and senior managers of a small company, which at that time employed less than 100 people. I asked each of the dozen people I met to provide me with an elevator pitch about their organization. Some people were taken completely by surprise. Others sat and thought, and struggled to articulate an elevator pitch, or even describe their value proposition. The pitches I heard varied drastically.

Elevator pitches are an important digital asset for every agency. They should be vetted, scripted, practiced, and preached. I call it an asset, as it is a fundamental component in the marketing of any agency. And every member of an insurance agency, from agent to receptionist, to customer service representative to executive team should be able to promptly and professionally deliver their insurance agency elevator pitch.

Your sales and marketing efforts are built upon a well articulated and easily repeatable value proposition, which should be a microcosm of your elevator pitch. If you cannot communicate your value proposition in less than 30 seconds, or stumble when trying to express it, it’s time to write it down, rehearse it and communicate your value proposition with everyone in your agency. Once that is done, turn it into a 30 to 60 second elevator pitch. Practice makes perfect, try repeating both of these in monthly management meetings and sales meetings, and it’s important to note that your elevator pitch might vary based on your target niches (P&C versus Group Benefits for example).

Here are a few best practices when it comes to your insurance elevator pitch:

  • Be succinct – 30 seconds is much better than 60 seconds (you may not have 60 seconds!)
  • Create empathy – For example, “We work exclusively with New York contractors” or “we work with trucking companies with 5 to 50 power units” or we specialize in groups between 50 and 150 participating employees”
  • Verticalize – a vertical pitch is easier to differentiate, allowing you to better articulate your unique pitch. “We insure restaurants addressing their unique risks.”
  • Be different

Know About the Consequences of Not Having Public Liability Insurance Coverage

Public liability insurance is an important insurance policy that protects your business during the time of adversities. Especially, if your business handles risky activities like construction, plumbing, etc., or if the public enters into your business premises like in retailing, then this insurance plan is a must have. Owing to the uncertainty of accidents and the huge costs of legal claims, your business may run into crisis if you are not properly guarded by the right insurance plan, i.e. public liability insurance.

This article gives you a little insight into the consequences your business might face, if you do not have public liability insurance coverage.

Financial burden: Depending on the damage or loss caused to the third-party, the amount claimed may vary. But the third parties generally sue the company for heavy amounts as small amounts do not matter for both company and the sufferers. These claims will add up to the company’s existing costs and become a financial burden to the company. Managing the finances between the company’s needs and legal claims is not wise as it halts the business operations.

Legal battles: Apart from the amount to be reimbursed, a company has to face legal battles which occur as a result of lawsuits filed against the business by the third parties. The legal costs and expenses are generally high. You need to deal legal authorities with utmost care. These legal battles are hectic. The time and effort required to fight these legal battles is also high. It diverts you from your core business. But if you have a public liability policy, the insurance company assists you and takes charge in fighting these legal battles till the case is closed, besides paying the legal expenses.

Chances of bankruptcy: Inability to pay the outstanding charges claimed by the third parties may lead the business to go bankrupt. Unless a business has outstanding capital, it cannot afford to pay these legal expenses. Moreover, you are needed to provide additional financial assistance in the form of medical aid as in case of accidents and repairing charges in case of property damage, besides paying the lump sum amount and the legal costs.

Investment at risk: In case your business is facing a third-party legal claim, and if you are in a position where you cannot pay the claimed amount instantly, then, the bank or the court gives permission to seize your various monetary investments or fixed assets such as land, furniture or machinery to cover the legal expenses and the claimed amount.

Lack of mental peace: With the all the above issues, you will surely lose mental peace. These legal claims not only eat away the business’ time and effort but in some cases may ruin the business’ existence. Legal claims should be dealt instantly; any delay will only aggravate the tension and loss.

A good business will always be prepared for the future crisis. Having a public liability insurance policy is a wise decision. It provides timely financial help to pay the …

Can GEICO Auto Insurance Help When It Comes To DUI Car Insurance?

DUI car insurance is quite a significant issue for those charged with drunk driving, DUI, DWI, or other alcohol-related driving offenses. Auto insurance companies including GEICO auto insurance will base their rates on a variety of factors, including driving record.

Drunk driving convictions will cause many auto insurance carriers to drop you like a hot potato as an insured; others will raise the rates significantly. In many cases it may be best not to reveal a pending case to an insurance carrier, simply because without a conviction, there is no obligation to do so.

If an accident is involved in the alcohol-related driving episode, then it becomes even more complicated when to talk with your auto insurance company and when to talk to your lawyer. Therefore, it is critical to consult with a qualified lawyer in your area to determine whether the insurance company can exclude the incident from coverage. In most cases, when someone has a DUI or DWI and gets into an accident, a GEICO auto insurance policy will cover the damage. It is not absolute, but nice to know they stand by their auto insurance policies and can back it up with their strong financial power.

By getting a free, no-obligation quote on auto insurance from GEICO Auto Insurance anyone accused of a DUI / DWI can get information on the specifics of their situation while there is still time to do something about it.

For fast info on some of the top 10 auto insurance companies click on over to Free Advice For Top 10 Auto Insurance Companies.…

Part-Time Lawn Mowing Business While Working a Regular Job

No matter what the economy, the grass still grows. There is always someone near by who needs their lawn mowed and can not do it themselves. These folks have a problem and you, the full-time employee wanting to start a part-time lawn mowing business, have the solution. They can pay you to mow their yard. Problem solved.

I often get the question of whether you can start your lawn mowing business part-time in the evenings and on weekends and keep your full-time job. The answer is a big yes!

The question is can you do it? If you have lots of energy, enjoy being outdoors and working in your yard, and can handle just 5 to 10 extra hours of physical work each week, you can start a part-time lawn mowing business and keep your regular job.

People who work 12-hour rotating shift schedules are in a terrific position to run a lawn mowing business part-time while keeping them full-time jobs because they have so many days off.

Marketing
First, you need to find some customers. Write a flyer using word processing software, print it, take it to your local copy shop, have 25-30 copies made, and distribute them around your neighborhood within walking distance of your house. You may want to use a half-page flyer so you can distribute to 50-60 houses. Include what you offer the prospect (lawn mowing, edging, cleaning off the concrete), your name, best phone number to contact you, your address so they know you are a neighbor and how much you charge. Since you are new to the business charge on the lower end of the average rate other lawn care professionals charge in your area. Five dollars cheaper than average may get your neighbors to stop using someone out of the neighborhood and start using you instead.

Another reason to start with your neighbors is they know you or know of you and we all want to help other people, especially people we know. Since these folks are close by, you get to go out, knock on doors and meet your neighbors while marketing your business to them. Smile, introduce yourself and tell them which house is yours or what street you live on and get to know a little about them and some things you might have in common. Hand them a flyer at the end of the conversation and move on to the next house.

Keep this up until you have at least one person ready for you to go home, get your equipment right now, come back and work that day and are pulling out their checkbook to pay you. If this happens, stop marketing that day, service your new customer and earn some money. Continue marketing the next day.

When you have the number of customers you think you can handle, stop marketing daily and only doing a little occasionally or when someone asks for your information. You will need to keep a few flyers on hand to give …

The Goal of Insurance

Not because you are insured means that you are going to act recklessly on the roads or in general, life. There are some companies which give you part of your premium when your insurance has not been used for a specific period. To make your task a lot easier, there are a number of online insurance websites which compares different rates of insurance with specialist criteria to give you the best result. When shopping for any type of insurance compare which company has a higher claim bonus.

It is a good habit to shop around when looking for a good motorcycle auto insurance. It is obvious that each insurance company will differ in various things, such as, rates and coverage. For this reason you are to do all the necessary research and also evaluate yourself and see what would best fit you. That is the main purpose. It makes no sense in getting a plan which is not only over your budget but also does not cover accidents which are more likely to happen in your specific case as compared to someone else. Some may have more coverage but may cost more and vice versa. The insurance company is trying to determine both how much you will be using your vehicle and how much experience you have on it. This is very important to the insurance companies because they realize that your chances of having an accident will increase based on how often you drive. The years you have been using your vehicle or a vehicle will also be contributing to the determination of your rates.

Very often people get confused on this topic but it can be simple once some research is done or an insurance agent is consulted on the matter. There is always help out there waiting for you to ask, whether it be online or in person, you have the chance to learn and educate yourself on the variable that make a significant change in your insurance rate. Nowadays people are becoming more and more aware of the necessity of their insurance and the important role that it plays in their lives.

It is also important that you consult with an agent if you have further questions or would like to clarify something you read online. When it comes to your insurance you have to be dead on, a mistake can cost you money and in these hard financial times I think it is safe to say that we would like to save every penny. Keep note of what affects your insurances rates which type it may be and try to follow them so that your rates may be lower. There is always help out there waiting for you to ask, whether it be online or in person, you have the chance to learn and educate yourself on the variable that make a significant change in your insurance rate. It is always best to do your research yourself even after consulting with a professional, that way …

Insurance Claims for Orthodontics

Orthodontic billing is one of the things that gets questioned all the time and in all truth, it probably deserves its own book. There are a number of reasons for the confusion that crops up between providers and insurance personnel whenever orthodontics comes into the picture. However, it’s just tough to make nifty catch-phrases over something that should be simple and relatively mundane. As we talk about some of these items remember that we are coming to you from an insurance adjusters point of view.

How Does Insurance View Orthodontics?

Let’s start with the insurance side of the coin. For an insurance company, orthodontics can be a big pain in the you know what. We have multiple providers supplying multiple types of services and billing for them in a myriad of billing styles. Some bill all up front. Some providers charge their patients a certain amount based on what their insurance will pay. Some providers have adjustable payment plans to allow patients to gradually pay for services over the years. All of these options and more make orthodontics billing more complicated than it should be.

From the insurance side, orthodontic benefits are strictly limited. Almost every plan we’ve ever seen has a maximum lifetime benefit. Note that there ARE exceptions to this rule, but an open-ended orthodontics maximum is an extremely rich benefit and is definitely being seen less and less these days. These benefits are usually applied to the individual patient, but may also apply to the entire family in some cases. For example, little Susie Jones who has a $1,000 lifetime maximum benefit for orthodontics goes to an Orthodontist and has $1,500 worth of work performed. The insurance company pays out based on their coverage level – usually 50 percent or 60 percent, which would make the payment in this situation $750 or $900 respectively. If Susie needs an additional $1,000 worth of work, she will only receive $250 or $100 – again dependent on coverage level. If the $1,000 orthodontic lifetime maximum applies to her entire family, then there will be NO other payments for any other members of her family. This is the starting point of view for insurance companies and different companies have different payment philosophies based on this starting point.

How Does Insurance Pay Orthodontics?

Some companies are just tired of dealing with orthodontics. They acknowledge that there is a strict limit put on orthodontic benefits, so they don’t even bother messing with it. They’re doing this because somebody somewhere made the decision that it costs more to try and review these claims than that review would be worth. Some companies take the opposite approach, since orthodontics can be such a big-ticket item. They’re going to require you to submit a logical, well-thought-out plan documenting every step of the process in that patient’s treatment. Then there’s another approach still in which the insurance company tries to control these treatments to ensure that the patient is really getting his money’s worth out of his …

Maritime Frauds

What is a fraud? An international trade transaction involves several parties-exporter, importer, ship-owner, charterer, ship’s master, officers and crew, insurer, banker, broker or agent, freight forwarder. Maritime fraud occurs when one of these parties unjustly takes another’s goods or money. In some cases, several of these parties act in collusion to defraud another. Banks and insurers are often the victims of such frauds.

The sinking of an over-insured vessel carrying a high valued non-existent cargo has been encountered at regular intervals. During periods of economic and political upheaval and depression in the shipping business, there have been incidents of unusual losses. In the last few years, these and other factors have led to a significant escalation in the number of incidents that can be termed as ‘maritime frauds’.

Types of Fraud

Maritime fraud has many guises and it methods are open to infinite variations. Majority of these crimes can be classified into four categories as under:

o Scuttling of ships

o Documentary frauds

o Cargo Thefts

o Fraud related to the chartering of vessels

Scuttling of Ships

Also known as ‘rust bucket’ frauds, this involves deliberate sinking of vessels in pursuance of fraud against both cargo and hull interests. With occasional exceptions, these crimes are committed by ship-owners in a situation where a vessel is approaching or has the end of its economic life, taking into account the age of the vessel, its condition and the prevailing freight market. The crime can be aimed at hull insurers alone or against both hull and cargo interests.

For example, a dishonest shower may approach am exporter and offer to carry his next large cargo shipment on his vessel. The exporter is to arrange the contract and the proposed buyer to open a letter of credit in his favor to pay for them. No goods are actually to be supplied or shipped, but the ship-owner agrees to supply bills of lading to show that the goods have been loaded on the vessel. The bills of lading together with such other documents as are required are presented to the bank negotiating the letter of credit. The banker pays against documents and not against goods. After ascertaining that the cargo description corresponds to the requirements as stipulated in the L/C, the bank, in the normal course of events, releases the funds under the terms of the L/C.

The ship, without it is by now paid for, but non-existent cargo, leaves port. It should not of course reach its destination, because should it do so, the missing cargo would lead immediately to the discovery of the fraud. To avoid this eventually, the ship is deliberately scuttled in a suitable location, so as to remove the evidence of the non-existent shipment beyond any prospect of subsequent investigation.

The ship-owner enters an insurance claim on his hull underwriters and he also receives a share of the proceeds from the letter of credit from exporter, leaving the hapless buyer to pursue an insurance claim for loss/non-delivery of his cargo.…