Wealth and Wisdom

This weekend we were watching The Millionaire Inside on CNBC. The episode was Debt Makeover and one case study hit home.

Paul was a successful entrepreneur who was diagnosed with non-Hodgkin’s lymphoma. He turned his back on his business in order to dedicate himself to his treatment and recovery. He borrowed from savings and started charging inventory to his credit cards in order to keep the business afloat. As a result he is $270k in debt and at risk of losing both his business and his home.

Three things jumped out at me:

• He wants to do right and honor his debts: Recovery starts with taking responsibility.
• By intermingling his business and personal affairs he has put everything at risk: This is why incorporating (or forming a LLC/LLP) is critical. Once you have the structure you must keep your personal life and your business separate. If he had done this it would just be his business in jeopardy. Now he may lose everything.
• This could have been avoided by Business Overhead Expense (BOE) insurance.

What is BOE insurance?

BOE insurance is a subset of disability insurance. It pays your rent, employee salaries, and other overhead expenses while disability pays your paycheck. It basically keeps the lights on until you can get back to work.

BOE insurance is common among profesionals (doctors, dentists, lawyers, etc) but is not so well known by small businesses. It isn’t for everyone but can be a tool to protect your company if something happens to the owner.

More info

Wikipedia

Bankrate.com: When you’re ill, BOE insurance inoculates your business from harm

The CPA Journal: Disability Insurance Planning for Professionals

Financial Web:Disability Insurance for Businesses

• All things being equal the one who wants it the most usually wins: During the racquetball tournament last weekend I beat several people who were as good as me. One probably was better. In the end I wanted it more and took second place.
• Usually the better player wins: I lost the final match to a player who spanked me. No matter how hard I played I just couldn’t overcome his superior skills.
• Basic skills do matter: My back hurts. I almost couldn’t walk. It is time I go back to basics and work on my swing mechanics and footwork. I’m using my back too much and my court movement is mediocre. I will not improve any further until I make changes.
• Some people are better sports than others: Most of the guys at the tournament were pretty cool. A couple were grade a jerks. Guess who I enjoyed beating? Guess who I’ll go out of my way to talk to next month?
• Even if you have 16 available hours a day to get things done you can still only accomplish so much: I had a lot of stuff go on over the last couple weeks. No matter how hard I tried it was just too much for one person. You need to know your limits and learn to say no.
• My abdominals hurt: Why oh why did I start my new workout regime? Oh, I remember. I’m tired of being in good shape. I want to be in the best shape of my life. Not so the girls ohh and ahh. It’s so I can:
  • Be the best I can be. \
  • Stay healthy as I get older (I’m approaching a milestone).
  • Set a good example for my kids.
  • Have more energy.
  • Be the best racquetball player and athlete I can.
• Do the right things and good things happen: I have several areas of my life where I am focusing on the basics and doing the right things to the best of my ability. As a natural consequence good things are happening:
  • I am in the top 5% of salesmen in my company and improving.
  • Our subscribers at Wealth and Wisdom are growing around 9% a week.
  • I just had a comment that touched me deeply. Missy read How to respond when your family asks for money and it hit a nerve. It fit her life and was wisdom she needed.
  • My racquetball game is improving and I just was offered (and I accepted) a sponsorship.
  • UCLA has requested to use some of my work at their business school and career center.

Have a good weekend

I personaly plan on shutting down the computer and not firing it back up until Monday. Yes, I’m taking a media vacation. Don’t worry, I’ll be back raring to go on Monday!

Warren Buffet’s first principle for investing is to never lose money. In today’s uncertain market that is easier said than done.

I would typically pull my money out of the market and sock it away someplace safe. I have neither the time nor the inclination to learn to become a trader. I believe my time is better spent growing my business than trading stocks!

We can’t rely on that option this time. IndyMac’s failure is the first of the bank failures. This casts doubt on the safety of our deposits.

I can rely on FDIC…or Can I?

I’ve always known that FDIC will protect my deposits. There has always been a lingering doubt on what that means. Is the $100k protection per account, per bank, or per person? What do I have to do to get my money after the failure?

Suze Orman wrote an article today on FDIC insurance. I recommend you read it to better understand what is involved. People are losing a lot of money on their deposits at IndyMac because they didn’t take the time to learn the rules. Some of the basics are:

• One name on the account:$100,000 per person per bank. What about two accounts at the same bank? The $100k total limit still applies.
• Joint account: $200,000 per joint account. This is in addition to the $100k per individual account.
• IRAs: Your bank IRA (why would you have an IRA through a bank?) is covered up to $250,000. Note: this is only cash instruments. No stocks or mutual funds.
• Trust/Pay on Death Accounts: complicated. Check with the FDIC and your advisers.

I again recommend you read the article and check your accounts to make sure you are covered. Also remember that I am not a financial adviser or planner. Please consult your financial professionals before you make any decisions.

Yesterday I was honored to have articles posted at Get Rich Slowly and My Super-charged Life. We didn’t plan for both to happen at once but such is life. It is nothing to complain about, I just had to re-prioritize my week on the fly to support both.

As a result of this we had a surge of trafic and our reader base grew significantly. It was also a lot of fun interacting with such a large audience.

Welcome New Subscribers!

Our growth has been strong (38% growth per week). Add in yesterday’s subscriber surge and we have a lot of new people. Since we have so many new readers I thought it would be a good time to introduce ourselves.

We started Wealth and Wisdom because we saw a gap in the market-we experienced it ourselves! We know that entrepreneurship isn’t for everyone. That being said it can be the best way to wealth, a balanced life, and security. Also, many of the same principles apply whether you are an employee or the employer.

We were looking for one source that could provide:

• Business and entrepreneurial information and advice without hype or scams.
• How to build a business that supports the lifestyle you desire.
• How to grow as a person and become more effective.
• How to balance family, business, and your personal life.
• How to go beyond personal finance 101. Now that you are debt free and have a savings what do you do?
• How to protect your assets.

And Wealth and Wisdom was born…

Help us serve you better

We firmly believe a business should be focused on it’s customer. Everything it does needs to support it’s customers and make their experience better. This principle is what our blog and the companion website are founded on.

We welcome your feedback and suggestions. An active community is much more fun and productive. Your comments help draw out the finer points that may have been missed in the initial post. Your unique perspective can help show an issue from a different light. It also helps up develop to better fit your needs.

When it rains it pours. I got an email last night from JD over at Get Rich Slowly. He asked if it was alright to publish a guest post of mine today. The notice was short but how could I say no? The end result is a guest post on both Get Rich Slowly and My Super-charged Life.

If you get a chance please take a moment and stop by and read Network Your Way to Job Security. Take a moment to look around as JD has put together a great blog on personal finance.

Visitors from Get Rich Slowly

Welcome to Wealth and Wisdom. Please take a look around and make yourself at home. I’ve picked out some articles you might find interesting:

How to respond when your family asks for money

Three paths to financial abundance

11 Steps to the Job of Your Dreams

The Real Housewives of Orange County…In Houston Texas

If you like what you see leave a comment and let me know. I’m pretty good at responding to all comments though it may take a few hours. I would also like to invite you to join our blog for free. You’ll save time by having our articles delivered to your RSS reader. Don’t have an RSS reader? Feel free to sign up for our email subscription at the top of the page.