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How the Rich Make Money

golden_eggs.jpgThe Federal Reserve recently published some new wealth data [PDF]. They looked at levels of net worth and the income associated with each. They defined net worth as total assets (including a primary residence) minus any money owed.

You need a net worth of over $8 million to make the top 1%, $2 million gets you in the top 5% and it takes about $900,000 to place yourself in the top 10%.

So those are your targets if life on your own terms means being in the top 10% or above.

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Making more doesn’t mean having more

This report also looked at share of total wealth. As it turns out, the richest of the rich – the top 1% – didn’t get richer. They still held approximately one-third of the country’s total wealth in 2007, the same as 1995.

However, their share of income was up significantly – from 17% in 1997 to 22% in 2007.

The wealthiest people in our country saw a bigg increase in share of income, but their share of net worth didn’t go up. Does that mean rich people got caught up in the “spend, spend, spend” economy? Possibly.

We often think, “If I could just make a little more money.” This study offers further proof that making more doesn’t necessarily translate into having more – even for the richest among us!

Make do, then make more

The crucial thing – the starting point – is to figure out how to make do with what we already have. Then when we make more, we’ll have more because we manage it all better.

We can enjoy some of it now and invest the rest for our future – for the life we dream of living.

How the rich make money

As might be expected, the average person gets most of their income from salaries and wages. As we move to the top 5%, we see that a larger share of income comes from business ownership and investment real estate.

It really kicks in for the top 1%. Plus they have built up enough assets to get a significant boost from selling those assets for a profit. It’s Economics 101 – buy low and sell high.

But it’s no panacea

We’ve recently seen people losing money in business and real estate. Like most things, it’s no panacea. It’s risky. But if you aren’t trying to get rich quick, you can greatly improve your odds.

The best advice

We also found it revealing that this study showed that the bottom 50% lost money holding assets and from the ownership of businesses and real estate.

The rich made a lot. The bottom half lost money. What do the rich know?

Before you jump into investing in a business or real estate, educate yourself. Get advice from someone who’s actually succeeded at it. If they’ll mentor you, that’s great. If they charge you for it, it will be worth every penny.

You’ll get where you want to be faster by learning from people who have done it rather than trying to learn it on your own.

So if life on your own terms means building wealth, get started creating multiple streams of income today – even if it’s just part-time!

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Please join us next time when we ask, “Are you talking to the right person?”

Thanks for reading our post today. Until next time, here’s to your bigg success!

 

Direct link to The Bigg Success Show audio file:
http://media.libsyn.com/media/biggsuccess/00381-042709.mp3

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Save Money by Sharing

sharing.jpgOur parents taught us to share. It was part of being a good little boy or girl. The economy is reminding us adults about the value of sharing.

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Home for Sharing

For example, some people are now sharing living space. More and more people are accepting the idea of having a roommate again by renting out a room to help pay bills.

There are a number of people who are out-of-work and looking to save money every way they can. “Necessity is the mother of invention” as we’ve heard.

Co-working

Another popular idea is sharing workspace. Freelancers across the country are creating co-working stations in their communities where they can share office facilities and other resources.

Instead of going it alone – signing a long-term lease, paying utility bills, buying office furnishings and equipment – they pay a fee and share space with other freelancers and entrepreneurs.

The spaces are usually nice and bright. They have a conference room and maybe even a full-time receptionist.

It’s not just about money. For freelancers who are starting to feel like loners, it gives them a chance for in-person human interaction during the day.

Sharing infrequently-used items

We started thinking about other ways to share. One example is a lawn mower. We only use our mowers once or twice a week. In our area of the world, we only use it for about half of the year. Would it make sense to share a mower with a neighbor?

As long as both people don’t feel the need to mow on the same day at the same time, it would probably work. There are issues – you have to both agree to take care of the mower and those sorts of things.

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georgeThis makes me think of my dad. If he owned something, he took really good care of it. If he used something that someone else owned, he took really, really, really good care of it!

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Sharing for fun

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marylynnI had an event coming up and I didn’t know when I would find time to go shopping. I told one of my girlfriends about it. She said that she had the perfect dress. We went over to her house and, sure enough, she did!

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georgeI needed a pressure washer to do some clean up around the house. I told one of my friends that I needed to go rent one. It turned out that he had one that he let me use for the weekend.

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Just so we don’t give the wrong impression, we also share our stuff with our friends!

A fun way to share

Since we like to do everything in a bigg way, let’s ramp up this idea of sharing more. Why not organize an event with a group of your closest friends?

Hop from house to house. If you want, you can have appetizers or organize a full meal as part of the activities. You can do it all in one day or create a series – this month at our house, next month at yours.

At each house, let the host show off the wares that he or she is willing to share.

It could be a Fashion Show – from clothes to accessories. Try them on if you want. Parade around. Show them off.

Or a Home Show … from power tools to hand tools. Test them out. Complete a project together. It’s your show; do what you want.

You could have a Home Entertainment Show. Show off DVDs, books and Wii accessories.

You can all see what each person in your group has to share. Then the next time you need that certain something, you won’t have to go out and buy it – you’ll know Joe or Jane has it.

This is a fun way to spend some time with your close friends. You’ll find that it will spark a lot of fun conversation and you’ll learn more about each other.

It’s also a creative way to save some money by pooling resources. That’s a bigg idea!

What have you shared with your friends?

Please share that with us by leaving a comment below, calling us at 877.988.BIGG or sending us an e-mail at bigginfo@biggsuccess.com.

We thank you so much for sharing some of your valuable time with us today!

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Would you like more tips and tools to live your life on your own terms?
Subscribe to the Bigg Success Weekly – it’s FREE!

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Recent research shows that, even before the recent decline in stocks and homes, the rich weren’t getting richer. Please join us next time when we discuss why.

Until then, here’s to your bigg success!

 

Direct link to The Bigg Success Show audio file:
http://media.libsyn.com/media/biggsuccess/00380-042409.mp3

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Ramp Up Your Savings

uptrend.jpgBigg success is life on your own terms. One of the five elements of bigg success is money. We need to plan ahead so we have enough money to live our golden years on our own terms once we no longer work, another one of the five elements. Otherwise, it’s hard to imagine our golden years being golden.

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The silver lining

There’s at least one silver lining (boy, we’re hitting all the precious metals today) in the dark cloud we’ve been experiencing with the economy – we’re saving money again! It’s not easy to save money, but many of us have realized how important it is to have a reserve.

Financial planners say we should save at least ten percent of our income to put toward retirement. We’ve even heard some recommend twelve percent.

A lot of us face a bigg challenge in socking away that amount of money. Some people may get discouraged because they can’t come close to saving ten percent. So they just don’t save at all.

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georgeI can relate to that because I’m somewhat of an all or nothing guy. But as my dad used to say, “Fifty percent of something is better than a hundred percent of nothing!”

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marylynnAnd nothing is what we end up with if we don’t stash some away now! But there’s no need to get discouraged if you’re not saving all that financial planners recommend.

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Ramp up your savings pain-free

Let’s consider a hypothetical couple that has a household income of $100,000. They should save $10,000 according to the experts, but they’re only able to save $3,000.

However, they are determined to find a way to get to that ten percent. They decide that, one way or another, they will make an extra $2,000 every year, year after year, for the next five years. So they plan to make $102,000 next year, $104,000 the following year and so on. This may come from pay raises, bonuses, or a part-time job or business.

Let’s assume that they’re able to invest all of this extra money in a tax-deductible retirement account so they don’t have to pay any taxes on this income now. They also keep investing the $3,000 base they started from.

By the fifth year, our hypothetical couple is making $108,000 and saving $11,000. So they’re now actually saving a little more than financial planners recommend and they did it relatively pain-free!

Ramp up your savings pain-free

Let’s consider a hypothetical couple that has a household income of $100,000. They should save $10,000 according to the experts, but they’re only able to save $3,000.

However, they are determined to find a way to get to that ten percent. They decide that, one way or another, they will make an extra $2,000 every year, year after year, for the next five years. So they plan to make $102,000 next year, $104,000 the following year and so on. This may come from pay raises, bonuses, or a part-time job or business.

Let’s assume that they’re able to invest all of this extra money in a tax-deductible retirement account so they don’t have to pay any taxes on this income now. They also keep investing the $3,000 base they started from.

By the fifth year, our hypothetical couple is making $108,000 and saving $11,000. So they’re now actually saving a little more than financial planners recommend and they did it relatively pain-free!

  • not being discouraged at what they could save now
  • saving every bit they could now
  • improving it a little bit every year

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Would you like more tips and tools to live your life on your own terms?
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The underlying secret

In this simple example is a secret that can help you with all your goals, not just your financial ones. Bigg success is life on your own terms. If you think about “terms” as time frames, you can reach bigg success faster.

We’ve said that you are the entrepreneur of a very important enterprise – your life. You may or may not be an entrepreneur in the traditional sense of the word. That’s immaterial. What’s important is that we can learn a lesson from successful entrepreneurs, particularly those who work with outside financiers like venture capitalists.

Milestones

An entrepreneur and a venture capitalist come to terms and strike a deal. The venture capitalist will invest a large amount of money in an entrepreneur’s company. However, the entrepreneur only gets a certain amount of it upfront. He or she must complete some agreed upon action – for example, get a customer – by a certain time to insure the venture capitalist puts in more money. These agreed upon actions with a deadline are called milestones.

As the entrepreneurs of our own lives, we think it’s helpful to set milestones in all areas of our lives.

Think about your bigg goal.

Then carve it up into milestones – specific activities you will complete by a certain time.

By breaking your bigg goal into little actions with deadlines, you can achieve things that you would think were impossible otherwise.

You can measure your progress each step of the way. You can take corrective action if you’re off the mark. Or if you’re ahead of schedule, you can celebrate your bigg success!

Do you set milestones?

Tell us how you do it by leaving a comment below, calling us at 877.988.BIGG or sending us an e-mail at bigginfo@biggsuccess.com.

Thanks so much for reading our post today!

Please join us next time as we build on this subject of milestones. We’ll talk about creating a cumulative advantage.

Until then, here’s to your bigg success!

 

Direct link to The Bigg Success Show audio file:
http://media.libsyn.com/media/biggsuccess/00371-041309.mp3

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The 5 Elements of Bigg Success

the number 5 created by legos for the post 5 elements of BIGG Success

Last time, we talked about how the words we use, the terms, can provide fuel for our bigg success. It’s all part of the definition of bigg success. Bigg success is life on your own terms.

As we conducted our research, we discovered five core elements that propel people to bigg success or that keep us from living our lives on our own terms.

The 5 elements are money, time, growth, work, and play.

They operate independently and interdependently all the time.

Money

As we surveyed people, some of the issues regarding money were:

  • not making enough
  • spending too much
  • not saving enough
  • not knowing how to invest it

Time

We can get more money, but we can’t get more time. So time is our most precious resource.

Some of the issues we’ve heard in regards to time include:

  • not knowing how to prioritize
  • being too stretched between work and home
  • wishing there was more time for a certain activity
  • a to-do list that just keeps growing

Growth

Growth is vital to becoming the entrepreneur of our own lives. As we talked about this with people, we found that fear often holds us back because bigg success often forces us out of our comfort zones.

We also heard about challenges with certain essential skills – not the type of skills we learn in school – but the soft skills that are crucial in the 21st century economy.

Work

This is one of the most important decisions we make. Yet it’s definitely not a once-in-a-lifetime decision any longer. To be a bigg success, we must constantly evaluate our situation to see if a career change makes sense.

One of the most critical choices we make is whether we choose to work for ourselves or for someone else. We are the entrepreneurs of our own lives. But do you want to be an entrepreneur in the traditional sense of the term as well?

We obviously face a lot of challenges here as we learned from our research. Some examples:

  • How do I know if I need to change jobs or think about a career change?
  • Am I ready to start my own business?
  • What do I do if I’m really unhappy where I’m at?
  • How do I make money doing what I love?

Play

Play helps us build vital relationships. It also provides the experiences that make our lives whole.

Many people don’t achieve bigg success quite simply because they don’t play enough! All work and no play, you know! It not only makes us dull, it dulls us.

Another challenge with play is finding time for just ourselves as individuals as well as the people that we care about.

You can’t have one without the other (four)

What we love about these five elements is how they work interdependently.

Money and time – the two resources we all have.

Work and play – the expressions of who we are.

Growth – the element that links it all together to drive us to bigg success.

We spend time at work to make money so we can afford to play. But if we spend too much time at work, we don’t have time to play! We may spend money to get more time, or we may have to spend more time doing something we’d rather not do because we don’t have the money. With a little growth, we could make that money so could spend more time doing what we want.

Back to the future

The idea behind these five elements and how they work together is the well from which we’ll be drawing for upcoming posts. We’ll focus on the challenges we all face and the opportunities we have to live life on our own terms.

So what does life on your own terms mean to you? What challenges are you facing right now in your quest for bigg success?  Tell us by sending a message.

We’ll take the most common challenges and do a show about them. We’ll also highlight how people are living life on their own terms.

So this is your opportunity to get in on the fun!

Thank you so much for checking in on us today.

Join us next time as we wrap up this series. We’ll discuss the bigg idea behind our definition for bigg success.

Until then, here’s to your bigg success!

See the entire series

What is BIGG Success

Own Your Life

The Power of Defining Your Terms

The 5 Elements of Bigg Success

The Bigg Idea Behind Bigg Success

Direct link to The Bigg Success Show audio file:
http://media.libsyn.com/media/biggsuccess/00359-032609.mp3

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Is it Time to Buy a House?

home_sales The national news is full of bad news about our economy – rising unemployment, stocks hitting ten-year lows, and the value of our homes falling. We wanted to get an inside perspective so we turned to the experts – the National Association of Realtors. We were fortunate to be joined by Jed Smith, their Senior Economist, on The Bigg Success Show today. Here’s a recap of our conversation:

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marylynnWe’re hoping for some rainbows and butterflies from you, Jed. Are there markets where home prices are actually rising?

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jedThere are a few. Right now, the market is in a process of stabilizing, which means that prices are down but sales activity is up in quite a few markets. Just to give you a few examples, prices are actually rising a little in Minneapolis, Minnesota; Mobile, Alabama, Stamford, Connecticut; and Amarillo, Texas. It varies around the country depending on a lot of local conditions. However, right now, we’re particularly interested in the level of sales. Obviously, a good level of sales can lead to an overall price rise in the future and, as your listeners probably know, both sales and prices have been declining for awhile. We’d sure like to see those level out and there’s some reason to believe that we’re getting to the bottom of the market.

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george
Real estate is still a local game, right?

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jedYes. Every market is local. To give you an example, prices are way down in Prince William County, Virginia. That’s a suburb of Washington. Just across the way, up the street in Washington, D.C., prices are stable; and in Arlington, Virginia, prices are actually starting to rise a bit. So it varies from region to region.

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georgeSo, while we may be hearing doom-and-gloom about national real estate prices, it’s possible – depending on your local market – that the dream house you want to buy is getting more expensive.

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jedWell, prices right now are down. As I said, they are starting to turn a little bit in a few markets. Most markets are either declining a little or holding steady while they’re getting ready to turn. But I think if you’re thinking about a house right now, I don’t think you want to think about a short-term flip. There was a lot of flipping a few years ago during the rapid run-up in prices in 2006 and 2007. Right now, as measured in terms of affordability, taking into account interest rates which are at an all-time low coupled with reasonable prices, housing is actually a very good buy. If you’re not buying it to flip it, but rather to hold it for five or six years, I think you’ll be very pleased with the ultimate result.

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georgeOn average, Jed, how much have house prices fallen back nationally from their peak?

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jedWell, that will vary from area to area. I think we want to talk in terms of the last year. They’re down about 15 percent in the last year, probably down about another 10 percent above that from the peak. That’s not true everywhere. That’s just a national average, like my head’s in the furnace and my feet are in the Artic, so I’m comfortable on average.

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george
I like the way you explained that!

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jedWe think that with the forthcoming recovery – there’s a lot of spending going on, a lot of economic stimulus, and a lot of effort to stop foreclosures – we project that prices will start to level out, certainly, by the fourth quarter of this year. That’s why, when prices are in good shape and you can get that $8,000 tax credit, right now is a good time to consider buying a house if you don’t own one.

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marylynnWe’ve been hearing that prices in areas like Detroit are just astoundingly low. Is it wise to go into an area that has been beaten up and buy some property there?

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jedThat depends on the long-term outlook for the area. Let’s put this into a little broader perspective than Detroit. Much of California, Arizona and Nevada have had prices that have been beaten up pretty thoroughly. Yet we all know that those areas are going to have vibrant job growth over the next four or five years and, right now, we see buyers flocking out to purchase property in that area. The prices are low, but the number of buyers showing up is substantial. I think for the longer term, these folks are getting a good buy.

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marylynnFor people who are thinking about buying in some of those areas, do you have any recommendations for finding an area that is beat up but has long-term growth potential? How do people get that information?

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jedThis is the type of information – specific market characteristics – that a Realtor would know. A Realtor could give you an idea of the outlook for jobs, income, population in a specific area, and how prices compare to the overall market for that area. That’s why we would recommend working with an expert – a Realtor – to understand the market because there are some good buys out there.

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george
And you probably know a Realtor or two, don’t you Jed?

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jed

I probably do.

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georgeI think you’re absolutely right. I have found in my life that it pays to turn to the professionals and let them help guide you through the process. With a Realtor, you know it’s win – win all the way through.

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jedWe think that Realtors bring a real value-added to the market because they live in the community, they know the community, and they’re part of the community. They’ve been there for a long time and they’ve done a lot of transactions. They can guide you – just like a doctor or a lawyer does with their professional services – in making your largest purchase.

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Thanks Jed so much for sharing your time and wisdom with all of us! And a special thanks to Hilary Marsh and Sara Weis, Jed’s co-workers at the National Association of Realtors, for helping us arrange our conversation with him.

If you’re in the market to buy or sell your house, the National Association of Realtors is a great resource. Check out their tips for home buyers and sellers.

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Get the tips and tools you need to be a BIGG success.
Subscribe to the Bigg Success Weekly – it’s FREE!

___

Thanks so much for reading our post today. Join us next time as look squarely at the four-leaf clover on St. Paddy’s Day! Until then, here’s to your bigg success!

 

Direct link to The Bigg Success Show audio file:
http://media.libsyn.com/media/biggsuccess/00351-031609.mp3

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