Investing is a plan

As I was reading Robert Kiyosaki's Guide to Investing this past weekend, I realised that I'm wasting time. Or phrasing it differently, I'm spending it, not investing it. Or saying investment is something else: "Sacrificing something now, so that you can have more of it in the future." And that holds for both time and money. Are what you doing today resulting in having more of that in the future?

Regards
Leon van der Walt
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RSS feed for website

I have set up an RSS feed for my website Financial Inspiration Cafe for the purpose of seperating this blog from the website.

The URL for that is: http://www.financial-inspiration.com/support-files/financial-inspiration.xml

From now this blog will only occasionally refer to the website (except for the sig).

Regards
Leon van der Walt
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Articles on Financial Inspiration

I've added a new section on my website containing inspirational articles. Check it out.

Regards
Leon van der Walt
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Target financial situation - 15 December 2005

I mentioned before that I would tell you what I want my personal financial situation to look like at the end of the year. So I took the template I used previously and adapted the figures to what I want it to look like by the end of this year. This time round you are welcome to leave comments.

Income statement

Income:
Salary:	12900
Real estate: House & Flat	0
Real estate: Semi's(Duet)	1000
Business Income: Vending Business	2000
Business income: Web Services	17000
Expenses:
Taxes:	2700
Mortgage/Rent:	0
Car loan payment:	0
School loan payment:	2230
Credit card payment:	0
Child expenses:	0
Other expenses:	3255

Surplus cash flow: 24715


Balance sheet:

Assets:		Liabilities:
Savings/Cash:	3000	Mortgage:	0
Stocks/shares:	0	Car loans:	0
		School loans:	35000
		Credit cards:	0
Real estate: House & Flat	200000	Real estate: House & Flat	205000
Real estate: Semi's (Duet)	200000	Real estate: Semi's (Duet)	205000
Business: Vending Business	12000	Business: Vending Business	0
Business: Web Services	10000	Business: Vending Business	0

Once again, just a few notes on this:

1. All figures are in South African Rand (ZAR): $1 = +-ZAR 5,8.
   
2. The ZAR 1400 that I am currently paying for rent has disappeared, because I want to acquire a property (house & flat) where I live in the flat and rent out the main property that will cover my bond repayment.
   
3. The positive cashflow property (semi's aka duet) is possible - a friend of mine is doing it.
   
4. I mentioned that I'm putting away ZAR 2000/month and this will allow me to purchase a vending machine of ZAR 12000 in approximately six months.
   
5. The tax figure I mention is not changed as I will have my businesses in seperate legal structures (it might change a little if I get a raise).
   
6. The 3000 in savings is a automatic deduction from my pay each month (250) that gets paid out in December.
   
7. This is a snapshot of the situation I aim to have by December - i.e. it will not necessarily look like that in October or Novermber. It will move/evolve towards that from the current situation.
   

More heroism and Cornelius Vanderbilt

I've added two more content pages to my website. The first is the song Wind beneath my wings of Bette Midler and it slots in with Bonnie Tyler's I need a hero - it is an acknowledgement of the hero in the shadows. The other page is the biography of Cornelius Vanderbilt - the transportation tycoon that lived around the early 19th century and was one of the earliest American industrial tycoons.

Regards
Leon van der Walt
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Who needs a hero?

Remember that old classic I need a hero by Bonnie Tyler? I just recently traced it and listened to it again. Oh, what inspiring music indeed. So if you are in need of a hero, just contact me :) But don't tell anyone - super heroes need their secret identity ;)

Regards
Leon van der Walt

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Most influential banker - JP Morgan

I've researched JP Morgan and written a short biography of the man on my website.

This is a man that was born 'rich', but he did not squander his wealth, he built it up even more. And the power he had did did not lay in his own wealth, like John D. Rockefeller. Instead it was in the billions of wealth he controlled. Just think of yourself - do you control your wealth or does your banker?

Regards
Leon van der Walt

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The have's and the have nots

I've found a great article at Fortune on inequality that puts my mind somewhat at ease about inequality between the rich and the poor.

In short - the incentive to become rich must be there for people to strive for (not too heavy taxes or redistribution of wealth).

Capitalism introduced inequality. It is not perfect but it has raised the overall living standards of people by providing that incentive, the possibility of becoming rich. Socialism on the other hand, did not allow individuals to become rich and therefore there were no incentive for individuals to stretch themselves.

Another point raised in the article is the issue of wealth over generations: the first struggles to get it, the second generation preserves it, the third becomes used to it and the fourth wastes it. So the challenge becomes how do you keep wealth through more than four generations?

Regards
Leon van der Walt

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Financial freedom journey companion

I've changed the home page of my site to more accurately reflect what I want to do with it. Instead of just offering to inspire, I'm now your companion on your journey to financial freedom as I am also on this journey.

Regards
Leon van der Walt

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Real estate prices pricing beginners out of the market?

Yesterday I had a look at a real estate paper for the South of Johannesburg which only come out today. Yet, when I phoned to enquire about some properties, they were all taken (all two of them that were in my price range and possible investment properties).

With the current propert boom we are experiencing, I find that many people who like to start in property cannot get into the market at a reasonable price. Here in Johannesburg, we are already forced to search for properties on the fringes of the city (not the North though as that is already in the Major Leagues i.t.o. prices).

Take myself as example: I have a post graduate college degree and earn a very respectable salary (gross +- 13500). This allows me to qualify for a bond of R410000 (taking 30% of my gross salary as repayment on the 100% bond). Compare this to the ABSA house price index "average" house price of R1,2 million.

Yes, there is still propery out there and it can be found, but you have to look hard for it - or rather, look in places where others aren't looking. As for me, for the time being, I'll phone the advertisers if I see a property advertised that might give me a positive cash flow property (in South Africa?!). And until I have the time to devote myself to finding a property and looking for it in unusual places, I will just do as the growing herd - stand on the sidelines and see the rich getting richer - until the interest rates go up and things go bust :)

Regards
Leon van der Walt

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Searching for a financial mentor

I'm looking for a mentor. More specifically a financial mentor.

I have grown up in an environment where financial education wasn't a priority. So my mind was sort of a blank slate regarding finances. Or rather, it wasn't blank but contained lots of irrelevant financial information. It wasn't until I read Robert Kiyosaki's book Rich Dad Poor Dad, that I started to see a light at the end of the tunnel (lets hope its not a train :) ) . I've gone on to read most of Robert Kiyosaki's other books, as well as books like Think and Grow Rich and The Richest Man in Babylon.

Up to now, RK served as my financial mentor in that he helped me to change my mentality on money and finances. Now I feel I need to move on and find a person with whom I can have contact, on say a regular monthly basis, to move forward in my financial life.

This person must be a man who has been successful financially (in Business and/or Investing - see Cashflow Quadrant), a man who has strong Christian convictions, a family man, and a man with strong morals, yet open to new ideas and ways of thinking. In short, I want a mentor, who are now, what I aspire to be in the future.

I have talked to a certain individual who runs a mentorship program and coaches mentors and we will have a session later to discuss my needs and responsibilities further (he still needs to match me to a suitable mentor after determining what I'm looking for). So until then, I will continue to read and find my own way.

Regards
Leon van der Walt

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Personal finance situation - Jan 10, 2005

As promised, I've set out my current financial situation below.

Income statement

Income:
Salary:	12900
Real estate:	0
Business income:	0
Expenses:
Taxes:	2700
Mortgage/Rent:	1400
Car loan payment:	0
School loan payment:	2230
Credit card payment:	163
Child expenses:	0
Other expenses:	3255

Surplus cash flow: 3152

Balance sheet:

Assets:		Liabilities:
Savings/Cash:	0	Mortgage:	0
Stocks/shares:	0	Car loans:	0
Real estate:	0	School loans:	72000
Business:	0	Credit cards:	820
		Real estate:	0
		Business:	0

There are a few notes I have to make on this.

1. All figures are in South African Rand (ZAR). Approx $1=ZAR 5,8.
   I have bought a one year subscription for an SBI website worth approximately ZAR 2500 which would count under Business Assets. It has not yet started to produce an income, so I have not included it (and it does not cost me money to run, so it is not a liability - it was an expense in the month I bought it).
   
2. My surplus cashflow are distributed as follows:
   
   • 1000 - Extra payment on credit card.
     
   • 2000 - Owner contibution to vending business (I'm saving towards buying a vending machine for cash and as it is the first month , I can't register any savings on that yet).
     
3. As you can see, I'm almost finished paying off my credit card. My plan is to then use the extra ZAR 163 (plus the ZAR 1000 I'm currently pushing towards reducing that debt) on reducing my school loans (an extra payment of ZAR 1163 / month).
   
4. I repeat my caveat: I believe everyone is responsible for their own financial situation and to make excuses or belittle others for wanting/improving their finances is paramount to writing your own financial eulogy. So, unless I can help you in some way, keep your comments to yourself (unless you want to hand out compliments, of course ;) ).

And there you have it. I will update this on a monthly basis or when a significant change occurs. Stay posted for my goal statements - what I want these figures to look like at the end of the year.

Regards
Leon van der Walt

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Cashflow Quadrant reviewed

I finished Robert Kiyosaki's book - Cashflow Quadrant this weekend. It is the second time I read this book and feel it is just as valuable as the first time I read it. You can read my official review of Cashflow Quadrant on my website financial-inspiration.com.

I have already read most of the Rich Dad books so I've got a fuller picture of the message that Robert Kiyosaki is trying to convey than someone who have only read Rich Dad Poor Dad. In RDPD Robert was telling us that the rich is different and now he starts to tell us how we can also become rich (or start to think like the rich).

He still uses the simplistic Income statement and balance sheet he introduced in RDPD and I like it. When I was walking through our local mall with friends, I started seeing, in my minds eye, the shops' balance sheet and if I wanted to buy something, how that would affect my and their balance sheets. 'Balance'-sheet, it takes more than one statement to balance. In this case, mine and the shop's.

There is also an action step where you define your current financial situation. You use the template from the Cashflow game for this. I like to use this as a template as well when reporting, or determining my financial progress.

Kind Regards
Leon van der Walt

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Accepted for Google's Adsense

I have just checked my inbox and was pleased to see a mail from Google - I have been accepted into their Adsense program. The other mail item in my inbox was one from Amazon and I have now been accepted as one of their affiliates.

Now that I've got this out of the way, I can focus on building my website the SBI way - through content.

Kind Regards
Leon van der Walt

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Why don't people talk about money?

There seems to be this huge stigma in the world, the great 'Unspoken'. What I'm talking about is the silence on money. Anything to do with money or personal finances is taboo.

So what's the deal, why don't people talk about money? I think it is because of this need of ours to self sufficient - oh, and of course to complain. What? Yes, we need money to eat, to sleep in a bed, and to do all the wonderful other things that money can buy. And somehow, we end up without money and we have to ask for it. Tada, we are not self sufficient anymore. And the people that have it, don't want to talk about it to those who don't (have money) because then they will be asked to help. Or people are sometimes just afraid to admit they are somewhat (or totally) incompetent - and I'm not excluding myself here.

Its all about protecting your own. That's why people hesitate to tell you how much they are earning. It is to avoid the inevitable "Why don't you buy it, you've got the money?" And we all like to compare ourselves to our peers - financially and otherwise. And if they get more than us we tend to belittle them or if we earn more, we become smug.

But staying silent, for me, will defeat the whole purpose of this blog - to increase my money and financial literacy. Yes, but I press forward anyway.

So if you know me personally, don't tell anyone about my financial numbers or any other sensitive information :) Also, don't tell me that you know, sometimes ignorance IS bliss (unless you are willing to reciprocate or you think you can learn something from me).

So from now on I will be open about my finances with one caveat:
I believe everyone is responsible for their own financial situation and to make excuses or belittle others for wanting/improving their finances is paramount to writing your own financial eulogy. So die a happy death!

Now that I got that out of the way...let the journey of a thousand miles begin (or continue)...

Regards
Leon

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Start on blog journey

I have just started on my blogging journey and are looking forward to it. The main purpose of this blog will be to tell you how my financial journey is progressing and how close I am to exiting the rat race.

My current 'works in progress' include an SBI website www.financial-inspiration.com and a vending business, though the latter is not very far along.

My latest addition to my website is my review of The Art of the Deal of Donald Trump. Quite an interesting and compelling read.

Well, thats all for now. I hope to keep you updated as I go along.

Regards
Leon