Professional Documents
Culture Documents
O f H i s O w n Fo r t u n e
Sallust
You Are
Destined
For
Wealth
A One-On-One
Coaching Experience
d e s t i n e d
w el co me
to
f o r
w e a l t h
d e sti ne d
f or
we alt h
Dear Friend,
Welcome to my Destined For Wealth program, a One-on-One Coaching
experience, and congratulations on your commitment to making your financial
dreams come true. I admire and respect you because you want more in your life and
you are willing to do the little things that can make all the difference, the difference
between mediocre results and extraordinary ones.
I am excited that you have chosen this program to assist you in developing, and more
importantly achieving, your financial dreams. I believe you will find this program to
be fun, logical, and ultimately beneficial.
I believe that, at some level, everyone desires to be financial independent. In other
words that you work because you want to, not because you have to pay the bills.
As you may know, this program incorporates the system I used to go from being
$28,000 in debtwith a negative Net Worth of $18,000to having personal assets of
more than $2 million. In other words, I know this system works! However, it did
take me ten years to accomplish these results, and of course I experienced many challenges and learning experiences along the way.
My desire for you is that, through the trials and mistakes of myself and others, you
will be able to take advantage of this system to accomplish similarif not greater
results in a much shorter period of time.
I wish you all the best in your quest to achieve your financial dreams, and I look forward to hearing the story of your success.
Best Regards,
Chris P. Hendrickson
Author, The 5-Minute Debt Solution
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
d e s t i n e d
f o r
w e a l t h
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
d e s t i n e d
f o r
w e a l t h
getting to know
your workbook
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .pages 4-8
Session 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .pages 9-18
Take Count finding out where you are right now.
Money Metrics, are you winning or losing the game? . . . . . . . .pages 15-18
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
d e s t i n e d
f o r
o ve rv ie wa
w e a l t h
nob le
g oal
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
d e s t i n e d
re ac hi ng
h
o
n
e
s
t
y
y our
f o r
w e a l t h
f in anc ial
de st iny
"
Your Direction
The Actions You Take, No Matter How Small
i
n
t
e
g
r
i
t
y
a
d
d
v
a
l
u
e
Your Purpose/Decisions
Your Reasons why ! Your Choices & Evaluations
f
i
r
s
t
Your Psychology
Mindset ! Values ! Beliefs ! Standards ! Patterns ! Language
True wealth comes from being grateful for what you already have
ANTHONY ROBBINS
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
d e s t i n e d
f o r
w e a l t h
n ot e s
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
d e s t i n e d
ove r vie wt he
f o r
w e a l t h
f iv e
mas te r
st ep s
1.
2.
3.
4.
5.
3. All Income
4. All Expenses
You must then evaluate how you are doing, are you winning or losing the game?
d e s t i n e d
f o r
w e a l t h
n ot e s
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
d e s t i n e d
f o r
w e a l t h
session
1
TAK
DISC O V ER
W H ER E
CO
UN T
Y O U
AR E
R IG H T
N O W
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
d e s t i n e d
f o r
w e a l t h
Investment Assets
1
2
3
Business Partnerships
Checking Account(s)
Bonds
Value of corporate, municipal or global bonds
CDs
Amounts you have in a Certificate of Deposit
Commodities
Value of any commodities or futures you own
Pension Fund/SEP
Value of these, or similar types of accounts
IRAs/Annuities
Current amount in Individual Retirement
Life Insurance
Cash/redemption value of policies you own
Money Market
Amounts you have in a Money Market
Portfolio Accounts
Amount you have in stocks & Mutual Funds
Savings Account
Amount you have in a bank or credit union
401K/403B/Keough/Simple
Value of these, or similar types of accounts
Education/College Savings
Real Estate
Family Trusts
Subtotal
$
$
$
$
$
$
Electronics
Computer, Stereo Equip. Phones, etc.
Household Items
Furnishings, Appliances, etc.
Jewelry
Include all items of significant value
Luxury Items
Any luxury items you may own
$
$
$
10
prop e r t y
Toys
Boats, Motorcycles, Jet skis, etc.
$
$
$
$
$
$
$
$
$
$
$
$
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
d e s t i n e d
de b ts
&
f o r
w e a l t h
When counting your liabilities, it is critical to be as accurate as possible. You may need to use some
scratch paper in order to get the most specific answers to the questions below. Be sure to reference your
most recent loan and credit card statements to access this information. If you dont have a statement,
call the bank or creditor to get the most recent information.
Balance Owed
Type of Debt/Liability
Automobile Loan(s)
Minimum Payment*
Business Loans
Any amount(s) you owe for business interest, etc.
Education Loans
Personal Loans
*Be sure to list your minimum payment only, do not include any extra you may pay.
If only the people who worry about their liabilities would think
about the riches they do possess, they would stop worrying.
DA L E CA R N E G I E
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
11
d e s t i n e d
av e ra ge
f o r
w e a l t h
m onth ly
inc ome
State Taxes
Medicare Tax
12
M A R G A R E T T H AT C H E R
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
d e s t i n e d
av er ag e
mo nth ly
6
7
SUBTOTAL
My Seven Basic Expenses
$
$
$
$
$
$
$
$
Personal Accessories -
Rentals/Properties -
Household Staff/Support -
supplies, care
Mortgage payment and expenses on
property other than residence
skis, collector car
$
$
$
$
$
$
$
Financial/Banking - Broker,
Transactions, Service Fees, ATM, etc.
Furniture,
Appliances, Decorative items, accessories
Household Maintenance -
Education -
$
$
Grooming Expenses -
Household Items -
any Donations
Children -
Hobbies/Activities - sporting
Business Expenses -
My Discretionary Expenses
Any unreimbursed expenses, gifts, meals,
incidentals, etc.
e xpe n se s
w e a l t h
$
$
f o r
note
Remember there can be a significant discrepancy between what you think you spend and what you actually do spend. It is highly recommended you track your expenses accurately for at least 3 months to get realistic numbers. You
can use the resources in Session 4 (Offense Plan #4, Monitor & Measure) to help you with this type of tracking detail.
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
13
d e s t i n e d
f o r
w e a l t h
n ot e s
14
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
d e s t i n e d
f o r
w e a l t h
Money Metrics
A FA I R EVA L U AT I O
F O R
FIN
AN C IAL
TO
O L
UC C ESS
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
15
d e s t i n e d
mone y
f o r
me t ri cs
w e a l t h
e val ua tion
Its important, once you have captured and counted these four critical elements of your financial picture, that you now evaluate how you are doing. Are you winning the game or are you losing the game?
This is not for us to evaluate you, but rather for you to evaluate yourself. It is not our position to make any
judgement about your financial condition and we would like to at least offer some guidelines or
criteria to help you make some type of analysis as as to whether you may be succeeding in this area of
your life.
Score
Income/Expenses
My Total Monthly Income
(Income from page 12)
My 7 Basic Expenses
$
<
>
Percentage
_______________%
Evaluation Scale:
0 - 40% = A
41 - 50% = B
51 - 60% = C
61 - 70% = D
71% & Above = F
My monthly income
(total from page 12)
Score
$
$
Ratio/payments to income
_______________%
Evaluation Scale:
0 - 10% = A
11 - 20% = B
21 - 30% = C
31 - 40% = D
41% & Above = F
Assets/Liabilities
Total Personal Assets
(total from page 10)
Score
My Investments Assets
(Liquid and Illiquid total from page 10)
My Liabilities
My Net Worth
(all assets - liabilities)
<
>
16
JIM ROHN
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
d e s t i n e d
e valu at ion- ha ve
f o r
w e a l t h
y ou
sa ve d
10 %?
In George Clasons blockbuster book The Richest Man in Babylon, he explains a top key for ensuring
financial success to save a minimum of 10% of your gross earnings. My question to you is...
tip
*You can contact the Social Security Administration at 1.800.772.1213 and ask for an application
for a Statement of Earnings form. This will be a record of all earnings you have reported your
entire working life. You can also obtain a form online at: http://www.ssa.gov/online/ssa-7004.pdf
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
17
d e s t i n e d
f o r
w e a l t h
e ig h t
are a s
In making an overall evaluation of where you are compared to where you want to be the simplest of
tools is to rate yourself on a scale of 1-10. 1 being of the poorest results you can imagine, and 10 being
all you want, your most desired situation. You must also break things down to the 8 most
critical areas that effect your overall success. Below are the 8 areas of financial management (which
we will be covering in session 4 and 5 of this manual).
Area of Management
Score
(Scale of 1-10)
Spending (Your ability to know what you are spending and how that effects your overall plan)
Take the time now to notice where you have scored the lowest and you may want to make a decision
to make this area (or areas) your highest focus for a period of time. Of course the great balance of life
is to accomplish this without jeopardizing your score in the other areas and more importantly the major
areas of your life (health, relationships, emotional well-being, etc.).
18
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
d e s t i n e d
f o r
w e a l t h
session
2
K
SET
N O W
C LEAR
YO
UR
UTC O MES
C O MP ELLIN G
F IN AN C IAL
G O ALS
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
19
d e s t i n e d
my
f in anc ial
f o r
w e a l t h
mis sion
st ate m en t
When you get down to it, you can only do two things with your money.
20
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
d e s t i n e d
3
t y pe s
of
f o r
w e a l t h
f inan ci al
g oal s
Independence Goals
These goals are specific, long term sums of money that you are moving
towards. They are widely referred to as retirement goals. They represent a specific date by which you will achieve them. You are clear about
what this goal will mean to you in terms of income and lifestyle when
you achieve them. The three levels are:
1. Financial Assurance (12 month, 5 Year and for Life)
2. Financial Independence
3. Financial Abundance
Pathway Goals
These goals are more short-term in nature and have more of
a time target attached to them. They also lead you in the direction of
your Critical Result goals by increasing your critical mass and net worth.
They include:
!
!
!
!
!
!
!
Lifestyle Goals
These are the goals that allow you to enjoy the process. The
problem with them is that they require you to spend your money,
instead of saving and investing it. When effectively planned, however,
they are critical to enjoying life:
!
!
!
!
!
!
!
!
Clothing
Toys & Gifts
Homes
Contributions
!
!
!
Education
Recreation
Celebration/Parties
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
21
d e s t i n e d
c r itic al
f o r
w e a l t h
re s ul t
g oals
When setting financial goals you want to have different targets to shoot for.
Each of these levels of lifestyle has a number attached to
it that will represent what it will take for you to achieve it
Financial Assurance
You can retire with the income from your savings mass and have
these basic needs met without having to work
1.
2
3.
4.
5.
6.
7.
Financial Independence
The top 6 needs above are met*. In addition, you can continue to
fund these or similar expenses:
8. You or your childrens education needs
9. Continue a pension or retirement fund
10. Basic entertainment and reasonable luxury items
(movies, shows, vacations)
11. All Household Needs (Repairs, Upkeep, Furniture, etc.)
You can live the same quality of life you live today (or better) without having
to work. In other words, you are independent from work.
Financial Abundance
You can now do what you want, when you want, with whomever
you want, as much as you want. All the time! In other words, you
have enough money accumulated that you are set for life!
*Your ultimate goal is to have this sum be zero since you cannot have
financial freedom without debt freedom.
note
22
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
d e s t i n e d
how
muc h
f o r
do
w e a l t h
y ou
ne e d?
In order to create financial independence, you must first determine how much money will create your
independence from work. This formula can be done many ways, and will include many factors like:
amount of expenses, inflation, rate of return, tax rate and whether you plan to live totally off the income
you earn (ROI) or whether you plan to spend some or all of your principal balance (Critical Mass) along
the way or a combination of the two.
I encourage you to meet with a Professional (proven) Financial Planner at some point to help you in
determining this figure for you and your family, but to keep it in its most simple form, all you must do
is the following:
For example, if you want to have $100,000 per year to cover your expenses, you would do the
following: $100,000 divided by .08 (8% blended return on investments) equals $1,250,000.00
exercise
How much income do you want/need per year to be
independent of work? $ ______________
What rate of return on your investments do you believe you
can produce? ________%
Divide question #1 by question #2 and write this answer on the
following page under your amount for financial independence.
note
Keep in mind that you can always chose to continue to work and contribute to this amount, or you can always chose to
spend some of this capital each year rather than purely living off of the income created by this mass.
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
23
d e s t i n e d
de c lar at ion
f o r
of
w e a l t h
inde p e nde n ce
Its not what we get, its who we become that makes us wealthy!
ANTHONY ROBBINS
24
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
d e s t i n e d
m y
f o r
f in anc ia l
w e a l t h
g oals
25
d e s t i n e d
m y
f o r
w e a l t h
f in anc ia l
g oals
26
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
d e s t i n e d
my
top
f o r
1- y e ar
w e a l t h
g oals
1.__________________________________
2. _________________________________
3. _________________________________
4. _________________________________
5. _________________________________
6. _________________________________
7. _________________________________
8. _________________________________
9._________________________________
10._________________________________
note
Be sure to have a balance of goal types (Critical Result, Pathway & Lifestyle)
so that your achievement brings you ultimate success.
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
27
d e s t i n e d
m y
f o r
fin anc ia l
w e a l t h
g oals
28
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
d e s t i n e d
f o r
w e a l t h
session
3
T
H E
SY C H O LO G Y
BE
A
AN
O F
IN V ESTO R
P RO F ITABLE
IN AN C IAL
N O T
BUSIN ESS
N O T
SUC
C ESS
SP EN DER
A
C O N SUMER
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
29
d e s t i n e d
wha t
f o r
is
w e a l t h
mon e y?
Money is an _________ of
______________ in the marketplace!
In other words, money is a means to an end.
f ive t hin gs y ou ne e d t o
ac h ie ve f ina nc ial abu nd anc e
30
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
d e s t i n e d
the
# 1
ke y
t o
f o r
w e a l t h
f ina nc ial
a bu nda nc e
note
This simple formula will insure that there will come a day when you never have to work
another day in your life and that if you do work, its only because you want to!
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
31
d e s t i n e d
y ou r
f o r
be lie f s
w e a l t h
ab out
mon e y
Your beliefs are the most powerful force within you to shape your financial destiny. They have
the power to create, the power to destroy the power to manifest and the power to shut down all
resources and options you have available for creating wealth and financial abundance. I believe
they are the single most powerful force within you to not only create, but also to sustain wealth
for you and your family.
What is a belief?
Oxford American dictionary defines it as the feeling that something is real or true. If you
really stop to think about it, a belief is simply an idea and ideas are defined as a plan
formed in the mind, an opinion or mental impression. It is truly miraculous how beliefs
work because we are able to take an idea or thought, form it as something that is so strong
within us that it can control every aspect of our life once we embrace it, and back it up with
strong emotional support. There are three levels of a belief, and the only difference
between them, is the emotional intensity or amount of certainty we attach to the validity or
truth of that idea.
The first level of belief is an opinion which is the least potent as they can be changed simply with another or alternative point of view. The second we call a belief and this is a
stronger feeling than an opinion because you have more references to back up your idea so
you have more emotion invested in the idea. The third level and most powerful (or most
devastating) is what we call a conviction. These are the types of beliefs that you literally
would die for. The emotional intensity is so strong that you would take such a firm stance
to defend its truth. We end relationships, start new careers, fight to the death and build
world changing organizations through our convictions of what we feel is right, true or worthy of our time energy and focus.
If you believe you can, or believe you cant, you are right
H E N RY F O R D
32
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
d e s t i n e d
y ou r
f o r
be lie f s
w e a l t h
ab out
mon e y
For example, lets say you are aware of the idea that people should not drive after they
have been drinking. You may have read an article or seen a billboard that this idea should
be supported. Currently it is in your head but there is little emotion. Now lets say one
of your best friends drives drunk and has a tragic accident. You now have a reference and
a significant event that effects your life, you begin to attach much more emotion to this
idea. The more emotion you attach, and the more aware you become that this is a problem,
the stronger your belief will become. It would be safe to say that the woman who started
M.A.D.D. (mothers against drunk drivers) has a conviction that you must never drive
drunk.
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
33
d e s t i n e d
y our
b e lie f s
f o r
w e a l t h
a bou t
mone y
exercise
Write down a belief you feel you have that is negative about
money or wealth (i.e. wealthy people are greedyor it
takes money to make money):
Now write down the source of where you think this belief
may have come from (i.e. my father, mother or book, etc.).
Write down all the reasons this new belief is true or will
better support you and your goals in the future:
34
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
d e s t i n e d
s e tti ng
u p
f o r
y ou r
w e a l t h
c omp any
If you were to give your portfolio and financial plan a name, what would it be? Take a moment now to
create a name for your widget factory. Think of a name that would excite you to contribute to its success, a name that would make you proud to say business is great.
Financial Abundance
example
Some examples of past graduates include:
!
!
!
!
Me, Inc.
Mano E Mano
P.A.W., Inc.
Freedom Corp
!
!
!
Money Machine
Millions in Motion
Dollars R Us
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
35
d e s t i n e d
wa tc h
y ou r
f o r
w e a l t h
voc ab ul ar y
It is important to remember that the words you choose to describe your financial condition, will become
your financial condition. Be sure to choose your words wisely.
______________________________________________________
______________________________________________________
36
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
d e s t i n e d
ab u ndan ce
f o r
w e a l t h
vs.
s ca rci t y
Economy
Traditionally, economy is defined as "the study of scarce resources." But economy is driven by
technology and technology is abundant, not scarce. If you have a psychology of scarcity, in
other words there isnt enough to go around, then that is what you will experience. There is a
difference between being frugal and coming from a place of scarcity. When you are coming from
a place of scarcity, you are coming from a place of fear.
An Abundant Psychology
So what is an abundant psychology? It is the beliefs, values, patterns and mindset you have
around money and financial success. How you think and feel every day about your goals,
financial dreams and what you believe is possible. As you make your financial decisions, stop
and think about where the evaluation/decision is coming from. Is it coming from a place of
scarcity and fear, or is it coming from a place of abundance and faith.
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
37
d e s t i n e d
f o r
w e a l t h
p rob l e ms
Quality Problems
There is nothing worse for a person, than to have the same problem for 10 years! The only way to overcome
a problem is to grow past it, to become more in the process! Who you are is bigger than what can happen
to you! If you are living and breathing you will have problems. This is guaranteed. The goal of life is not
to have no problems, but rather to have better quality problems that will ensure you grow and become
more in the process. If you wish for small, easy financial problems, then thats exactly what you will get.
Again, dont wish things were easier wish you were better.
Let me ask you a question. Which problem would you rather have, A not being able to make your mortgage payment of $5,000 dollars a month (approx. a $700,000 loan) or B not being able to meet your $300 rent
payment? I sincerely hope you picked "A". If you didnt, then you may want to consider a change in your
evaluation of these two scenarios. Let me explain why. Jim Rohn, one of my favorite mentors says it best
"dont wish your problems were easier, wish you were better". If you wish for the easier problem, then thats
what you will get. Its the harder, more challenging problems that make us grow, and thats the point of
this game anyway, is to grow! To become more than you were when you started. This is my sincere desire
for you, because this is what will bring you fulfillment. There are plenty of people out there who have a ton
of money but who are miserable, and this isnt what you want. People like Elvis Presley, John Belushi and
Marilyn Monroe had all the money they needed but werent fulfilled inside. This is not wealth! You want
to be wealthy, emotionally, spiritually and financially, not just to "have a lot of money"! You want to have
better problems, as they are a sign of life. There is nothing worse than a person with the same problem for
10 years! You know the person, they complain about the same thing for a decade, not doing anything to
move past it. And the only way they will is when they grow. The only way to overcome a problem is to
grow past it! Think about a problem that you had maybe 10 or 15 years ago, a really big problem. When
you think about that problem now, how does it make you feel? Do you feel like you can handle it, no problem? Doesnt it feel insignificant to you now if you think about having to overcome something equal to that?
Not to say that you want to, but you have the emotional muscle to deal with it should this level of problem
ever arise. The reason for this, is because you are not the same person, you have become more! Who you
are is bigger than what can happen to you!
I was in a room with two friends and they were discussing investing and the stock market. One friend (who
is doing very well financially) had made a comment that he lost nearly $20,000, because of a "dip" in the
market. The other (who is struggling) responded "my gosh, that would kill me!" and "I could never imagine that!". And guess what, he never will experience that if he doesnt make a change in his philosophy
about that kind of a problem. What he doesnt realize is what this $20,000 represents to this other person!
In other words, you need to look at the big picture because, the gentleman who had lost the $20K, has nearly a million dollars invested in the stock market, a mere 2% drop. Consciously, or unconsciously, if a person
says "I never want to lose that amount of money" and they dont make a shift in their perception of this kind
of problem, they will never experience the level of success it will take to have that kind of a problem.
If you are living and breathing you will have problems, this is guaranteed. The goal of life is not to have
no problems, but rather to have better quality problems that will ensure you grow and become more in
the process. If you wish for small, easy financial problems, then that is exactly what you will get. Again,
dont wish things were easier, wish you were better.
38
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
d e s t i n e d
avo iding
t he
f o r
w e a l t h
lot te r y
sy nd rome
Some people play the financial game with the philosophy I call "The Lottery Syndrome." In
other words, a reason they dont save and do the little things day to day that actually create
wealth long term, is because they believe, at some level, that one day they will hit "pay-dirt,"
win the lottery, or come into a windfall of money and that will solve all of their problems.
The place we need to come from to win this game, is the mindset of always spending less than
you earn. If you consistently do this, and by chance you do win the lottery, or fall into a large
sum of money, from an inheritance or lawsuit etc. then it becomes a "bonus" to your existing
plan. Getting rich quick doesnt work! Deciding to become rich, for the right reasons does!
Remember this, gold (meaning money) avoids those unwise in its use! What this means is, if we
are not wise in the use of our money, it is going to go to someone who is! This is a universal
truth, a principle of financial success!
Avoid the mindset of "someday Ill save" or "when I make enough money, then Ill start saving",
or you will find yourself coming up short in the financial game. Make a decision to give yourself the gift of at least 10% of each paycheck you receive.
t he
80 /2 0
p hilos op hy
You may have heard of Vilfredo Pareto or the Pareto Principle? Pareto was an italian economist at the University of Lausanne in Switzerland in the late 1800s. When he died in 1923, he
was Senator of the Italian Kingdom. Mr. Pareto created a philosophy of economics known as the
Pareto Principle or more popularly known as the 80/20 rule.
The basic premise of this principle is that 80% and 20% are the general numbers or percentages
that inherently make up the outcome of any endeavor. For example, 80% of the results you get
in your life are determined by only 20% of the actions you take and conversely 20% of these
results absorb 80% of your resources or efforts. If you are in sales, 80% of your revenue is generated by only 20% of your customers or 80% of your sales revenue is generated by only 20% of
your sales force. If you are in management, 80% of your headaches or challenges come from 20%
of your staff or 80% of your time can be consumed by 20% of your problems.
This is not meant to be an exact science but rather a philosophy, that once aware of you can begin
to focus on to gain the edge in any area of your life. Would you do things differently if you
knew that 80% of the actions you were taking were not supporting your ultimate goals?
This system was designed to help you focus on the 20% that can make 80% of the impact in your
financial life.
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
39
d e s t i n e d
ne t
w ort h
f o r
v s.
w e a l t h
c rit ic al
ma ss
People tend to focus on everything they own such as cars, toys, jewelry, and household items to determine their financial well-being rather than focusing solely on the cash , and investments they have accumulated. This can create a false sense of security as these items will not bring you income in the future
unless you sell them. To be successful in determining your true level of financial success you must focus
on your critical mass of savings.
net
worth
critical
mass
Critical Mass
The problem with using your Net Worth as a basis for determining the health of your finances is that
you are including items that you may not ever convert to cash or cash flow. Net Worth, although a very
popular term used in the financial world, is not accurate when it comes to determining cash or cash flow
which is the basis for being independent of work.
An example would be, lets say person A gets a $5000 bonus and he decides to go out and buy himself
a Rolex. His Net Worth has just increased $5000 (maybe a little less with devaluation) but his Critical
Mass has not increased at all. Person B takes the same $5000 bonus and buys a $500 Swiss Army watch
and takes the remainder and puts it in a Money Market. His Net Worth may have gone up near $5000
but more importantly his Critical Mass went up $4500 and will continue to go up if he reinvests his interest or dividends. His watch may or may not go up in value but he does not care because that is not his
focus.
A question that is critical when making financial decisions is by spending this money am I increasing
my critical mass or only adding to my net worth?
Happiness is not having what you want, its wanting what you have.
In other words, happiness is an inside job.
WAY N E D Y E R
40
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
d e s t i n e d
a re
y ou
re al ly
f o r
a
w e a l t h
mil liona ire ?
l
e
s
s
t
h
a
n
y
o
u
e
a
r
n
$1 Million in Assets
i
n
v
e
s
t
t
h
e
d
i
f
f
e
r
e
n
c
e
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
41
d e s t i n e d
joh n
f o r
c oc k toas tin s
w e a l t h
ne t
wor th
re p or t
ASSETS as of 12/31/07
Account/Bucket
Balance
$
$
$
$
$
1,000.00
250.00
500.00
168.00
1,500.00
3,418.00
Other Assets
1999 VW Jetta
Furniture
Jewelry
Personal Items
San Diego Home
$ 4,000.00
$ 10,000.00
$ 5,000.00
$ 20,000.00
$ 700,000.00
$ 739,000.00
Investments
401K
Presidential Brokerage
$
$
7,000.00
2,750.00
Total Investments
9,750.00
example
Total Assets
Liabilities
ABC Mortgage
Jerome's Furniture
$450,000.00
$ 1,500.00
Credit Cards
Corning Credit Card
Citibank Visa
Nationsbank
Nordstroms
$
$
$
$
Total Liabilities
$748,750.00
6,000.00
3,000.00
2,500.00
1,000.00
$464,000.00
$284,750.00
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
d e s t i n e d
j ohn
c ock t oast in s
f o r
w e a l t h
c r iti ca l
mas s
re p or t
Account/Bucket
Balance
$
$
$
1,000.00
500.00
1,500.00
example
Total Cash and Bank Accounts
3,000.00
Investments
401K
Presidential Brokerage
$
$
7,000.00
2,750.00
Total Investments
9,750.63
Total Assets
12,750.00
$12,750.00
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
43
d e s t i n e d
f o r
w e a l t h
n ot e s
44
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
d e s t i n e d
f o r
w e a l t h
session 4
part 1
CLO
P UTTIN G
F O R
SIN G
Y O UR
TH E
AP
OF F ENS E
F IN AN C IAL
TO
W O R K
IN DEP EN DEN C E
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
45
d e s t i n e d
t he
g ame
f o r
w e a l t h
o f
mone y
When you dont try very hard, winning doesnt feel very good
and losing doesnt hurt that much
D ICK VERMIEL
46
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
d e s t i n e d
8
p lan s
f or
f o r
w e a l t h
f ina nc ial
su c ce s s
Savings Plan
Just like a spending plan, you must decide in advance how
much money you will save every year no matter what based
on a proposed income and commit to that plan every month.
Investing Plan
You must understand the different markets, the sector of
those markets, the industries within these sectors, and the
climate of each industry. You must also understand the
different investment vehicles that are available and how to
allocate these vehicles.
note
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47
d e s t i n e d
f o r
w e a l t h
n ot e s
48
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
d e s t i n e d
f o r
w e a l t h
offense plan #1
income
CLO
P UTTIN G
F O R
SIN G
TH E
Y O UR
F IN AN C IAL
AP
P LAN S
TO
W O R K
IN DEP EN DEN C E
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
49
d e s t i n e d
offe n se
f o r
p lan
w e a l t h
# 1-
inc ome
In order to affect your income, you must first understand and utilize six critical areas of focus
that will control and determine how you do financially. They are all vital to affecting your
income as well as helping you to become the person you want to be along the way.
Economic Alchemy
The first is having a basic understanding of the laws of economics. A basic and simple
truth, about income is this; you will be paid in direct proportion to the value you add to
the "marketplace". Two of the most brilliant economists of our day are Paul Zane Pilzer
and Harry S. Dent. I highly suggest you familiarize yourself with their philosophies of
what drives our economy and how we can prosper in any economic climate. Their material is highly "user-friendly" and will help you to master this vital area of focus.
50
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
d e s t i n e d
offe n se
f o r
p lan
w e a l t h
# 1-
inc ome
You will learn many skills on this fascinating subject and you can use them to immediately impact the earnings you make by having an impact on others. Another word for influence is persuade. Some people will actually consider these words or skills to be negative
by controlling others. What I have found is that the difference between influence or persuasion and manipulation is purely intent. In other words, what is the intent of the person
doing the persuading. If their intent is to help you and have a positive impact on your life,
then that is called influence or persuasion. If the y dont have your best interests in mind
and are doing it solely for selfish or negative reasons, then that is called manipulation. You
want to be a persuader, and person of influence of the highest caliber!
Be a Marketing Wizard!
The fifth skill you have to master in order to effect your income is marketing. You have to
have people to influence and the way you create and grow a business is through marketing. The laws of marketing are ever changing, especially in todays society, and you need
to keep up with the ideas and strategies, which are working in todays culture. Some of
the best books I have come across on this subject are any books by the team of, Al Ries and
Jack Trout. Some of their titles include, Positioning, Horse Sense, The 22 Immutable Laws
of Marketing and the more recent, The 22 Immutable Laws of Branding. Another bestseller
is Permission Marketing by Seth Godin, the Marketing Guru behind Yahoo.
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
51
d e s t i n e d
offe n se
f o r
p lan
w e a l t h
# 1-
inc ome
52
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
d e s t i n e d
off e ns e
f o r
pla n
# 1
w e a l t h
-
inc ome
exercise
How much do you currently make? (your total income) $__________.
How much do you want to make? (what is your ideal) $___________.
What is the gap between these? (subtract #1 from #2) $<________>.
There are only a few things that keep you from earning more:
!
!
!
!
Your Beliefs
Your Musts (otherwise known as your standards)
The value you are adding to the marketplace
Better quality questions or evaluations
The gap above (answer to question 3) is the cost of your limiting beliefs, standards or occupation you have chosen. Now is the time to make a decision about what you are committed to.
By taking the time to focus on what you really want and what you are committed to, you will
begin to ask new questions about how to make what you want your reality. In this exercise
some beliefs may have surfaced about income. If there is a large gap between what you are
earning and what you would like to earn, there will most likely be a feeling of discomfort that
comes with this gap. This is just another problem for you to solve, so you may want to go back
to section 3 and review the pages on beliefs and problems.
The goal isnt so much to solve this today but rather to embrace where you are and know that
you are moving in the direction of what you really want.
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
53
d e s t i n e d
f o r
w e a l t h
n ot e s
54
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
d e s t i n e d
f o r
w e a l t h
offense plan #2
savings
CLO
P UTTIN G
F O R
SIN G
TH E
Y O UR
F IN AN C IAL
AP
P LAN S
TO
W O R K
IN DEP EN DEN C E
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
55
d e s t i n e d
off e ns e
f o r
pla n
w e a l t h
# 2
sav ing
When it comes to achieving your financial goals, there is no more important plan, in the beginning, than
saving. Saving is what begins you on your journey to financial independence and there is no more
noble financial habit than the deliberate act of saving at least 10% of all that you earn. When you
save your money, we like to refer to the places you keep it in as buckets. Your buckets create a way
to store, prioritize, and allocate your money for savings into a specific account (i.e., a bucket) that has a
specific destination (savings/investing). This will help you to organize what you save and where the
money will be kept so that you will stay on your plan.
security
This bucket is used for your Financial Assurance goal (6-60 months of living expenses) and
the beginnings of your Financial Independence goal. This money should be kept in a lowrisk/liquid environment such as a money market, CD or bank savings account. This money
is never to be touched as it is the basis of providing security for you and your family in the
form of a future income. You will also be building your retirement here, which will be kept
in long-term investment accounts such as IRAs, 401Ks, private pensions, annuities, and
SEPs. This money will be used to create a quality of life when you retire from work.
bucket
growth
The purpose of this bucket is to grow your portfolio at a higher rate of return. This is
done through long- and short-term investment vehicles such as stocks, mutual funds, and
commodities and usually kept in a money market between trading or during bear
markets. This usually means a greater risk so understanding the fundamentals of investing
is imperative for this bucket.
bucket
momentum
&
3
income
This Bucket is used primarily for trading and having a more aggressive income plan with
your investments. These are usually more short-term investments objectives such as options
trading, with goals such as daily, weekly and monthly returns for income. Again, this
usually means a greater risk of loss, so understanding the fundamentals and sophisticated
strategies of investing, and having a defense strategy, are imperative to the long and
short-term success of this Bucket. Allocating the income and gains you receive from this
Bucket should be taken into consideration. You can allocate a percentage into your Security
Bucket and/or Growth Bucket. Reinvest a percentage into your Momentum Bucket and even
set some aside in your 'Cookie Jars' for future expenses. Any monies spent must only come
from this Bucket and you must decide on a percentage and commit to it.
56
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
d e s t i n e d
joh ns
f o r
s avin gs
w e a l t h
p lan- e xa mple
% Committed: 29%
Amount Committed: $1225
2009
2010
2011
2012
2013
$20,000
$35,000
$55,000
$80,000
$110,000
example
Needed
Monthly
ABC Bank
$1,000
$5,000
$4,000
$325
401K
$1,000
$3,000
$2,000
$170
Kemper
$1,500
$3,000
$1,500
$115
Presidential
$750
$5,000
$2,500
$350
Cred.Union
$500
$3,000
$4,250
$200
ABC Bank
$250
$1,000
$750
$65
TOTALS
$5,000
$20,000
$15,000
$1,225
Account
Wealth comes from a state of being grateful for what you already have!
ANTHONY ROBBINS
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
57
d e s t i n e d
my
1- 5
y e ar
f o r
w e a l t h
s avin gs
p lan
% Committed: _______%
2009
2010
2012
2011
2013
Amount:
Why must I absolutely accomplish these goals?
TOTALS
Monthly
Needed
(This figure will be moved to your New Spending Plan on page 95)
58
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
d e s t i n e d
f o r
w e a l t h
offense plan #3
investing
CLO
P UTTIN G
F O R
SIN G
TH E
Y O UR
F IN AN C IAL
AP
P LAN S
TO
W O R K
IN DEP EN DEN C E
Its the action, not the fruit of the action thats important.
You may never know what results come from your action.
But if you do nothing, there will be no result.
GANDHI
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
59
d e s t i n e d
off e ns e
pla n
f o r
# 3
w e a l t h
inve s tin g
In addition to the U.S. indicators, you must also consider the International indicators as well.
They can be easily organized into four groups, the Americas, Asia/Pacific, Europe and
Africa/Middle East. Among the major World indices are:
1. United Kingdoms FTSE
2. Japans Nikkei
3. Chinas Shanghai
4. Hong Kongs Hang Seng
In addition to understanding these different markets, we need to understand the different investment models, which will help us to create an effective plan which will insure our own personal
economic growth. The biggest challenge we face is that there are many investment models available and choosing the right ones that will maximize our ability to get great returns on our investments gets lost in the mass of information available. This product is not designed to teach you
how to invest your money, but rather to assist in making YOU responsible for the investment
choices you do make, and to assist you in making investing a focus. Remember I am not a financial advisor, I am just your coach in making your dreams come true, whatever they are.
Never put more than 10% of your portfolio in any one investment
S I R J O H N T E M P L E TO N
60
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
d e s t i n e d
off e ns e
f o r
pl an
# 3
w e a l t h
inve s tin g
Investment Mentors
We all need mentors in the financial arena, we just need to make sure that these mentors are getting the results that we desire in our own life (again, not asking the overweight person, how to
be healthy). What all these different methods create, is a way to duplicate results and increase
your chances of winning vs. losing in the stock markets, by making effective evaluations. There
are many outstanding financial role models. The top 10 mentors I have had the privilege to
learn and grow from are listed below, and their system, or psychology they use to produce outstanding results.
1.
2.
3.
4.
5.
In addition to these different mentors, is the different "models" of investing in the Securities
Market. From the most basic of evaluations, like Bill Statons Americas Finest Companys to the
"Buy and Hold" strategies to the more sophisticated "Momentum" style of daily trading for an
actual income.
It is important to know the options available to you as an investor, and which style you are
able to capitalize on to get the best results possible. Some people dont want to focus on daily
trading where as another person may be totally motivated to do so. It depends on your goals and
how aggressive you want to be with them. Think of it this way, if you seek a yearly or annual
return thats what you will get. If you seek a weekly or daily return, you will get that too. It all
depends on the investment goals you set for yourself. As you preview the goals you wrote down
in Section 2 of this program, make sure you set some investment goals for yourself. These will
be Pathway Goals that will help you to expedite your Critical Result Goals quicker, or they may
even be Lifestyle Goals as well. I have a close friend who has a goal to pay for some exercise
equipment he purchased on a "1-year same as cash" program. He has his "cookie jar" set up to
pay for it as well, but he is also seeking an investment return on a certain amount placed in the
market. If he reaches that goal, he will take his gains and pay for the equipment purely from
money he made investing. He can then use his cookie jar money for something else. If he does
not reach the investment goal, he is prepared either way.
Making investing a study will prove to be one of the greatest investments in your time and
focus. Everyday people accomplish new financial heights purely through their focus in the securities and or real estate markets. I know a gentleman personally who started with $9000 in
October of 1997 who, with some additional savings, has built his portfolio to over 1.2 million dollars in less than 2 years. All on a school teachers salary! Anything is possible if you make it a priority and a focus to accomplish your dreams.
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
61
d e s t i n e d
f o r
w e a l t h
n ot e s
62
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
d e s t i n e d
f o r
w e a l t h
offense plan #4
SIN G
TH E
Y O UR
F IN AN C IAL
AP
P LAN S
TO
W O R K
IN DEP EN DEN C E
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
63
d e s t i n e d
off en se
p lan
# 4
f o r
w e a l t h
mo nito r
&
me a su re
Spending
Income
Major Expenses
Saving
Quarterly
!
Investments
Yearly
!
Taxes
Protection
The critical issue here is to never go more than 1-year in any of the 7 other areas of financial management without checking in and asking the question: do I need to make some changes or
improvements in this area to help me acheive success now? Remember that, the more often you
check-in in any particular area only allows you to make any corrections sooner rather than later
which can certainly help you avoid potential disasters and to be able to celebrate success as well.
64
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
d e s t i n e d
f o r
w e a l t h
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
65
d e s t i n e d
66
f o r
w e a l t h
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
d e s t i n e d
f o r
w e a l t h
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
67
d e s t i n e d
f o r
w e a l t h
n ot e s
68
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
d e s t i n e d
f o r
w e a l t h
session 4
part 2
CLO
P UTTIN G
F O R
SIN G
Y O UR
TH E
AP
DEF ENS E
F IN AN C IAL
TO
W O R K
IN DEP EN DEN C E
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
69
d e s t i n e d
8
pl ans
f or
f o r
w e a l t h
fi nan cia l
s uc c e ss
Spending Plan
You must decide in advance where you will spend your money.
In addition to this, you must have a way of tracking what you
spend, so you can adjust habitual spending that is not supporting your savings & investing goals.
Protection Plan
You must intelligently and legally protect yourself, your
family and your income from any outside forces that can blow
you or your plan off course.
Tax Plan
You must work towards keeping as much of the income you
earn by understanding the tax codes which legally and
ethically allow you to avoid as much tax as possible.
note
70
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
d e s t i n e d
f o r
w e a l t h
defense plan #1
debt & major expense
CLO
P UTTIN G
F O R
SIN G
TH E
Y O UR
F IN AN C IAL
AP
P LAN S
TO
W O R K
IN DEP EN DEN C E
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
71
t he
# 1
d e s t i n e d
f o r
k ill e r
f in anc ia l
of
w e a l t h
su c c es s
The number one obstacle to reaching your financial dreams, other than your belief systems
about money is the expense of carrying debt.
Learn to Say No
The 3 most dangerous words in marketing language are low monthly payments. We get
hypnotized by the lending industry to believe that the consequences of our choices our
minimal because of the low amount of commitment they ask us to make with each
financed purchase. If we stopped to see what we were really spending overall on a purchase, we would be more focused on the negative consequence of our choices. In some
purchases, mostly larger ones like homes, cars and personal loans, we receive a document
called a Truth in Lending disclosure which shows us the true cost of the borrowed purchase.
72
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d e s t i n e d
di ff e re nt
f o r
ty p e s
w e a l t h
of
de b t
Remember that at its core, debt is simply overspending and it can be classified into three types of
spending patterns, Reasonable, Problematic or Compulsive.
Reasonable debt is typically debt that is used more for investment type purchases or for tools that help
you to lead a more productive life. Problematic debt is usually debt that comes from us telling ourselves we need something right now and we have convinced ourselves that it is okay to make the purchase because we may have planned it out in advance (i.e. when I get my raise I am going to buy that
new stereo on credit) but it still creates this problem known as interest expense. Compulsive debt is
usually marked as spending that comes more frequently, adds to your problem and has no plan to it
whatsoever. You are walking down the street, you see a new outfit in the window and you make the
purchase without considering the consequences.
This type of spending is usually addressing some sort of emotional void like the person who is overweight (problem debt) but continues to overeat to feel better. Either way the consequences can be
devastating! Below are the different types of debt you can acquire, starting with the more reasonable
and working its way down to the more compulsive.
Home Mortgage/Auto
Mortgages and auto loans are considered reasonable because they become tools for
investment or production. Both can be problematic or even compulsive if abused.
For example a second mortgage may be problematic and a third mortgage may be
compulsive.
Personal Loans/Liabilities
Like credit cards this type of debting is simply problematic and again, can easily
become compulsive. This would include Medical Bills and IRS back taxes or Liens.
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73
d e s t i n e d
s tag g e rin g
f o r
w e a l t h
st atis tic s
ab out
de b t
Americans are dealing with 1.93 trillion dollars in debt (not including mortgage debt).
On July 21, 2002 the largest
1 business bankruptcy ever was filed. Total assets for Worldcom,
Inc. was $103,914,000,000
. In addition, Enron Corp. filed on 12/2/01 for a total of
1
$63,392,000,000 .
Americans borrowed approximately 200 billion from their home equity in 2005.
The total average credit balance owed by an individual is $9312, up 35% from 1999.
The average credit card interest rate still remains around 14.7%
If your credit card balance is $8000 and you make the minimum monthly payment each
month at 15% APR, it will take you 37.3 years to pay off the debt. You will have spent
$12,789 in interest.
If you made a fixed payment of $160 (2% of original balance) it would take you 6.6 years
and cost you $4632.96 in interest, a savings of more than $8100.
More than 500 million credit cards are issued annually in North America.
Every year since 1996, more than 1 million households have filed for bankruptcy relief.
In 2005, 2,053,000 Filed for Bankruptcy protection, a 31% increase over 2004 (1.5 million)
Current estimates tell us that 5 Billion offers are made each year, thats an average of 20 per
person regardless of credit history.
The causes of financial problems, found by the AICCA are as follows:
#1. Excessive use of credit (38%)
#2. Reduced income or unemployment (25%)
#3. Poor money management (14%)
#4. Divorce or separation (9%)
#5. Other (14%)
1. Source: BankruptcyData.com
The sentence youre paying is too high-priced when youre living beyond all your means,
and the man in the suit has just bought a new car from the profit he made on your dreams
STEVE WINWOOD
74
FROM
T H E L O W S PA R K
OF
HI G H - H E E L E D
BOYS
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
d e s t i n e d
6
mas te r
st e ps
f or
f o r
w e a l t h
e ndin g
con su me r
de b t
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75
d e s t i n e d
six
me th ods
fo r
f o r
w e a l t h
g e tt ing
ou t
of
de bt
Getting out of debt is not an easy task especially when the amount of debt responsibilities you have far
surpass your income and abilities to repay. A lack of clear options reinforces fear, procrastination and
sometimes humiliation and anger. Taking responsibility mixed with effective strategies and clarity of
your options will help one take action and create a positive momentum towards eliminating your debt
obligations once and for all.
Downside
Sometimes you will pay a loan processing fee, or a higher interest rate, depending on your
credit history or market conditions and timing.
! Can create a false sense of less debt because they only have one bill instead of the many they had
prior to the consolidation.
! In most cases, when you lower your payment, you will increase the amount of time you are paying on your debt creating yet another false sense of success.
! Loss of positive equity in your home investment.
!
You may not qualify for a loan, or have to give up collateral or get a cosigner..
!
Unless the problem is cured at the source (overspending) you will charge your balances back up
and wind up having the bigger consolidated balance but all the new debt payments as well.
! You can wind up losing your home or personal property to foreclosure.
!
Downside
This can create a lack of self-esteem from knowing you did not fulfill your obligations.
!
Will create poor credit ratings for 10 years.
!
Will become a matter of your public record indefinitely.
!
76
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
d e s t i n e d
s ix
m e thod s
f or
f o r
w e a l t h
g e tti ng
ou t
of
de b t
Downside (cont)
Will not create relief from secured debts.
!
Can make future borrowing more difficult (which may not be so bad).
!
Can force you to live on a cash basis (which again, may not be so bad).
!
Attorney fees and legal costs (anywhere from $300-$1500).
!
Relying on someone else to handle (may get bad advice).
!
Passing responsibility to the legal system.
!
You may not qualify (income limitations, i.e. you earn too much).
!
You may lose secured assets to liquidation (i.e. furniture, car, etc).
!
May not eliminate certain taxes (less than 3 years old).
!
May not eliminate student or education loans.
!
Will most likely mean higher interest rates for you in the future.
!
Cont
Downside
Payments can be deducted from your payroll so your employer will know you filed.
!
Will create poor credit ratings for at least 7 years.
!
Will become a matter of your public record indefinitely.
!
Can make future borrowing more difficult (which may not be so bad).
!
Can force you to live on a cash basis (which again, may not be so bad).
!
Attorney fees and legal costs (anywhere from $300-$1500).
!
Relying on someone else to handle (may get bad advice).
!
Passing responsibility to the legal system.
!
You may not qualify (income limitations, i.e. you earn too much).
!
You may lose secured assets (i.e. furniture, car, etc).
!
May not eliminate certain taxes (less than 3 years old).
!
Will most likely mean higher interest rates for you in the future
!
You can receive low interest rates therefore increasing the amount of money paid to
the principal balance, albeit for a short time (usually 30-90 days).
!
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77
d e s t i n e d
si x
me t hods
f or
f o r
w e a l t h
ge t tin g
out
of
de b t
78
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d e s t i n e d
si x
me t hods
f or
f o r
w e a l t h
ge t tin g
o ut
of
de b t
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79
d e s t i n e d
the
5 -M inu te
f o r
w e a l t h
D eb t
So lut ion
Now that we have looked at all the possible methods, lets put them together into one simple strategy
utilizing the upside of each method described while eliminating any downsides.
apture
Capture all your debts onto paper (you can use the worksheet on page 85) or computer program (Excel, Quicken) with who you owe, how much you owe, the interest rate and the
minimum monthly payment. Wherever possible, consolidate any balances into the lowest
possible interest rate. Communicate to any creditors who you are behind that you promise
to pay as much as possible, catch up any past due amounts or want to work with them on
an alternative plan.
esolve
This step is critical as this is where you must get honest with yourself and realize what you
have done to yourself and resolve that you must turn this around now. Remember that
pain is your friend as this is where your motivation and drive can come from. You must
brainstorm why (reasons) you must get out and stay out of debt and make a decision to live
on a cash basis no matter how tough things get. You must also have compelling saving and
investment goals beyond getting out of debt.
xecute
Utilize the Massing of Forces strategy (a.k.a. the snowball or power-down method) by paying the minimum monthly payment on all but one of your debts. This becomes your #1 target for elimination. See page 80 for how to make this determination.
erminate
Pay consistently on your plan, and when you payoff your #1 debt, trickle down the payment from that debt, including your DEA, to the next one on your list and so on until they
are gone. Remember its okay to celebrate but remember your #1 outcome, which is to get
out, and stay out forever. You want to continue and pay the same amount every month
until your debts are gone! Once completely out of debt you will transfer the money being
applied to your debt payments to your savings, your cookie jars and give yourself a
lifestyle increase within reason.
80
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d e s t i n e d
de f e ns e
pl an
# 1
f o r
w e a l t h
g e t
ou t
of
de bt
example
If person A carries an average balance of $5,000 on his credit card annually, he will pay an
average of $841 per year in interest and have nothing to show for it at the end of the year. At
the end of 5 years, he will have paid $4,205 in credit card interest.
If person B, by making a decision to not spend more than he earns, accumulating the $841
per year and investing it in a simple money market account, he would have accumulated
$833.05 at the end of the first year, and would have $4,879 by the end of 5 years including
critical mass is $9,879 at the end of 5 years! Remember, person A still has the $5,000 in debt
at the end of 5 years.
example
example
Person A buys a 1997 Toyota Celica for $17,000 with a bank loan for 5 years. His total cost
for this car at the end of 5 years is $21,500 ($275 per month).
Person B buys this same car in 1998. The car has had a previous owner for 1 year and has
20,000 miles on it. Total cost is $12,000. Person B has been saving $142 per month for this
car for 3 years and his total money out of pocket was $11,000. Person A paid nearly twice
as much for the same car.
Its not what we owe, or even the interest rate that makes the difference.
Its how we pay that has the biggest impact.
C H R I S P. H E N D R I C K S O N
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81
d e s t i n e d
4
f o r
way s
t o
w e a l t h
p ay
Remember that our #1 objective is to get out as fast as possible for the least amount of interest expense.
In doing so, there are 4 strategic ways you can approach your debt. You must create a hierarchy using
a criteria that gives you the maximum advantage. Below are 4 options for how to create you gameplan.
82
FROM
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the
#1
d e s t i n e d
f o r
k ille r
f ina nc ial
of
w e a l t h
s u cc e s s
If the outcome is to get out as fast and inexpensively as possible, lets take a look at the different options
of how we can pay. We have 3 choices when it comes to paying back our debt. We can be hypnotized
by the banks and credit card companies and make minimum payments. We can set our own fixed payments and we can choose to accelerate our fixed payments with additional monies.
Creditor/
Debt
Total
Expense
Nordstroms
$1,000
2%
16%
187
$1329
Credit Union
$1,500
2%
15%
225
$1956
Household Bank
$1,000
2%
12%
139
$697
Discover
$3,000
2%
17%
394
$6448
BofA
$2,500
2%
17%
363
$5233
Ford Motor
$12,710
$387
6%
36
$3199
Citibank
$2,500
2%
14%
268
$3055
Jerome's Furn.
$1,500
2%
18%
313
$3431
TOTALS
$24,710
Revolving
1925
$25,348
example
*Remember the key to this method is for the banks and finance companies to continue to lower your payments as
your balances decrease, each month prolonging the life of the loan and the total amount of interest you pay.
Creditor/
Debt
Total
Expense
example
Nordstroms
$1,000
$20
16%
83
$659
Credit Union
$1,500
$30
15%
79
$869
Household Bank
$1,000
$20
12%
70
$393
Discover
$3,000
$60
17%
88
$2,256
BofA
$2,500
$50
17%
88
$1,880
Ford Motor
$12,710
$387
6%
36
$3,199
Citibank
$2,500
$50
14%
76
$1,274
Jerome's Furn.
$1,500
$30
18%
94
$1,293
$24,710
$647
614
$11,283
TOTALS
Total savings using Option 2 over option 1 is 1311 time payments and $13,525 in interest,
not to mention all the time writing checks, mailing bills and the cost of stamps.
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83
d e s t i n e d
j ohn s
g e t
out
f o r
of
w e a l t h
de b t
p lan -e x amp le
6,166.00
24,710.00
15 %
Option 3: Pay a fixed total payment each month (total of all minimum
payments) plus your DEA Factor to accelerate your plan.
Creditor/
Debt
Balance
Owed
Minimum
Mo. Pmt.
Interest
Rate
Time to pay
off*
Total
Expense
Nordstroms
$1,000
16%
$30
Household Bank
$1,000
$20
12%
$60
Jerome's Furn.
$1,500
$30
18%
13
$239
Credit Union
$1,500
$30
15%
18
$280
Discover
$3,000
$60
17%
24
$894
BofA
$2,500
$50
17%
29
$904
Citibank
$2,500
$50
14%
33
$809
Ford Motor
$12,710
$387
6%
34
$3,194
$24,710
$647
163
$6,430
example
TOTALS
84
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d e s t i n e d
my
g e t
f o r
o ut
of
w e a l t h
de b t
p lan
Amount Committed: $
TOTALS
Minimum
Mo. Pmt.
Balance
Owed
Creditor/
Debt
Time to
pay off*
Interest
Rate
M y #$1 T a r g e t
(This figure will be moved to your New Spending Plan on page 95)
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85
d e s t i n e d
f o r
w e a l t h
n ot e s
86
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
d e s t i n e d
de f e ns e
pl an
f o r
# 1
w e a l t h
e xpe n se
p lan
Its a simple fact that you can only do one of two things with your money: You can save it, or you can
spend it. Thats it! Like a cookie jar, the expense jars create a way for you to save money you know
you will spend for major expenses in advance into a specific account (i.e., a jar) that has a specific
destination (an expense).
automobile/transportation
&
insurance
The purpose of this jar is to prepare in advance for your automobile and transportation
expenses and needs. These needs should include a new car no matter how far in the future
it may be. In addition, this jar includes savings for any repairs, insurance, and registration
expenses. This money should be kept in a low-risk, short-term investment account that is
easily accessible, similar to the assurance bucket.
jar
home,
taxes,
education
&
medical
The purpose of this jar is to prepare in advance for the major expenses of your home and/or
childrens education. Your home expenses may include all insurances and taxes if you dont
have an escrow account. In addition, it should include money for a new home, fixing up
your current home, or possibly for a second home or income property. The savings for your
home should be liquid but not too easily accessible, short to medium term CDs or Money
Markets work well. Your education accounts (for yourself or your children), should be in
medium term, secure growth environments like a mutual fund. Pension Plans can work well
for your childrens education expenses as well.
jar
toys,
gifts,
clothes
&
pets
The purpose of this jar is critical as this is where monies can disappear and get you off
track in a hurry. The purpose of this jar is to prepare and save in advance for your expenses
for any vacations you may plan, toys, or luxury items you purchase. This would include
life-style purchases, such as audio-visual equipment, computers, tools, sporting goods, and
activities such as concerts and weekend getaways. Also this jar allows you to save in
advance for any gifts you will purchase throughout the year such as family and friends
birthdays, weddings, and baby gifts and any non-reimbursed business expenses. In addition, you can save for your clothing purchases here. This money should be accessible, i.e., a
bank savings account, money market or short-term CD.
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87
88
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89
d e s t i n e d
f o r
w e a l t h
n ot e s
90
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d e s t i n e d
f o r
w e a l t h
defense plan #2
spending
CLO
P UTTIN G
F O R
SIN G
TH E
Y O UR
F IN AN C IAL
AP
P LAN S
TO
W O R K
IN DEP EN DEN C E
The difference between the rich and the poor is simply this:
the rich save their money and spend what is left and the poor
spend their money and save what is left. Thats it!
WARREN BUFFET
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91
d e s t i n e d
d e fe n se
p lan
f o r
w e a l t h
# 2s pe n ding
Once you have set clear goals, established a plan for getting out of debt (if needed) and set a
plan to stay out of debt by managing major expenses, the next step is to manage all you spend.
This step is so critical in the process because this is the funnel where all your success will come
from. Remember, its not what you make, its what you keep that makes the difference of your success and the way we manage what we keep (save and invest) is by controlling our spending.
Spending is a very emotional issue because all that we want, and all that we feel we need and
deserve is completely tied to how we feel. A common problem with spending is that we tend to
increase our spending at the same rate our income increases. To make sure you are successful
long term, whenever you get a pay increase, or your income goes up, make certain you dont
raise your standard of living by the same percent. All too often we see people who make
$250,000 per year and their expenses can barely keep up with it. As your earning power increases you want to make sure you first increase your savings, then your expenses and spending to
insure long-term success.
When we make our spending plan a priority, we have much more ability at controlling and
anticipating forces that can catch us off guard. See the diagram below on how a large number
of peoples money flows through their life
Income
EARN
DEBT
Payments
92
Spending
Savings
Income
EARN
Expenses
Spending
SAVE
INVEST
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
d e s t i n e d
de fe n se
p lan
f o r
# 2
w e a l t h
sp e ndin g
Three Actions we can take to change our lifestyle and what we spend
Cut the fatdiminish our wants and our perceptions of what we need
Where is the bulk of our spending going? Chances are it is on your:
1. Taxes
2. Mortgage/Interest payments
3. Food
4. Automobiles/Transportation
5. Insurances
6. Utilities
Here are some questions we can ask ourselves to help us cut the fat:
!
!
!
!
Spend with the long-term in mindThe idea here is to make sure you evaluate future or ongoing expenses associated with your
immediate purchase. For example, if you are purchasing a bigger home, what additional
expenses will come with this larger home? If you are purchasing a toy (motorcycle, boat,
etc) what are the future costs to maintain this vehicle or purchase?
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93
d e s t i n e d
de f e ns e
f o r
p lan
# 2
w e a l t h
s pe n ding
Never underestimate the value of a decision. Take a look at these scenarios that more
clearly illustrate why you want to be an investor not a consumer!
example
pack
of
cigarettes?
Couple A smoked 3 packs of cigarettes per day for 46 years, they spent approximately
$33,190 for cigarettes during this time period and complained all the time that they had no
money to invest.
Couple B, by making a decision not to smoke anymore, instead purchased Phillip Morris
stock with the same amount of money, dollar cost averaging the stock over that 46-year
period. Not only will they be in better health, having reinvested all dividends, and selling
the stock at its peak, that $33,190 worth of stock is now worth approximately 2.2 million
dollars! Had they invested that money in an index fund during their lifetime, it would have
been worth nearly $100,000.
example
what
kind
of
car
do
2
you
drive?
Person A buys a Subaru in 1967 for approximately $6000. He is not sure today where that
car is because he sold it and moved to a different car.
Person B instead purchased the Subaru stock around $2 per share in 1967. It went to $167
at its peak and would be worth over half a million dollars!
example
coke
anyone?
On average, each child in the US consumes three 12-oz. sodas per day. If instead of buying
these sodas, they would have invested in Coca-Cola stock, they not only would have much
lower dental bills and no caffeine addiction, they would also have a ton of money!
Three sodas per day is 90 sodas per month or about 1,080 per year. At .75 cents each from a
vending machine, that equates to $810 per year. If they had saved their money and invested
in Coca-Cola stock at the end of each year for the past 5 years, they would now have over
117 shares of stock. They would have invested a total of $4,050, which would now (1/1/99)
be worth $7,846.86.
94
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
d e s t i n e d
c u t
exercise
Go through your entire
spending plan, item by item,
and ask the questions on page
91 to help you cut the fat. You
will be surprised how much
extra money you can find at
the end of the month. This is
money you can use to accelerate your debt payment (DEA)
or use to accelerate your savings and investments to
achieve your Critical Result
Goals at a much faster pace.
Go for it!
note
You can go to:
www.takecount.com and
download an Excel spre a dsheet that will calculate this
exercise for you.
t he
f o r
f at
w e a l t h
e xe rci se
Monthly Expense
Business Expenses
Children
Clubs/Organizations
Contribution/Charity
Education
Electronics/Technology
Food-Dining Out
Financial/Banking
Fun/Entertainment
Gifts/Celebrations
Grooming
Habits
Hobbies/Activities
Current Cost
New/Ideal
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
Rental Property
$
$
$
$
$
$
$
$
Toys
$
$
$
$
$
$
$
$
$
$
$
Travel/Vacations
$
$
$
$
Household Groceries
Household Items
Household Maintenance
Household Staff/Support
Legal/Professional Fees
Luxury Items
Medical/Dental/Alternative
Personal Accessories
Pet Care
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
95
d e s t i n e d
joh ns
ne w
f o r
w e a l t h
sp e ndin g
pla n- e xamp le
Financial/Banking - Broker,
Transactions, Service Fees, ATM, etc.
Mortgage or Rent
$ 1125
Grooming Expenses -
$ 200
Clothing Expenses
$ 100
Auto/Transportation
Service, Fuel, Parking, Registration
alcohol, gambling
$ 100
Hobbies/Activities - sporting
goods, boating, golf, scuba, skiing, yoga,
painting, collectable's
$ 20
$ 60
$50
$ 25
$ 25
$ 75
example
Debt Payments
SUBTOTAL
$ 150
$ 180
Household Items -
$925
Household Maintenance -
$ 2,780
Discretionary Expenses
Furniture,
Appliances, Decorative items, accessories
Windows, carpets, paint, exterminator
Household Staff/Support -
Savings Buckets
(total amount from page 55)
Expense Jars
(total amount from page 86)
$1225
(Included in other fields)
Children -
$ 50
$0
Contribution -
Charity,
Tithing & any Donations
$ 50
$ 20
$0
$ 50
$ 10
$ 20
$0
$ 25
$50
$ 25
$ 50
$ 20
$ 50
Rentals/Properties -
Clubs/Organization -
Dues
for Gym, Athletic Club, magazines,
country club, environmental
$ 25
$ 25
$100
$555
$ 0
$5,460
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
d e s t i n e d
my
ne w
f o r
w e a l t h
sp e ndin g
pla n
1
2
3
4
5
6
7
$
$
Clothing Expenses
Residence Only
Auto/Transportation
Service, Fuel, Parking, Registration
SUBTOTAL
Furniture,
Appliances, Decorative items, accessories
Household Maintenance -
My Discretionary Expenses
Savings Buckets
(total amount from page 56)
Expense Jars*
Children -
Clubs/Organization - Dues
for Gym, Athletic Club, magazines,
country club, environmental
Contribution -
Charity,
Tithing & any Donations
Financial/Banking - Broker,
Transactions, Service Fees, ATM, etc.
note
$
$
$
$
$
$
$
Rentals/Properties -
Personal Accessories -
supplies, care
Household Staff/Support -
Education -
College, private
school, seminars, tapes/CDs,
Personal Growth, Books
Debt Payments
(from worksheet on page 83)
alcohol, gambling
$
$
*You can either list these expenses individually on this page, or use the total from your plan on
97
d e s t i n e d
f o r
w e a l t h
n ot e s
98
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
d e s t i n e d
f o r
w e a l t h
defense plan #3
protection
CLO
P UTTIN G
F O R
SIN G
TH E
Y O UR
F IN AN C IAL
AP
P LAN S
TO
W O R K
IN DEP EN DEN C E
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
99
d e s t i n e d
de fe n se
p lan
f o r
w e a l t h
# 3p rot e ct i on
Business/Corporations
Wills
Trusts
!
!
!
Insurances
Patents, Copyrights, Trademarks
Health Care & Medical Documents
What to Protect
!
!
!
Personal Property
Business Assets
Real Estate
!
!
!
Intellectual Property
Investment Assets/Portfolio
Your Family
100
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
d e s t i n e d
de fe n se
p lan
f o r
w e a l t h
# 3p rot e ct i on
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
101
d e s t i n e d
de fe n se
f o r
p lan
w e a l t h
# 3p rot e ct i on
term
life
insurance
Term insurance is the easiest to understand. In exchange for a level premium (i.e. $30 per month)
over a specified period of time (10, 15, 20, 30 years) the insurance company promises to pay a
specified death benefit (i.e. $500,000) if the insured dies within that period of time. If the insured
does not die within that period of time, the policy either lapses, is renewed at a much higher rate,
or (with most insurance companies) can be converted to some sort of permanent insurance (usually at much higher costs than if permanent insurance was originally purchased).
Term insurance will always be the least expensive option initially. If you know you will only need
or want coverage for a certain period of time or if finances are limited, term is the ideal insurance
solution.
permanent
life
insurance
Many people speak of whole life when referring to permanent insurance. Whole Life is actually only one of four main types of permanent insurance. Permanent life insurance is designed
to be in force until you die, no matter when that is. Permanent life insurance can also be a valuable option if you are interested in using the policy as a form of savings. Most life insurance
policies will require that you meet certain medical criteria.
1. Whole Life
Similar to a term policy, whole life policies stretch the cost of insurance out over a period of time
in order to level out the otherwise increasing cost of insurance. In this case however it is spread
not over a few years but over your entire life. Your excess premium dollars are invested by the
company and this cash value accumulates at conservative interest rates guaranteed by the life
insurance company. Because you arent personally managing that investment, your selection of
an insurance company is vitally important. With this type of policy, however, the inflexibility of
premium payments could become a burden if your expenses increase or if you lose your job or
income. Premiums are generally required to be paid until age 100.
102
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
d e s t i n e d
de fe n se
permanent
p lan
life
f o r
w e a l t h
# 3p rot e ct i on
insurance
(cont.)
2. Universal Life
This option offers greater flexibility than whole or term life. After your initial payment, you can
reduce or increase the amount of your death benefit (although to increase the amount, youll
probably have to give the insurance company medical proof that you are still in good health).
Also, after your initial payment, you can pay the premiums any time, in almost any amount,
within the policys required minimums and maximums. The excess premium is invested by the
insurance company (generally at higher current rates than whole life), so youll need to be careful when choosing a company.
4. Variable Life
This option provides death benefits and cash values that fluctuate with the performance of the
portfolio of investments that you choose (youll receive a prospectus along with your policy).
The cash value is not guaranteed, but you get to choose where your premium dollars go among
the investments in the portfolio. Thus, while there is no guaranteed cash value (it can go down
when the market goes down), you have control over your money and can invest it according to
your own tolerance for risk.
In most variable policies, if your investments perform well, youll either have a higher cash
value and death benefit (some policies allow you to add your cash value into your death benefit). If they dont, youll have a lower cash value and death benefit, although some policies guarantee a minimum death benefit. You can also take loans against the cash value of your policy
(true of other types of permanent insurance as well). The tax-deferral and potentially tax-free
withdrawals can make these types of policies very attractive for people looking for additional
savings vehicles.
Look closely at the underlying funds of the company offers: Are they well balanced? Do they
give you a range of choices to satisfy all risk tolerances?
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
103
d e s t i n e d
m y
f o r
p rote c tion
w e a l t h
p lan
c h e ck lis t
Proper Insurances
Disability Insurance
Life Insurance
Medical Insurance
Auto Insurance
Home Owners/Renters Insurance
!
!
Legal Insurance
(Patent, Copyright, Trademarks, etc.)
*consult a professional
104
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
d e s t i n e d
f o r
w e a l t h
defense plan #4
taxation
CLO
P UTTIN G
F O R
SIN G
TH E
Y O UR
F IN AN C IAL
AP
P LAN S
TO
W O R K
IN DEP EN DEN C E
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
105
d e s t i n e d
de f e ns e
f o r
p lan
w e a l t h
#4 t axe s
106
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
d e s t i n e d
de f e ns e
f o r
p lan
w e a l t h
#4 t axe s
Beware of Underpaying!
Im sure this has happened to you, you have had a great year, you met some goals, saved some
money and everything seems to be going well and then all the sudden you are slapped with a tax
bill at the end of the year. Unless you have invested this underpayment and received a spectacular return that more than pays the tax bill, this can be a very frustrating experience you want to
avoid. Be sure to get proper advice on estimating your taxes so that you avoid underpayment.
Avoid Overpaying!
Be careful of overestimating your taxes and getting that nice "refund" every year. For a lot of people this can be exciting, to get a check back for overpayment, but you have to remember that your
money is not working for you if you do this! When I was younger, I looked forward to that check
every year, because I knew that if I didnt overpay, I would have spent the money anyway, so I
treated like a savings account. But the IRS does not pay you interest or dividends on your overpayment. You get back what you overpaid, period! You must have the discipline and focus on
paying as close to the amount you owe, so that you can save and invest your money instead of
having the IRS hold it for you, with no benefit.
Keeping Records
Being organized, year by year can be a great benefit to you should there ever be a question about
your records. Sandy Botkin has a great system to help you keep records. This system helps you
to keep only what you need, and what the IRS wants to see. Get a file folder or bankers box and
keep your records neat and organized. Separate envelopes for your receipts work well.
note
Use the spreadsheet on page 106 to track what your total tax payments
a re and more importantly, what the p e rc e n t a g e is to your income.
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
107
d e s t i n e d
108
f o r
w e a l t h
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
d e s t i n e d
f o r
w e a l t h
session
5
RESO
BO O K S
UR C ES
F O R
C O AC H IN G
& C
UC C ESS
S O F T WA R E
O MMUN ITY
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
109
d e s t i n e d
fi le
f or
f o r
w e a l t h
su cc e s s
!
!
!
!
110
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
d e s t i n e d
fi le
f or
f o r
w e a l t h
su cc e s s
Your In-Box
Keeping an in box is essential step in getting and staying organized. A general rule that works
well is this, dont file something until you have entered the updated information into the computer. If you use this rule, then you can assess the work ahead by the size of your in basket.
Cleaning House
Dont keep things forever! At least once per year, you should purge the paperwork, statements and receipts you no longer need. Keeping a lean filing system will, again, free your
mind to focus on the important tasks, rather than the clutter you have to deal with "someday."
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
111
d e s t i n e d
for
f o r
y ou r
w e a l t h
re cords
Below is a place to keep all your pertinent account information in one place. Here you can capture
Account information that can easily be referenced in case of an emergency.
Account
112
Account Number
Phone Number
Additional Info
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
d e s t i n e d
df w
f o r
w e a l t h
re c omme nde d
re a di n g
Fundamental Strategies:
!
!
!
!
!
!
!
!
Sophisticated Strategies:
!
!
!
Copyright 1997, Chris Hendrickson. All rights reserved. Reproduction in any form without the express written consent of the author is prohibited.
113
d e s t i n e d
ab ou t
f o r
e ig h ty / twe nt y
w e a l t h
te c hno log ie s,
inc .
Mission Statement
To have a positive impact on the amount of people who enjoy financial independence and a debt-free life.
We accomplish this by providing resources that educate and empower individuals and families with
strategic ideas that create choices and motivation for financial prosperity.
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This Excel workbook will take you through a live version of the first section in this book, calculating your evaluation for you and helping you to understand where you need to place the majority of your focus to get greater
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This workbook will take you through a live version of the first section in this book, calculating your evaluation for
you and helping you to understand where you need to place the majority of your focus to get greater results in
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Destined for Wealth Workbook (112 pages, spiral bound) $34.95 / E-Book $24.95
This detailed workbook outlines the steps for achieving financial independence. Complete with examples, exercises, and descriptions, it will guide you in establishing where you are financially, where you want to go, and how
to create financial prosperity for you and your family. Also available in PDF format for $19.95
114
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Ta k e
Count
Eighty/Twenty Technologies, Inc. 13024 Sandown Way, San Diego, CA 92130-3739 1.858.720.8720 www.5MinuteDebtSolution.com
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