Insurance Advice and Assistance

Payday loan execrices and assessments

Again, you need to strike a balance between task and relationship development every step of the way. You don’t want to start taking each other for granted, especially after your first activity together. This can be hard for many in business—managers do not want to sit around and “waste their time” talking about relationships. But this is a critical investment—you may have thousands or even millions of dollars riding on the success of your partnership. So it’s absolutely essential to discuss the relationship issues with your partner.

In evaluating your initial activity, of course, you’ll also want to identify new information you didn’t have before. You’ll want to look at other opportunities and synergies your partnership suggests. You’ll also want to account for problems or breakdowns in the process. You’ll want to use this stage as a learning opportunity, not just a “pass/fail” appraisal. At the end of the meeting you might want to list what I call the “pluses and deltas.” The pluses are things that worked well in the meeting. The deltas are the items you’d like to have changed for the next meeting. If you or your partner are having trouble in any of the Six Partnering Attributes—Future Orientation, Comfort with Change, and the like—you’ll want to review Part Two and the attribute that’s causing you difficulty. There you’ll find skill-building exercises and assessments you can complete to help you increase your Partnering Intelligence in each attribute.

Establish task credit objectives

Just by working through the “preflight” checklist, you communicate to your partner that you have certain expectations.When you embark on a planned adventure, you’ve already influenced some of the dynamics of the trip. Spontaneity is replaced by planfulness, which opens the way for communication and sets expectations for both partners.

By establishing a trial project with both task and relationship objectives, you have specified the performance you expect from each other. Based on the criteria, rating system, or measurements you established in the first phase with the Agreement Between Partners Checklist, the results of the initial activity should be obvious. If you set a goal of opening ten stores in ninety days, for example, and you’re now looking back after ninety days, you can measure your progress quantitatively. If you set a short-term goal of developing a joint marketing strategy as measured by a written marketing plan you both embrace, you can measure your progress by that evidence. You’ll also want to talk about the Stages of Relationship Development.

Threat to home equity

The biggest threat to home equity is impulse buying and keeping up appearances in a consumer society. Have you taken out a second mortgage even though you consider home equity your retirement nest egg? Many people run up credit card debt and then refinance it at a lower rate with a second mortgage. At some point, though, the nest egg disappears. Impulse buying and keeping up appearances can turn savers into spendthrifts.

Still, there is some justification for using a home as a savings vehicle. We all need to have a residence. The purpose of saving is to create a sense of financial security in our lives. Renters are subject to rent increases and the whims of landlords. A long-term saver able to pay a mortgage and not take out second and third mortgages will not have rent increases. A longterm saver able to pay off the mortgage will dramatically increase the sense of financial security in his life. Investors and speculators will have little interest in this type of security.

Home ownership works best for long-term savers who are not interested in the value of their home, but the security of their lifestyle. They are able to ignore the ups and downs of home prices, interest rates, and the economy, and focus on paying down the mortgage one payment at a time.

Often, true savers double their mortgage payments to eliminate the mortgage at a faster, orderly pace, whereas investors would not dream of using their excess cash to increase a mortgage payment.

How to deal with financial problems

Ten years ago Michael looked at both real estate and stocks. A stockbroker told him that real estate was too complex. Because stocks and stock mutual funds were simple and easy to understand, he would do better in the stock market. Ironically, in 10 years of study, Michael still does not grasp all the complexities of the stock market; yet with no study, he and Susan were able to purchase three homes. The value of his current home has far outperformed his stock investments.

Despite his own experience, Michael still believes that real estate is too complex and the stock market is relatively simple. In fact, more than 100 factors can influence the price of a stock, whereas less than six factors affect the price of real estate. At first, real estate investing appears complex. After a year or two, it becomes simple. Stocks and stock mutual funds, a first glance, seem simple. After a year or two, the complexities appear. After a decade, the complexities of stock and stock mutual fund investing can become overwhelming. Late-night online investors, including Michael, come to understand why veteran stock managers work 80-hour weeks.

So how do Michael and Susan move out from under their defended position in the stock market and into their comfort zone of real estate? Financially, this can easily be accomplished. In fact, they have so few gains
in their taxable portfolio, they will not pay any taxes to shift into real estate. They will get tax deductions from selling out. Considering the negative investment returns they have been getting in the stock market, it also would be reasonable to take a 10 percent penalty and liquidate their 401(k). But emotionally, Michael and Susan are attached to their dysfunctional relationship with the stock market.

More on compound interest

For every month that goes by, 1% of the balance (12% divided by 12 months) is going to get added to the balance. The following month, that 1% is calculated on the new balance. For example, after one month, the balance would grow to $1,010. That’s $1,000 times 1%.

After another month, with no payments, the balance would grow to $1,020.10. The balance grew not by $10 like the month before, but $10.10. The difference comes from the fact that interest was calculated on the new balance, not the original. It doesn’t take long before this interest-on-interest growth of the balance mushrooms beyond control.

It’s not hard to see that with higher-interest-rate loans, this can spiral out of control. This is especially true when you are making the minimum payments, getting late fees added to your payments, or even skipping payments altogether. To add insult to injury, many companies begin raising their already-high interest rates when you don’t keep your account in good standing.

To make matters worse, most interest is compounded daily, not monthly. This only speeds up the effects of compound interest, and leaves you making much slower progress than you need.

Compound Interest

Albert Einstein, perhaps the most brilliant mind of the twentieth century, had an opinion about compound interest. He’s quoted as saying, “Compound interest is the most powerful force in our universe!”

Now, I know our old friend Albert was being a little sarcastic, but he’s got a semivalid point. Compound interest is a force to be reckoned with. For those who are owed compound interest, it can make them wealthy. For those who owe it to someone else, it can be an anchor around your financial neck.

Guess who loves to charge compound interest? You got it … credit card companies, payday loan providers, and other types of questionable lenders. It’s part of the reason that paying off credit cards is a far greater struggle than paying off a car loan—even when they’re at the same interest rate.

The magic of compound interest is that you are charged interest on your interest until the loan is paid off. In other words, a little bit of interest is added to your debt every month, week, day, or even every second. Then, in turn, you are charged interest on that new slightly higher balance, during the next period.

Like a car that’s lost its brakes on a steep and winding road, it doesn’t take long to go over the edge! Let’s look at an example of a 12% credit card, with a $1,000 balance, that compounds its interest every month.

The Intellectual Capital Landscape

1. Education and experience. Together with talent, these are the key components of human capital. They are typically summarized in an individual’s resume, a document designed in part to establish an individual’s value in the employment marketplace. But the value of individuals is not absolute: It is situational. That is why one is well advised to customize one’s resume for the particular requirements of each prospective position.

2. Traditional intellectual property. Patents, copyrights, and trademarks comprise this domain and are protected by law. In many cases, their value can be appraised, for example, the copyright on an enduring piece of music or a famous movie generates a royalty stream of reasonably predictable value. The same is true of a patent on a commercial drug. Such well defined, income-producing properties are, in fact, equivalent to tangible capital; whether they show up on the books is a matter of accounting convention and/or a business decision. In what may be a new trend, large firms, including Dow Chemical,2 are employing internal or external consultants to appraise and to manage their patent portfolios.