What Financial Mistakes to Avoid in a Crisis – Episode 358

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[00:01] On today’s episode, we’re going to be talking about the financial mistakes that you must avoid during a crisis. But first, I think we should define what a crisis is. How about that, Kim? Absolutely. My favorite definition comes from the Chinese and it is a combination of two Chinese characters. One is danger and the other is opportunity. And that is the best definition of a crisis. You know, it really is because it is the yin and yang to it, correct? Yes, it is really causing us to look at things differently, to think about things differently. And that’s where we can get really good value because clearly the way the crowds are thinking is a race to the bottom. And we want to lift our point of view up and out of that and be looking for a race to

[01:05] the top, which is unlimited. That’s right. So as we start to classify a few things, a race to the bottom would mean that it is a zero sum game that we’re playing. We’re not. We’re playing a game where there are outside elements and you live by this mantra, which is and. Do you want to explain that? Yes. Your family has, for as long as I can remember, had this perspective of looking at things not as an either or, but instead as an and or a both. And in fact, the short way that we say it is this is the house of both. And so, for example, if you have an opportunity with some money and you could spend it on a marketing program or you could spend it buying equipment for your situation, personal or business, my question always is, is there any way that you could do both?

[02:02] And a lot of times the answer is no, but that’s not the important point. The important point is how you are looking at the situation. And if you come into it from a how could I do both as opposed to a I know I’m not going to be able to, so I have to make a decision here, it just opens up your thinking and it stretches your mind and it causes you to look at things differently. And actually, I have to give Robert Kiyosaki some credit for this. He didn’t come up with the and both thing. I don’t know where that came from, but he did help me so many years ago switch a sentence that is so common. So this is absolutely one of the financial mistakes and the thinking mistakes that we want to avoid, and that is the sentence, I can’t afford it and just switching it around

[02:58] to how can I afford it or how could I afford it. And as we’ve identified, it starts in our brain and then it goes to our mouth. And as I like to say these days, it extends out through our fingers because how often are we typing things that why we might not verbalize them with our mouth. We’re verbalizing them with our fingers. OK, so here’s what I’d love to break down if we can do part one. And by part one, I mean just of this episode, we’ll do a few minutes on the dangers. And then I would love to jump over to the opportunities. Sound like a plan. Beautiful. So first, let’s hit up the dangers that are happening right now that you’re seeing people make. Maybe it could be messages that people have sent you or horror stories that you’ve heard

[03:50] and you’re like, oh, I wish I had a time machine to fix that. Well, this first one, a very critical one is how we’re thinking, talking and typing. And so everything that literally every thought and then consequently the words come out of our mouth and those that come from our fingers needs to be viewed. If it’s negative or fear based, it needs to stop in our thought and just not let it go any further. And so that I think is danger. Number one is it’s easy to overlook it. It’s easy to say, oh, yeah, easy for you to say, Kim, you have savings and you have already at home business. And yet this is why I have savings and an already at home business is because I watch every thought and bring it in to captivity and keep it there.

[04:44] If it’s negative and only put out positive things. Now, if there is a point of fear, then address it head on. In fact, in the mornings, if I am fearing, feeling fearful, I do all that I can to get that straightened out by my spiritual and inspirational reading before I literally even get into my day. And sometimes because of schedules, that’s really not allowable. And yet if it isn’t, then at noon when I take my break from 12 to one, I’m back into the spiritual and inspirational to make sure that I get my thought and even like my heart or my gut switched around. And this is paramount right now. Absolutely is. What other dangers are you hearing from others? Not having liquidity in the form of cash, actual cash and then savings account cash

[05:38] or the opposite side and having too much. It’s super important in today’s world that we keep our bank balances under 250,000 per institution. I know the rules say per account. I disagree with that. I don’t think you want to be standing in line with forms and papers waiting for FDIC insurance to come along at some point in the future. And we’ve shared this information on other podcasts, so I don’t want to over converse about it. And yet it’s something that we need to be cautious of. And then right along with that is what we’re doing with extra dollars and the desire to pay off real estate debt. I hear it over and over. People so badly want to pay off mortgages or prepay mortgages on rental properties

[06:23] and on their own primary residence. And I cannot emphasize enough the importance of not doing that right now. So just walking through it quickly, if you prepay a mortgage, essentially, you are literally burying dollars in the walls of a building because the bank is your only source to get access to those dollars again or selling the property, which essentially is still the bank because that probably means that somebody else has to apply and get approved for a mortgage. And so I know it’s a thing that people do and they don’t know what else to do with their money. And there are so many better solutions for storing wealth than in the walls of a home or a building. Very, very true. And I think that people are doing that just because they feel like they

[07:11] have no control over it and they just resort. It’s kind of like people focusing their entire thoughts and conversations around the 401k. And I’ve heard it so many times lately. I can’t believe that my 401k has lost 35% in the last three weeks or whatever that may be. Well, and that’s the perfect last danger to talk about is money that goes new money today that goes into a 401k that you cannot get it until you’re 59 and a half is potentially very unwise because what’s so more important today is cash and liquidity. And so even somebody that’s in their 50s, that’s nine years away and you might need that money next year. So, you know, we’ve talked for years about just 401k is up to the match level, MATCH.

[07:56] I would say in today’s world, you don’t want to be doing that at all. Plus, I know a lot of companies are removing the matches entirely because the companies are having financial challenges as well. So to me, any type of contribution to any type of environment where the money is tied up is unwise, whether it’s tied up in a home, tied up in a 401k, tied up in an IRA, even the Roth IRA. Yes, you can get your principal back out, but typically Roth IRAs are invested in the stock market. So now you’ve put the money in and then it goes down and you’re going to want to try to get it out. I don’t think so. So liquidity, liquidity, liquidity. All right. So now we’re going to shake this off. We’re going to the positivity.

[08:36] We’re going to be talking about the opportunities. How about that? I love it. So, okay, good. Yeah, we have to really go through that stuff first. Today’s opportunities are a chance for you to rethink everything. People are rethinking their work environments. They’re rethinking how they educate their children. They’re rethinking how they spend their days. They’re re-prioritizing and building based on what’s important to them. And this is so awesome. If you have a business and you have products or projects, whether it’s business or personal that are not feeding you and providing you interest and joy, then it’s time to get rid of it. You know, the Marie’s book about tidying up spark of joy. I can’t remember the title right now.

[09:29] That’s for old clothes in the closet. Well, it’s for old projects as well. If it’s not providing you a spark of joy, get rid of it. It’s time to shut it down. Absolutely. What other opportunities? I’ve got a couple of things on my plate, but if you’ve got some pressing ones, is that fine if I jump onto one real quick? Oh, please share. Excellent. Okay. So I’m taking this from my personal life, from my group of friends. Right now, more than ever, I am deepening my friendships and relationships. One, because I know that they need it and I know that I need it. Now, here is the phenomenal thing about it. We’re finding some amazing opportunities ahead of us. So I’m going to give a quick and concise explanation.

[10:18] This report came out on the 31st of March from StackLine. It’s about e-commerce because I own an e-commerce company. And on here, it is explaining the top 100 fastest growing and declining categories in e-commerce. Here it is. Number one is disposable gloves. Growth of 670%. Bread machines, 652%. Can you believe that? Wow. So it’s amazing. And in this short time, I have several friends that have started hand sanitization companies. They’ve started mask development companies. David Shipley, who we also know, his company Orbitform has created these devices and medical equipment that are now being distributed to hospitals. This all happened within the last few weeks. It’s pretty amazing. I love it.

[11:06] And that’s because these people thought differently. They took a look at what their skills were and they applied them to the economy at hand. That’s so cool to hear about. Absolutely. And if you don’t have a bread machine, you can still make bread, which is really I think what people are doing there. They’re making things at home more, which is a delightful opportunity for us to do a better job with our food. They are purchasing food more locally, also good. And then that is, I think, causing a family dinner environment that we had lost where so much value is provided for the family. And so those are all good things. My daughter is in her apartment in Denver and just shot me a picture yesterday of

[11:58] what’s the flat Italian bread that is so popular in restaurants these days. I can’t even think of that. I can only think of the non-bread. I can’t think what it is either. I can only think of the non-bread, the Indian bread, but I can’t think of that. Anyway, that’s what Google’s for, right? Find a recipe for bread that doesn’t require a machine if you don’t have one. Yes. And so these are our opportunities. Yes, absolutely. Now, there’s another opportunity that you spoke about recently. To give some context to this, listeners, recently we did a Q&A Zoom meeting where we took podcast questions, listener submitted questions, and Kim addressed those live. One of those was the opportunities that there will come about for accredited

[12:47] investors in oil and gas and other places. Can you touch on that just briefly? I know most listeners, it might not be applicable, but it might help them to understand. Absolutely. There’s the oil and gas space and also the life settlement space, both for credited investors. And if you are interested in this, please just shoot me an email. Hello at partners4prosperity.com so that you can get some more information. And just from an educational and learning standpoint, these are spaces that are not thought about by the crowd. They’re not the typical definition of an investment. And so many people think the only thing that’s an investment is a 401K, which is typically mutual funds and or stocks and bonds.

[13:31] And that’s all that fits. Well, there’s something like 24, I believe, legal specific categories of asset classes. And only maybe a third of those fit the stock and bond category. And so this is something that people can just go into learning mode on. And learning is a huge opportunity. And anybody can learn new things. And everybody should be wanting to learn new things, because as we deal with this situation, this unbelievable situation that we have in front of us right now, learning is going to cause growth, which is going to help you overcome the dangers that are associated with our unbelievable times. And so however the learning is occurring, whether it’s getting yourself to read books that have been on the back shelf

[14:28] forever that you’ve wanted to read and now you are taking an online class, even watching a documentary about something that you’re not familiar with is valuable time spent because once your brain gets stretched, it never returns to its original size. And I don’t mean physical size, not necessarily, but the idea of the size of your thinking. You stretch that by learning new things. And we have a whole blog post about all kinds of opportunities that will help you learn ways, new ways to generate income, to get money to move in your own personal economy. So we’ll want to make sure that that gets included in the show notes as well. Definitely we can do that. You know, for listeners, we’ve presented several different dangers,

[15:24] things to avoid, and we’ve presented opportunities. The worst thing that we could do right now is to throw our own pity parties, to turn on Netflix, to put on sweatpants, and then to come out of a cave and then say, wow, my pants don’t fit anymore and no one likes me. We don’t want to do that. This is, I think, an opportunity, as you mentioned, very carefully that our families can actually slow down. We can get back to our principles, spend time together, and maybe it’s a good pause button to say, okay, I know it’s important. Kim didn’t say this, but one of the things that I find remarkable is the principles that are the prosperity principles, but also what the insurance industry does, how you’re representing whole life.

[16:15] And that’s an industry that’s built around values and an industry that’s been around for centuries and centuries. And so we can have pause, but I don’t know what’s going to happen to banks, but I do know what’s going to happen to our own personal economy. So really helpful, Kim. Well, it’s a joy to share. And I really encourage the continued questions from our listeners. If you have opportunities that you are aware of from a learning standpoint, I’d love to share them with others. From an income generating standpoint, I think that’s valuable as well. And just as we wrap up, I want to share one more, and that is the entrepreneurial mindset, which says I get paid because I have first produced value for somebody.

[17:03] And the true definition of an entrepreneur is taking resources from a lower level to a higher level. And there’s just a lot of our society that has gotten, unfortunately, an incorrect view of what an entrepreneur does, and it’s inhibiting them. The full one to be entrepreneurial doesn’t mean you need to literally own a business, but to take resources from a lower level to a higher level is fabulous. And to apply good entrepreneurial thinking, i.e. how can I give first? How can I provide value first? And because I have done that, I will then be paid. Thank you for listening to the Prosperity Podcast. To take control of your money and have it work for you, visit us at partnersforprosperity.com.

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