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101 Answers to the Toughest Financial

Questions on

2009 Garrett B. Gunderson. All rights reserved.


101 Answers to the toughest financial questions on earth


Garrett B. Gunderson
Table of Contents

Chapter 1: Myths & The Media.....................3 Chapter 2: Getting Past Fear........................11 Chapter 3: Building a Foundation................15 Chapter 4: What Are You Worth?................26 Chapter 5: Identifying Resources..................34 Chapter 6: Increasing Your Wealth...............40 Chapter 7: Smart Investing..........................46 Chapter 8: Living Your Dreams.....................56

2009 Garrett B. Gunderson. All rights reserved.


101 Answers to the Toughest Financial Questions on Earth is essentially meant to be utilized as your own, personal auditing tool. It is set up so that you can self-evaluate where you are putting yourself at risk financially, and in what ways you could be more productive with your money. Tough questions will inevitably come up in every area of personal finance as you live your day-to-day life. Unfortunately, we often put off finding the answers to these questions until its too late to do us any good. The questions asked in this book are designed to help you think about your finances now, and come up with your own answers as you read through this informational material, so that you will be on a more solid footing when the unexpected comes along. Questions like: Are you investing your money in a way that makes sense? Do you have the right types of insurance for your situation? Are you using velocity to get the most out of every dollar? This self-audit process will help you determine the answers to these questions (and many more) so that you can create true financial freedom in your life. You dont have to be a genius to figure out how to be productive with your personal finances. Virtually anyone can become financially free if they understand what Im going to share with you in this book. I was born in a poor rural community, the son of a coalminer. Fortunately, I was born with an entrepreneurial spirit which drove me to work hard, learn a lot of lessons, and become a millionaire by the age of 26. But I am not perfect. I have made a lot of mistakes financially. I dont claim to be a guru, or to know everything there is to know about finances. However, what I have learned, I am happy to share. If I can help you avoid making some of the same mistakes that I have made, then Im happy that my experiences werent for nothing. 2009 Garrett B. Gunderson. All rights reserved.

Throughout this book, I will share many personal true stories from my life to help illustrate the principles that I am going to share with you. Some portions of this book will be more exciting to read than others, but please bear with me through the less exciting portions. Some aspects of financial wellness, like taxes and accounting, just arent as exciting as others, such as learning ways to increase your cash flow. But I urge you to keep on reading because those less exciting topics are equally important to your future happiness and financial wellbeing. One more note: as you read each question, consider in what ways your own personal finances could use some work in that particular area and where there may be room for improvement. Be sure to take notes when you come across areas where you want to implement changes. Also, as a resource, all of these 101 questions are also listed at the very end of this book, which gives you a convenient place to record your answers. Those answers will let you know where you are now, and where you still have some work to do. So, lets get started


Chapter 1: Myths & the Media

Where Do You Get Your Information? Do you get your financial information from the media? In the summer of 2008, I opened up a newspaper and noticed a financial article entitled Retirement Funds: Invest More Now. As you may recall, back in 2008 the market really hadnt had a massive decline yet. There had been a little bit of loss, but overall it wasnt too bad. Even so, people were starting to get fearful, and people were worried. They were hearing some unsettling information on the news and it had their attention.

Here is the article in its entirety. Read through it, see what you think, and then Ill give you my thoughts: Retirement Funds: Invest More Now The Salt Lake Tribune By Jonathan Burton Falling stocks are roadblocks to a comfortable retirement. At times like this, when the path looks especially rocky, its tempting to reduce your regular contributions to a 401(k) account or other automatic investment plan. In fact, with the U.S. and international stocks both down sharply this year, its actually a prime time to boost your commitment to these all-terrain retirement vehicles. Take a bit extra from each paycheck, buy more shares at lower prices, and let the markets long-term upward trend do the rest. Its a practice that almost all the great investors have used, says Christine Benz, director of personal finance at investment researcher Morningstar. Theyve taken advantage of short-term market panics. Its a sensible strategy for smaller investors to emulate. Of course, anyone just a few years from retirement shouldnt pile on stockmarket risk there isnt enough time to recover from losses. But this recent turmoil has also rattled the bond market, where the same buy low strategy applies.

As I was glancing at this article, I remember that the very first line caught my attention: Falling stocks are roadblocks to a comfortable retirement. I thought, WOW, that seems slightly obvious. I was curious, so I decided to analyze the article a bit more and make some commentary. Im going to share this article with you, so that you can start to see how the media can powerfully mislead people. NOTE: I dont mean to imply that it was the intention of the author to mislead anyone, because Im sure it wasnt. Even so, the end result remains the same: People are often being told to throw their common sense out the window and do the exact opposite of what would actually make sense.

If you can afford to contribute more, I would tell you to increase it in any market, says Sri Reddy, head of retirement strategies at ING. Participate as much as the plan will allow. Stick To the Plan Increasing payroll contributions to a retirement plan, regardless of market condition, will likely earn you more over time. Consider two hypothetical 401(k) investors who stashed $1000 in a Standard & Poors 500 Index mutual fund at the end of 1997. Initially, they each added $100 a month - $50 from salary and a $50 employer match to this allstock portfolio.

2009 Garrett B. Gunderson. All rights reserved.


A decade later, that approach brought the accounts value to about $17, 500, according to investment researcher Lipper. During this period, the U.S. market went through an uplifting bull market and a punishing bear. Indeed, it was still a dark time for stocks at the end of 2002, when one of these workers by now earning a bigger paycheck upped her monthly contributions to $75 with an equivalent employer match. That decision proved lucrative: At the end of 2007, this worker amassed a retirement portfolio worth $21,000. Even better, the automatic nature of these plans takes the emotion out of investing as long as you dont tinker with it. Through whats known as dollar-cost averaging, youre buying more shares in down markets and fewer in up markets.

By decreasing contributions now, youre giving up a long-term retirement nest egg, adds Dean Kohmann, a vice president of 401(k) plan services at Charles Schwab. Whether the market goes up in one year or three years, youre still better off staying invested. Now that youve read the entire article, lets look at what actually makes good sense, and where it would be easy to be mislead by statements made by the author. (The article segments will be in italics & blue print to make them easier to identify.) Falling stocks are roadblocks to a comfortable retirement. The first assumption is that people have to use stocks as part of their plan. Stock market investing has

If you are traveling down the wrong road, is staying the course going to get you where you want to go?
The worst thing that can happen, says David Kula, chief investment strategist at money manager Mainstay Capital Management, is that someone who has a long-term strategy designed to meet their goals and time horizon lets shortterm market volatility cause them to waver. Stay Balanced Yet with rising prices at the supermarket and the gas pump, an uncertain outlook for jobs and the pressure of mortgage payments and homes that have lost value, many Americans are stretched thin. A 401(k) may be a lifetime plan, but to many people at this moment its a piggy bank to cover the bills. Focus on the big picture. Trimming retirement contributions puts more money in your pocket, but youll have less once you stop working, and you may even have to work longer to make up the difference. Look for ways to cut spending or consult with a credit counselor before you slash savings. Turning to 401(k) money is not a reliable long-term solution to your debt problem, says Gerri Detweiler, a credit expert with Its better to leave it alone and look at your other options. 2009 Garrett B. Gunderson. All rights reserved. become so deeply associated with retirement planning that for most people, its almost unthinkable to consider alternatives. I say investing tongue-in-cheek because very few people actually invest in the stock market; most people are actually (what I call) gambling because they have very little control and knowledge of what theyre doing and how theyre creating value. Furthermore, there are plenty of private investments that may be more in alignment with a persons knowledge, passion, and abilities than stocks. Do you find it interesting that when the plan is failing, the article points out, that people would be tempted to stop contributing to something that is losing their money? To illustrate my point, let me ask you: If you are traveling down the wrong road, is staying the course and continuing on that road going to get you where you want to go? Or if there were a path less rocky than the one you are currently traveling, why wouldnt you want to take another route? It is as if the media wants you to think that your options are limited, and you just have to accept that the ride will be rough and you may or may not get where you want to go.


In fact, with the U.S. and international stocks both down sharply this year, its actually a prime time to boost your commitment to these all-terrain retirement vehicles. Isnt this an interesting take on investing? Since everything hasnt been working, and you have been taking losses, you should buy more because it is on sale. My thought is that it would have been better to know that the sale was coming so people could avoid putting money in when things were overpriced. So why, if stocks are down sharply, is it a good time to buy? A few questions that come to mind are: Are these investments going to go up for sure? Is this the end of the downturn or could there be more? Does anyone know for certain? If not, then it sounds an awful lot like gambling. It is like sitting at the roulette table and saying, It has hit black three times in a row, red is down, now is the time to bet on red. Take a bit extra from each paycheck, buy more shares at lower prices, and let the markets long-term upward trend do the rest. What is meant here by long-term? How long is the long-term? When will the upward trend do the rest? What is the impact of the downturn on your overall return - and ultimately - how you feel? This makes it sound so simple. You just throw your money at the market and it will work out (even though the article starts talking about sharp downturns). What about those that were counting on retiring next year or had already retired? How long before they get where they want to be? There is no science behind any of the statements made thus far, merely myths and marketing. The message is loud and clear: You dont know what you are doing, so just stick it out and let those in charge handle it for you. Youre not directly creating value in the marketplace, but the marketplace will handle value creation for you if you just give it money. Its a practice that almost all the great investors have used, says Christine Benz, director of personal finance 2009 Garrett B. Gunderson. All rights reserved.

at investment researcher Morningstar. Theyve taken advantage of short-term market panics. Its a sensible strategy for smaller investors to emulate. How do we know that it is a short-term market panic? What are the indicators? Who is right? Do you know who or what information to trust? If not, then moving forward is a gamble. Of course, anyone just a few years from retirement shouldnt pile on stock-market risk there isnt enough time to recover from losses. But this recent turmoil has also rattled the bond market, where the same buy low strategy applies. How does one recover from losses? This is a damaging and utterly false myth. There are two parts to it: firstthat high risk will be rewarding, and second, that you can actually recover from a loss. The definition of risk is to increase your chance of loss. So how can increasing your chance of losing equate to a higher return? It is a gamble. Do you want to gamble with the money you have earned through hard work? Do you have future dreams that your money must fund? If so, is it worth risking it all? Second, a recovery is a misnomer. If you have $10,000 and lose ten percent, it will leave you with $9,000. But if you earn ten percent the next year, you only make $900, therefore leaving you $100 short of your original principal. Furthermore, you have also lost two years of potential progress and gains, which equates to a lost opportunity cost - a cost that very few traditional advisors and pundits take into consideration. If you can afford to contribute more, I would tell you to increase it in any market, says Sri Reddy, head of retirement strategies at ING. Participate as much as the plan will allow. Increase the contribution in any market - WOW, this really exposes the myth. Do you think that you should be taking advice from ING when they have a huge interest in you making the biggest deposits possible - no matter what? Is this in your best interest?


Once again, it is automatic and requires no thinking. Who is really making the money here? ING makes money on fees whether you have an increase or a decrease. Now, they would prefer an increase, but in their own words I would tell you to increase it in any market. Where is the strategy? (There doesnt seem to be any!) Where is financial freedom and security? How is this in alignment with your plan? Stick To the Plan Increasing payroll contributions to a retirement plan, regardless of market condition, will likely earn you more over time. This is stated as if it is fact, but if you do some research, you may disagree. There is one key word here- likely. How likely? What are the factors involved that determine this likelihood? Is there any way that you can directly contribute to increasing the likelihood of earning more, or are you completely dependent on indeterminate market forces? Consider two hypothetical 401(k) investors who stashed $1000 in a Standard & Poors 500 Index mutual fund at the end of 1997. Initially, they each added $100 a month - $50 from salary and a $50 employer match to this allstock portfolio. A decade later, that approach brought the accounts value to about $17,500, according to investment researcher Lipper. So there was a total of $13,000 contributed to the plan and ten years later there is now $17,500. In the bestcase scenario, one can look at this as a 14.51% return on your money. If, on the other hand, the match money is considered as being yours (not the employers), it is only a 5.02% interest rate. (As a side suggestion, if you do not feel that the 401 (k) is the best vehicle for your retirement or as an investing vehicle, then you may want to consider a new approach. If you are in a firm where you can communicate with the decision makers, there might be an opportunity to ask them to just pay you the money they would have otherwise matched in your 401(k) so you can utilize it more appropriately.) Now lets get back to the issue of the 17,500 dollars. If inflation were 4 percent (think of the increased cost of gas, utilities, food and housing over the past 10 years and 10% would be a very low estimation) and now the $17,500 is only 67.56 percent of what it was just ten years beforein other words, the spending value is equivalent to $11,822, not $17,500. Additionally, if a person has not yet reached age 59 and a half, they will likely pay a ten percent penalty in addition to taxes (which could be higher if salaries or income have gone up for the individual in the last ten years).

Who is really making the money here?

Now it would seem the person in this scenario is merely treading water. This is BEFORE any administrative fees, 12b-1 fees, and expense ratios taken into consideration on this amount of money. During this period, the U.S. market went through an uplifting bull market and a punishing bear. Indeed, it was still a dark time for stocks at the end of 2002, when one of these workers by now earning a bigger paycheck [7]

2009 Garrett B. Gunderson. All rights reserved.

upped her monthly contributions to $75 with an equivalent employer match. Wellif it was glaringly unsuccessful above, then the author is reasoning that more money will fix the problem do you agree? So, to summarize, you now have $3,000 more, plus the impact of the penalty, and all of this time you dont have full access to the money, plus were assuming that all expenses are accounted for, etc. That decision proved lucrative: At the end of 2007, this worker amassed a retirement portfolio worth $21,000. Even better, the automatic nature of these plans takes the emotion out of investing as long as you dont tinker with it. Through whats known as dollar-cost averaging, youre buying more shares in down markets and fewer in up markets. Do you want to only be average? Is this the goal? I agree that taking emotion out of investing can be very effective at times. However taking the education out of investing is a dangerous path, and sure to lead to a rocky road.

The important thing is to stay in the game because once you slip out of Retirement-Savings Mode, its hard to get back into the saving mindset. However, if you are losing the game, is it the most important thing to be in the game? If you dont know what you are doing, how successful will that game be for your finances? Its important for you to know that you can be educated (as evidenced by you reading this article) because investing doesnt have to be complexits just lucrative for the institutions to convince you otherwise. The worst thing that can happen, says David Kula, chief investment strategist at money manager Mainstay Capital Management, is that someone who has a long-term strategy designed to meet their goals and time horizon lets shortterm market volatility cause them to waver. Ummmhow do they know the worst that can happen? What if the government changes the rules of 401(k)s or other types of plans? What if taxes go up? What if you need access to the money, but it is locked up in this plan and you damage your credit or face foreclosure due to the illiquidity of this plan? What if you have no exit strategy and therefore dont enjoy any of the money you save over your lifetime? What if you do not have a proper estate plan and lose up to eighty percent of the money to income and estate taxes when it is passed on to your heirs? What if you have too much of your employers stock and it ends up like Enron? I am not saying those things are going to happen, or that you should feel hopeless, or have all of your focus go towards worst-case scenariosIm simply saying that those that want you to invest your money in their products or services paint a limited picture of what is happening, what is available to you, and how it impacts your life. Stay Balanced Yet with rising prices at the supermarket and the gas pump, an uncertain outlook for jobs and the pressure of mortgage

2009 Garrett B. Gunderson. All rights reserved.


payments and homes that have lost value, many Americans are stretched thin. A 401(k) may be a lifetime plan, but to many people at this moment its a piggy bank to cover the bills. Focus on the big picture. Trimming retirement contributions puts more money in your pocket, but youll have less once you stop working, and you may even have to work longer to make up the difference. Look for ways to cut spending or consult with a credit counselor before you slash savings. If you are putting money into a 401(k), but carrying twenty-two percent or higher credit cards, it seems that a wise choice would be to take the guaranteed return of paying off the cards. You know that twenty-two percent will be charged on your credit card, but do you know what your investment inside your 401k will earn? (Does it make sense to put money into a 401(k) at 7% while paying 22% interest on the balances on your credit cards?) What if cutting spending means that you are not investing in your productivity? What if it means not investing in your education and memories with your family? What if those factors put undue stress on you and limit your happiness? Is that worth cutting back on always? It is important and essential to live within your means, but locking your money up for years and gambling in the stock market while carrying expensive credit cards, or having late fees on mortgages may not be big picture thinking. Turning to 401(k) money is not a reliable long-term solution to your debt problem, says Gerri Detweiler, a credit expert with Its better to leave it alone and look at your other options. By decreasing contributions now, youre giving up a long-term retirement nest egg, adds Dean Kohmann, a vice president of 401(k) plan services at Charles Schwab. Whether the market goes up in one year or three years, youre still better off staying invested. 2009 Garrett B. Gunderson. All rights reserved.

This is the same advice as before No matter whatstay input more in. It doesnt seem to matter to these professionals if the market goes up, down, or is flat. The advice is always the same. Dont you think that rather than just investing blindly questions should be asked, such as: What is your plan? What do you really want? Does your current financial picture and strategy align properly to deliver the results you want? Dont be subject to what financial institutions with vested interests wantdetermine what you want, and create your investment strategies based on meeting your interests. Get educated about what you are doing with your money and you can overcome the financial myths that are destroying the prosperity of so many. You May Have More Options Than You Think What I have found in finance is that common sense is really not that common. So-called Financial Experts keep telling us to stay the course, but what if youre not on the right road in the first place? Staying the course wont get you to where you want to be if youre heading in the wrong direction. Yet these are the options and the limited beliefs that we frequently get from the media. No wonder there is so much confusion. There are billions of dollars that are being spent on marketing to encourage people not to rock the status quo.

What I have found in finance is that common sense is really not that common.

Financial institutions have a vested interest in getting you to hand over your money to them to manage, and they arent afraid to spend money to get you to believe that way . [9]

We keep being told to buy more and more shares and then let the long term, upward trend of the market do the rest. What theyre basically saying is that You dont need to think, you can be mindless with your money, because it should go up over timehopefully. Isnt that mentality a lot like gambling? So heres the first tough question: Are you gambling with your investments? And if you are, then why? Is it because everyone else is doing it? The economy is rife with uncertainty right now, and so many people are just buying into these fallacies because everyone else is doing it. What happens is that these ideas become popular, and you think, I guess if

the neighbor loses money then its okay for me to lose money too. This is kind of the philosophy that so many people have developed over time. Unfortunately, in an economy like this, what I find is that the fallacies and myths actually have a greater stronghold on people than at other times. For example, how many times have you heard that youre in it for the long haul recently? People are saying this now more than ever, because theyve lost half of their retirement savings. So they say, Well, Im in it for the long haul. Its going to recover. But how does this recovery actually happen? If you have a loss, it was a loss. If you have to wait longer, then theres a price (called opportunity cost) associated with that time.

2009 Garrett B. Gunderson. All rights reserved. [ 10 ]

Chapter 2: Getting Past Fear

Survival Mode Right now there are people that are absolutely worried. Theyre fearfully wondering, Am I going to be able to give my kids the right schooling? Will I be able to afford to let them do things like sports or music lessons, and still put food on the table? Theres also a lot of stress thats created in relationships around the financial realm. In fact, a large number of divorces can at least partially be attributed to the financial confusion and the type of marketing thats going on out in the world today. These myths and these false beliefs are destroying peoples prosperity, and its really what has created the type of circumstances and uncertainty that exists today. Its frustrating for me to watch it happen unnecessarily, and to see people are losing hope. Theyre not looking towards their dreams. Theyre not even expecting to thrive. Theyre now framed in a world of Am I going to survive this financially? Yet, even during the Great Depression, people made it through and many even thrived. A third of the population maintained their standard of living. Now, maintaining to me kind of sounds like getting on a treadmill and running at a really fast rate and not getting anywheremaybe even putting it at an incline, so its kind of exhausting. That doesnt sound too good, but at least they werent losing wealth. However, a different third of the people did suffer by losing some (or all) of their wealth during the Great Depression. Some of that suffering can be attributed to the fact that they were so entrenched in scarcity based upon the media, and upon false beliefs, that they didnt recognize who they were and what resources they still had at their disposal. They kind of gave up. But there was also a third of the population that prospered and actually increased their wealth. Its reported that 2009 Garrett B. Gunderson. All rights reserved.

there were more millionaires made during the Great Depression than during any other time in history. Those were the people who understood the resources that were at their helm. Looking for Answers When I was 16 years old, I won $5,000. I wanted to invest it. Now, I know that sounds a little bit nerdy. I was a bit of a dork. I thought I was rich because it was $5,000, and Im from a small coal-mining town. I went out and I started thinking, Alright, how can I invest this? Where can I invest this? I started talking to people. My mom worked at the credit union, and I asked her, Where do I invest this? She said, You put it in this savings account. I wanted to know how much interest it would earn, and when my money would double. As I did the math, I realized it was going to take a long time for my money to double, so I wasnt that excited about it. Next, I went and talked to the Credit Union President and I asked him where I should invest it. He said I

should invest in a CD. I didnt even know what a CD was, so he told me a little bit about what a Certificate of Deposit was. Again, I wanted to know how soon that would double my money, because I had this idea that I wanted to double my money, so that when I went to college I could drive a nice car. When the Credit Union President told me how long it would take, it [ 11 ]

didnt sound that exciting either. Also, as we talked, the idea of locking my money up for five years didnt sound good to me at all so I kept looking. So there I was, out in the world searching and trying to find out the right way to invest, because there was so much different information available, and I didnt know where to look. What I did next was to go talk to my uncle, because he had a lot of money. Since he had a lot of money due to his job, I thought that meant that he would automatically know what to do in the stock market. Then my aunt, his wife, pulled me aside and said I shouldnt take any advice from Bill Because he sure does lose a lot of money in the stock market. I thought, Okay, so what do I do now? Eventually, someone helped me invest my money in a financial product. Three months later I figured out it probably wasnt the best investment. I was told that it was going to earn 18%, and that in 40 years by investing a mere $70 a month I was going to be a multi-millionaire. So, I was a bit nave, but at least I had my first investment under my belt. A few years later, when I was 19, I got an internship with a life insurance company that had a financial brokerage. I got my life insurance license, but I was a little bit embarrassed about it. I didnt want to tell people I sold life insurance, because I wanted to tell everyone in the world that I was a financial planner. So I went and got my Series 6 License and began to sell mutual funds. The year was 1999 and the market was doing great. The money goes up, and I think everything is great. Because I was still pretty young, most all of my clients were people like my mom & dad, my grandparents, etc. and the market was strong so theyre thinking Im a genius. They started telling their friends about all the money I was helping them make, and I started building a little bit of a clientele. Then the year 2000 comes around, and the market started to go down. This is where the traditional financial firms 2009 Garrett B. Gunderson. All rights reserved.

use their marketing geniuses to convince people to stay in the market. They start saying, Tell people theyre in it for the long haul. Tell people they just need to diversify. Tell people the market is on sale. They should put more money into this losing strategy. Basically, they were saying all the same things we frequently hear in the media. Over time mantras like this have become so clichd that its almost inevitable that if you talk to someone, even

Were being taught a philosophy that plays into the benefit of the institutions, but not necessarily to the benefit of the individual.
the common person with little financial knowledge, about what you should dotheyll tell you to diversify. Theyll say that the market is on sale. But isnt there a better way? Well, I learned the hard way because I didnt know any better. I just kept trying things, and I kept looking for the right way to invest. I would follow the advice that I was reading, make mistakes, and then wonder what happened. One thing is I learned for certain, was that I could not find the answers I wanted in most of the popular books or from the media outlets. What I eventually realized is that many of the people in the media had a conflict of interest with their clients. For example, theres a very popular lady thats in the media spotlight today that says not too worry if your moneys in the bank because of the FDIC, and then I see her as a paid spokesperson on FDIC billboards. Its interesting that theyre paying her something, and it sure seems like [ 12 ]

she might be saying something because shes paid to not necessarily because its the best advice. She says things like, Dont go buy anything from Starbucks because thats going to hurt your cash flow and, You could save that and, If you dollar cost average into a mutual fund and wait for 30 years, that could turn into hundreds of thousands of dollars. Then I see her show three weeks later and shes drinking a Starbucks. Im sure Starbucks struck some kind of deal, because they probably dont like her telling people not to buy Starbucks. I realize that the Starbucks thing is a pretty trivial example, but it illustrates a larger problem. Theres a conflict of interest when the people who are giving us advice are being paid by corporations and organizations to promote certain things. Then, when we see their true financial situation exposed, we find that even though theyre vigorously promoting the stock market in the media, they personally have less than 5% of their portfolio in the stock market, for example. Consider that most journalists that are writing financial information are getting paid around $40-60,000 a year or less, and may not even have any of the financial instruments that theyre talking about. Were being taught a philosophy that plays into the benefit of the institutions where you invest your money, but not to the benefit of the individual (You). Think about ithow many times have you heard that 30 years is the magic number for how long you should save money? If you just wait for 30 years, the miracle of compound interest is going to kick in. The miracle? Who said its a miracle? It is said that Einstein said compound interest is a miracle, and that he said that its one of the wonders of the world! But actually he never said that. He said that compounding numbers are a miracle. The financial institutions twisted his words and changed them to compounding interest, and they forgot to tell you who its a miracle for Its a miracle for them, because you keep your money with them for a very long period of time so they can keep

using it over, and over, and over. So, whos really making the money? When the market went down in the year 2000, I found it astounding that monkeys throwing darts at a stock board were literally doing better than a lot of the so-called Experts. That was a pretty interesting phenomenon. To be quite honest, the monkeys were doing better than I was at that point in time, and I thought, Maybe I

shouldnt be doing this professionally. Maybe its not my best ability. However, I didnt give up, I continued to search and look for better answers. As I did my research, what I found intriguing about the year 2000, was that while people were losing money in mutual funds and with financial institutions that were controlling their money, the financial institutions themselves had stock prices that were either stable or (in many instances) increasing. Why? Because they still got their fees, and whether the market went up or down, they still made their money. But this seemed wrong because who took the risk? We did as the investors. The problem is that through the marketing campaigns that are presented by the media and traditional planning, [ 13 ]

2009 Garrett B. Gunderson. All rights reserved.

we hear these financial clichs so often that they stop being questioned and become accepted myths such as, High risk equals high return. The irony is that the institutions that are teaching these investing principles are not taking high risks to get their higher return. Youre the one putting the money at risk, whereas theyre getting a return no matter what. Through greater understanding and perspective we can now see how these financial myths are starting to become exposed. We see that the financial journalists are not actually financial experts. They might be great writers, but does that qualify them to give us advice on how we should live our lives? That advice is impacting our dreams. Its impacting our lifestyle. Its impacting our relationships. Its impacting some of the most sacred things in our lives, because people wake up in

Some of the things that people arent sure about are whether they are paying too much in taxes, or at least how to begin figuring out how much you should be paying in taxes. If you are overpaying, then those dollars that could be used for things to help you enjoy your life more today, are being lost. Those are the dollars might make it so you dont have to worry if you have enough money to put gas in the car, send your kids to the right school, or to get them those music lessons that youve always hoped to be able to afford. Another thing that many people arent sure about is how credit works. Most people are taking a credit quiz every day, whether they realize it or not. Their actions are unknowingly impacting their credit score, and if they dont know which actions actually help your credit score, theyll continue to believe that just paying bills on time creates a good credit score. In reality, thats only a small percentage of what can affect your credit rating. NOTE: Ill go over specific examples on how credit works later on, so that you can increase your credit score, save thousands of dollars on interest, and even put your credit to more productive use.

the morning and many times the first thing they think about is how theyre worried about money. Theyre trying to make more money, yet they havent even optimized the financial resources that they already have available to them. Even worse, due to their lack of understanding, most of their financial resources are hidden to them and remain unused. Its kind of like theyve been put in a shed with a lock, and they dont recognize that theyve got the key in their own pocket right there with them. Thats what this book is: 101 Answers to the Toughest Financial Questions on Earth, and its a key that you can use to begin to unlock that door. Once its open you will begin to find those financial resources that are unseen, under-utilized, and absolutely unrecognized by most of the population.

2009 Garrett B. Gunderson. All rights reserved. [ 14 ]

Chapter 3: Building a Foundation

Protecting Your Assets Another area of financial confusion for many people is in the area of financial protection, or insurance. Many people are paying more for insurance than necessary because they have duplicate coverages, duplicate costs, or they dont have the right deductibles. For most people, everything is based upon what you had before, and an agent just shows you the next thing. Theyre just going from one quote to another, one agent to another and pretty soon your coverages get co-mingled, and they dont drop something off and theres this duplicate coverage that you arent even aware of. Often even insurance agents dont understand how things coordinate together. That ends up being additional money out of your pocket that youre losing. So, weve discussed some of the problems with financial planning and why so many people are exposed to unnecessary risk and loss. Were taught that finances are complicated and too difficult to manage on your own, but were going to simplify that today. Most financial programs are not comprehensive, because what happens is a financial planner or advisor gets one license. They want to sell that particular product no matter what, because thats the only way they make money. Often financial professionals dont cooperate well with other people in the financial world, because they fear that others might take the clients money before they can, and so they bad-mouth other options and approaches. Everyone that writes a book becomes a guru. Everyone thats talking finances says that theyre an expert. Thats part of the positioning. But its a lie. If you are completely reliant upon others to make your financial decisions, then youre going to lose freedom. And its inevitable that youll also lose money. There are a lot of important questions to ask in the world of personal finance, but not enough people are asking. Questions like, do you know what investments you 2009 Garrett B. Gunderson. All rights reserved.

have? Are those investments organized to complement each other? Are they providing more than one benefit? Do you know what theyre supposed to accomplish? Have you designed a full financial blueprint thats representative of what you want in your life? I mean, if you were going to live in a dream home and you just had a bunch of people go and build a bunch of different rooms, but they werent communicating and there was no blueprint actually put into place, then how would that home turn out? It probably wouldnt look very pretty. The same concept applies financially. If you dont have a clear blueprint of what you want in life, and how your finances are going to help serve that, then how can you expect to have an optimal financial situation?

If you think about it, a lot of the advice that so-called financial experts give out is fraudulent at worst and shady at best. The personal finance radio shows and TV shows cant possibly be giving legitimate advice, because when someone calls in saying, Hi, this is Sally. I have got this situation ____________, what should I do? Okay, we know just a tiny fraction of whats really going on in Sallys financial life, because theres no way to share a lot of detailed information in a couple sentences, and yet this expert is going to tell Sally exactly what she needs to do. I think thats outright scary. [ 15 ]

Protecting Your Assets I was in New York driving and listening to the radio. Every single person that called into this radio talk show was given the exact same advice every time: Invest in New York Municipal Bonds. They just kept saying, Well I think these municipal bonds that New York is offering are just fantastic, Im thinking, What kind of cut are they getting? I just wish that I could have recorded it, because it was an extreme example of what happens all the time with these financial gurus giving us mass-market advice. You might argue that these financial experts are really just entertainers, and that people know not to take them seriously. But the problem is that a lot of people do listen to their advice. And if you hear something over and over again, and thats all you ever hear, and its all you ever see, and the people that you love and care about have all bought into it, then that will very likely become a beliefwhether youre even aware of it or not. So then, if you start going against that belief, youll experience fear. You wont dare try something different, because youll be too worried about what other people might think of you. One positive aspect of the world financial meltdown is that it may have caused enough pain that people will finally start questioning some of the beliefs that theyve been sold by the financial world. In personal finances you want to consider both the protection side of your finances and the production side. How do you know what kind of protection is right for you, and how can you effectively transfer risk? With the production component of you finances, well look at what creates cash flow for you. Well look at how you can generate money using the resources that you have. Im also going to introduce a tool called the Production Continuum later on in this e-book, which allows you to be empowered financially, and understand better what youre doing with your money. It will help you ask the right questions, and see the whole picture. It works much differently than a financial sales tool that advisors use to show you how great an investment will be, so that you are compelled to make a choice in the moment. Later 2009 Garrett B. Gunderson. All rights reserved.

on you may not even know why you made that choice, what difference it made, and how its actually going to improve your life. A Different Perspective on Insurance So, as we begin to take a closer look at the protection component, lets start with a few questions: Have you ever paid for insurance and thought, What am I paying for anyway? Im a responsible person, and I havent ever had a claim. Or have you thought, Man, what could I do if I had all that money back that Ive been giving these insurance companies all the time? How much wealthier would I be? When I was growing up, my mom always used to say when she was paying the bills, We are so insurance poor. I asked, Insurance poor? What does that mean, mom? She explained that it meant that all the money that we make goes to insurance companies. That was the language that was used in my home, so I grew up seeing insurance as a somewhat negative thing. So as a young person, I thought, These stupid insurance companies are taking all of our money, so we cant do anything fun. I cant buy this stereo that I want, and we cant go on the vacation we want, because of insurance.

In personal finances you want to consider both the protection side of your finances and the production side.
The first time I heard that you should self-insure, I thought it sounded good, because then we wouldnt be insurance poor anymore. However, later on as I started to ask the big picture questions, I gained a much better understanding of how insurance works, and how it can actually increase your wealth if you approach it the right [ 16 ]

way. I asked questions like: How will this insurance impact me? What are the different components of a policy? How can I recover some of the costs, and how can I use insurance and the protection component to be a platform for me to be more productive. Youve probably asked yourself similar questions. When you buy car insurance, why do you buy it? Why do you have to have it? So many people have it only because the state requires them to. Right? Or some people dont have it even though the state does require them to, which is a very important note. If you have it and someone else doesnt, youll want to know that there is protection on your policy that helps you if other drivers are uninsured or under-insured. Auto Insurance What I see on a regular basis is that drivers that buy car insurance dont recognize the full benefit of that, and many times have protected every other driver on the road better than they have protected themselves and their own family! The reason that this kind of situation happens is because insurance agents are not taught to

Well lets dive in, and start to get more information. First of all, there is a component to car insurance called limited liability. Limited liability has a few different sections. One is bodily injury, which is the liability from someone else. So, lets say you crash into them, and they get hurt, and they cant work, and they have to sue for loss wages, or they want to sue for loss wages. The limited liability on your policy would pay them for you, which would protect your assets and your income from being at risk. Remember, theres uninsured limited liability, and underinsured limited liability. So, now lets say that someone else hits you. Which do you have more control over: You managing whether youre going to hit someone, or you getting hit by someone else? If youre a great driver, and youre doing everything you can to be safe, you still might hit someone, but you have less control over whether someone else hits you, right? Now if they dont have adequate coverage, or they dont have any coverage at all, youre uninsured and underinsured limited liability kicks in. What that means

insurance agents are not taught to be educators. They are taught to be order takers.
be educators. They are taught to be order takers. And theyre #1 order is to see if they can help save you some money with the same coverage that you had before. Think about it. When you see the commercials, what is the main selling point? Hey, we can save you money! Save money on car insurance! Or, my favorite is, Its so easy, a caveman can do it. To me that sounds kind of scary. Its so easy, that you dont even have to think about it? Well, if you are paying for it, wouldnt it be smart to think about it a little, and to find out if the coverage is actually the right policy for you? What happens if you got in a car accident tomorrow, would the coverage you have today do everything that you would want it to? Would it do everything that you would need it to? Do you understand the different components of the policy? 2009 Garrett B. Gunderson. All rights reserved. is, if they only have $25,000 worth of coverage, and you make $100,000 a year, and you cant work for two years, all they have is $25,000 thats going to pay you, and they are off the hook. Is that enough for you? Is that adequate? Well, one of the things you can do to protect yourself and eliminate that exposure, is to increase your uninsured/underinsured coverage to maybe $100,000, $200,000, or $300,000. It depends on the company and it depends on your situation. You have to ask yourself, What is it that I would want if the event were to happen tomorrow? Why do I have the insurance in the first place? And if you dont know what your uninsured/underinsured coverage is, I want you to write down right now, I dont know. The answer is either yes, unsure, or no. Now lets look at the limited liability section. Do you have the type of coverage that [ 17 ]

you would want in the event that you got into an accident tomorrow? Yes, no, or unsure? Do you know what personal injury protection is? Thats a rider in many car insurance policies. If you dont know what it is, you need to mark NO. If you know exactly what it is, what it covers, and if its protecting you and your family, youre assets, your future income, then you want to mark YES. How about property damage? Property damage is the actual vehicle itself, which I want to make a distinction here. There is property value, which are tangible things that are not human being, like a car or a computer. But theres also human life value, which is a human being, a person. Whats interesting is that most people in this world have protected all their property value, but not their human life value. For instance, they probably have a decent property damage coverage, but they might not have any uninsured/underinsured, or a very low insured/ uninsured amount coverage. But whats more important: Replacing your income or replacing your car? These kind of conversations are critical. We are essentially going

So, just to review car insurance: Do you understand your limited liability? Yes, no, or unsure? How about uninsured/underinsured limited liability? Yes, no, or unsure? What are your property damage limits, which might be $50,000 or $100,000. Its how much property would be replaced in the case of an accident. If you hit a Bentley, $50,000 probably wont cover it. If there

If you have the wrong deductible, then that might cost an extra several hundred dollars a year.
are four vehicles involved in the accident, and you are responsible, the insurance companies will say, Hey, I am off the hook at $50,000 and its now you. Its now your job, your assets, your income thats going to pay for this. And then, finally, there is the deductible. Do you have the right deductible? Do you know if it has the optimal savings? Is it high? Low? Yes, no, or unsure? I know car insurance is not an exciting topic, and its not something that people think about all that often, until, youre like Matt. Matt is one of our clients. Matt was speaking with one of the advisors in the The Accredited Network of financial advisers that we work with. The adviser, Dale Clarke, was teaching him some of these concepts and warning him to make sure his car insurance was optimal. Matt said, Ya, ya, ya, we dont need to worry about car insurance. I am worried about all of these other things. He decided that if he was going to [ 18 ]

through a type of financial audit right now looking at just car insurance. Other questions to ask are, What is my deductible? Why do I have the level of deductible that I have? This is where you dont have insurance until you hit a certain point, which means that if you have $1,000 deductible, and you got in a car accident that costs you $500, the insurance company wont get involved. They will say, We are only covering you after $1,000. There are some people that have some really low deductibles, but plenty of cash. That is actually increasing your premium. That is an unnecessary cost. If its an unnecessary cost, and you raise that deductible, maybe you could use those dollars for more productive things, like uninsured/underinsured coverage or limited liability, which is for more catastrophic aspects.

2009 Garrett B. Gunderson. All rights reserved.

have to cover all these little things, then he just wasnt going to worry about it, so he didnt come back. One day, Dale is sitting in his office several months later when in comes Matt. He throws a credit card at Dale and says, Charge whatever you have to charge, for me to work with you. Matt had gotten in a car wreck. When he got in that car wreck, he didnt have the right limit to liability, and it cost his family literally hundreds of thousands of dollars that would have been absolutely crippling if it werent for parents, and family members stepping in, so that they didnt have to lose their house. It may not sound sexy and exciting, but what Im explaining to you has a massive impact on people if they are not educated about their actions, and if they do not act on that education. We can choose to go about life in ignorance, but eventually that might be met with circumstances that are catastrophic. We talk about the protection component, because you as an individual, anytime you can transfer risk, anytime you can transfer worry, anytime you can increase your education, and be

Homeowners Insurance Lets move to homeowners insurance. What is your limit of liability of your homeowners insurance? And what does that cover? These are critical questions to ask. Let me give you the answer. If someone is out boating with you, and gets hurt, your homeowners insurance could cover it. If you run into someone while youre skiing and hurt them, the limit of liability of your homeowners insurance could cover it. But theres also someone getting hurt on your property, and this limit of liability keeps them from tapping into your personal

We can choose to go about life in ignorance, but eventually that might be met with circumstances that are catastrophic.
more powerful in this componentit actually becomes a way that you can produce more. So, thats why we start here. Its foundational. Its critical, and its important. These are the conversations that will help you become more of an expert than your car insurance agent is, so you can teach them.

assets in the event of the lawsuit. What is your limit of liability for your homeowners? Do you know? Is it adequate? Is it in alignment with your philosophy? Yes, no, or unsure? Property coverage, however, is like car insurance. Property coverage protects your home and belongings if something were to happen to it, like if it were to get burned down. Is your home properly covered? Do you know how much coverage you have? Is it enough to replace the home? Yes, no, or unsure? Do you have an inventory of everything thats inside of the home? If you have something called replacement coverage, it replaces the items in the home in the event that they are lost, stolen, or the house burns down, for example. But could you remember every single thing that you have in your house? Do you know the model of it? And what would it be like if you didnt have an inventory and the event actually occurred?

2009 Garrett B. Gunderson. All rights reserved. [ 19 ]

I was working with a doctor in Washington, and as I was having this conversation with him, he said Well, since I havent really told you about this, two and a half weeks ago our cabin burned down, and we didnt have any inventory of everything that was in there. And it has been an absolute nightmare, I have been on the phone with them multiple times, I have been trying to think of everything that we had, and they had to verify everything. If you cant prove what you owned, you might have to deal with a really messy situation. Just have a video inventory of everything in your home, and keep it off of the premises. You cant keep it at your house because then it might be lost if there is something that happens. So thats an important thing. Do you have an inventory? Yes or no? Now, whats your deductible on your homeowner insurance? I want to make a few more points about insurance. Car insurance and homeowners insurance is referred to as property and casualty. Now something

are going to raise their premium. So you end up paying for it anyway. If theres a theft and you make a claim, and lets say it was CDs or a laptop stolen from your car, then your homeowners insurance will cover that. But then you make a second claim for theft, the likelihood is that if they dont flat out drop you, then theyre at least going to raise your prices substantially. Theyll figure you must be living in a scary neighborhood or something, and they dont want to keep covering you because they are in the business for profit. So, once again, whats your deductible on your homeowners insurance? Is it the right amount? Is it maximizing your savings? Is it keeping you in the right state of mind, because its not too high? Yes, no, or unsure? Now, have you coordinated this with your auto insurance? Many times, if your auto insurance and your homeowners insurance is with the same company, then there is a multi-line discount. So if you have two separate companies, you might be paying10 %, 15%, or maybe even more, higher than premium. With homeowners insurance you get replacement coverage, or you get actual cost. Replacement coverage is going to take care of whatever it is that you have, even if its gone down in value. If you bought a TV for $2,000, but you could only sell it for $500, if you have actual value coverage, then they are only going to give you $500. But if you have replacement coverage, they will buy you a brand new TV, even if it costs more today than what that TV is worth when it was stolen or destroyed. Right now as you are reading this, I bet you are so excited that you are jumping up and down, right? This protection conversation is just so exciting and so fun. Okay, it probably isnt. But what I can tell you is that whats really not fun is when its not taken care of and something happens. Whats not fun is if we just calculate the costs of people being confused here, or going only on price.

Avoiding duplicate coverage helps you save some additional money, and that can make a big difference over time.
very interesting about it (and I know that its kind of an oxymoron to say interesting and car and homeowners insurance in the same statement) is that its not based upon the size of the claim necessarily thats going to impact your premiums or whether you can keep it in the future. Its actually the number of claims that will usually get you in trouble. So, some people keep a relatively low deductible in case they need to make a claim, then they claim on something small and insignificant, and the insurance company decides that since youre making claims, they 2009 Garrett B. Gunderson. All rights reserved. [ 20 ]

If you have the wrong deductible, then that might cost an extra several hundred dollars a year. Take that several hundred dollars over your lifetime, adding interest to it, that could represent a hundred thousand dollars. Thats why we look at this. We dont say that its insignificant because its a couple hundred dollars, because that couple hundred dollars could be the difference between going on a trip, and not going on a trip. It could be the difference between you having some financial peace of mind and not having financial peace of mind. So thats why this is a comprehensive audit, and why we are asking the 101 of the most difficult and critical questions about personal finance. With these questions, you may have already noticed some areas where you are probably exposed, where you didnt have the answer, or you didnt understand, and no one has talked to you about this before. I have had to search out answers over my life. When I was first making good money, I had to figure out who was the right accountant for me. I had to get an attorney, because I needed help forming my business entity and I wasnt sure if I needed an LLC or an S-Corp. I also realized that I should start thinking about my estate planning. Unfortunately, what I found is that the attorney and the accountant that I finally settled on, didnt agree on certain things. For two years I had to go through different audit issues and restructuring issues, because one thought it was an S-Corp, and the other one said that it was an LLC. We set it all up improperly from a tax perspective, and it was a costly matter, not only from a financial aspect, but also as something that distracted me from being more productive. Plus, consider that I was a financial service professional, and I still wasnt able to effectively orchestrate everything. So I could see how people in the industry can easily tell us, Hey, financial matters are too complicated, so just rely on someone else. But even if you go to a financial firm, what is the likelihood that they are going to talk to you about car insurance and homeowners insurance? Its not likely, and thats too bad because that has a massive impact on you.

Id like to share another example. There was a young couple that I worked with several years ago. When I met with them, they had the very minimum liability coverage of $100,000 that pretty much is available for most companies on their homeowners insurance. We talked about what would be ideal for their situation, and we ended up getting them $500,000 of coverage just by changing the deductible and upping the coverage without it costing them an extra penny. Nine months later, the gentleman gets in a boating accident. A child dies, and he dies. The family of the child that died were their best friends, but they sued the surviving spouse. Fortunately for this stay at home mom, her death benefit ended up being fully protected because she had that extra liability coverage, otherwise she could have lost everything. I know if you are anything like me, then you may feel pretty invincible most of the time. You might think that even though these kinds of things happen all the time, that they will never happen to you. But in going through this audit, the important thing to understand is that its not necessarily about spending more money for getting better coverage, its about structuring properly. The truth is that many times the best coverage at the best value

2009 Garrett B. Gunderson. All rights reserved. [ 21 ]

ends up also being the best price, so why not take care of it? Youve got nothing to lose by taking care of it, and potentially everything to lose by not taking care of it. Umbrella Policy The least understood, and almost never talked about, area in the same property and casualty industry, is the last component that we are going to talk about. Its known as the liability policy. Sometimes referred to as access coverage or an umbrella policy. What it means is that if your car insurance or homeowners insurance, or liability limits are not adequate for the catastrophic claim that comes about, then this coverage will kick in to further protect your assets and your future income. This extra coverage might be worth a million dollars or more. You have to ask yourself, If the event were to occur tomorrow, how much insurance would I want to have, not knowing what my claim would be? How much do I have to protect, and how much will a company offer me? These are very powerful questions that are asked beforehand. As we go into the liability coverage, one of the most unknown facts is that theres uninsured/ underinsured coverage available through a very few select companies. If someone injures you, and you cant work for several years, and they dont have adequate coverage, or theyre not in a financial situation to help you out, that umbrella policy could cover all of your lost income for many years to come. That uninsured/underinsured coverage is absolutely essential.Do you have uninsured/underinsured on an umbrella policy? Or even before that, do you have an umbrella policy? Yes, no, or unsure? If unsure, you probably dont. Most insurance agents dont sell them because they make about the size of the commission to buy a hamburger. So its a lot of work for them, but its a lot of coverage for you. They get minimal compensation, and they usually arent educated about it. If you talk to the average insurance agent, theyll tell you, Well, you arent worth a million dollars, so I dont know why you would have a million dollar umbrella. Well thats nonsense for two reasons. Number one, you 2009 Garrett B. Gunderson. All rights reserved.

dont have to be worth a million dollars this second to get into a million dollar state in the future. Number two, if they tell you that you arent worth a million dollars, then they dont know you. Youre assets may not reflect a million dollars yet, but I know everyone has a Soul Purpose, which means that you are well worth that and more. So, what are your underlying limits on your auto policy and your homeowners policy? If you get an umbrella policy, you only have to have a certain amount of liability coverage on the auto and home. You dont want to have more than is needed to have the umbrella kick in, otherwise that is a duplicate coverage as I mentioned earlier on. Avoiding duplicate coverage helps you save some additional money, and that can make a big difference over time. Make sure that you have uninsured/underinsured if you have that umbrella policy, and once again, you are just going to ask yourself yes, no, or unsure. Do you have an umbrella policy? Are your underlying limits, the right amount for your auto and home to have the umbrella? Do you have uninsured/underinsured on the umbrella? [ 22 ]

This kind of policy is one of the best ways to protect against catastrophic loss, and minimize your risk, and make sure that even under the worst case scenarios, you are protected and can continue to move forward and keep your family living that life that you really want. It makes it so that there are no holes and no hidden issues with your financial blueprint. Disability Insurance Now lets go over a type of insurance that is so important, and yet so many people ignore it: disability insurance. Lets have a little bit more fun by pretending that you get disabled tomorrow. Okay, so obviously no one wants to be disabled and its not a pleasant thought. Most of us dont sit around thinking about the possibility of becoming disabled, but what I find is that there are these blue parking spots everywhere I go. Some people think of disability as this crippling event where they never work again. But the majority of disability is a temporary event that can have a devastating impact on the whole family when the individual is not insured properly. It might be a sustained sickness, it might be a temporary injury that keeps someone from working, and then a year or two later, they can go back. Are you in a financial situation

where you could handle that type of disruption? Do you feel fully protected? This, I will admit in my own life, is one of the last things that I got taken care of, because I felt invincible. I didnt think I would get disabled, and getting disability insurance is not a requirement like car insurance is. Its a matter of personal choice. But, why protect your car and not protect you? Which is more valuable: your future

Is insuring a piece of property more important than insuring your own self?
income and your ability to earn money, or your car? People protect their car, and their property all the time. Even though its harder to see human life value and the protection of it, its by far more critical and more important. This is why a financial audit is absolutely essential. You have to actually sit down with a human being that can ask the questions and find out your particular situation to determine how to seal up the leaks and how to make sure that youve covered all of the areas where youve answered no or unsure, so that there is no risk exposure. If people went through this years ago, that hadnt gone through it before, they wouldnt be facing the devastation that we hear about in the economy, and they would have more certainty. They would have tapped into so many resources. And the good news is that its still not too late. Those resources are still there. You can turn a no into a yes, and many times that doesnt even require writing a check. A critical question to ask about disability insurance is: What is the elimination period? On a disability policy, an elimination period is much like a deductible. A deductible lets you know when car insurance kicks in. Elimination period means that after a certain period of

2009 Garrett B. Gunderson. All rights reserved. [ 23 ]

time, thats when the disability policy will start to kick in. Sometimes it might be one month, three months, six months, or even a year. It all depends on your financial situation and circumstances, and as to whether or not you want to do a one month, three month, six months, or one year elimination period. But just like car insurance and homeowners, the longer the elimination period, or the higher the deductible, the lower your premium will be. Some people miss the point of disability insurance. If you have car insurance, and yet no disability insurance, then ask yourself if you think that insuring a piece of property is more important than insuring your own self. So, do you have disability insurance? Disability - Long & Short-Term Theres still more to cover about disability insurance, because there are different types. Do you have shortterm disability insurance? And do you have long-term disability insurance? Yes, no, or unsure. We are going to really focus on long-term disability insurance, since it is really the most important of the two. First of all, do you know your elimination period? Elimination period is very similar to a deductible like I mentioned earlier. The longer the period, the lower the premium. The next thing to know is what is the definition of disability? Not all disability contracts are built alike. So you might say, yes, I have disability insurance coverage, but if you read the contract, youd be a little bit scared if you actually had an incident, because there are so many loopholes. There is so much information to process. So, Im going to help clear that up and give you the power to know if you are doing the right thing or not. Disability - One Occupation or Any Occupation The definition of disability that we are going to focus on now is whether youre covered if you cant do one specific occupation anymore, or if its any occupation. One occupation means that whatever youve been trained in, your expertise, if you can no longer do that, then the disability coverage will kick in. On the other 2009 Garrett B. Gunderson. All rights reserved.

hand, if its any occupation, then that means that if you could get any job and earn any income, then the disability policy will not pay outeven if you cant do your current job. Its an important distinction. Which one do you have? Is the policy for your own occupation? Is that the definition? Yes, no, or unsure? Disability - Future Purchase Options The next thing to ask is if there is a future purchase option. This has to do with your insurability in the future. Disability is a little bit finicky, and it can be a bit tricky with disability insurance to make sure that you can get good coverage. If you have a small health issue, for example, they might not give it to you. If you have had a problem with your back, then there might be back-related exclusions. So its very critical to know if you have a future purchase option, because that would allow you to buy more if you had a bigger income in the future regardless of your health. So answer yes, no, or maybe on the future purchase option. Disability - Residual Benefit The next component is the residual benefit. I know, these terms are so fun and interestingor maybe not, but look at it this way: We are definitely increasing your vocabulary and you can use this newfound financial terminology and knowledge to impress your friends, family, and coworkers. So, residual benefit is simply this: If you can still work, but not as much as before, and that impacts your income, a residual benefit would cover the difference between what youd be earning after the minor disability versus what you were earning before. So, is it yes, no, or unsure on if you have the residual benefit? The final aspect of disability insurance to understand, and then we can cheer and be excited that we have another section covered, is whether you have the right amount of coverage. Once you understand all of this, and once you have all this implemented, your risk goes down and your peace of mind goes up. I promise you, that just from this e-book, you will have more knowledge than most people who sell this stuff as their profession have. [ 24 ]

So again, do you have the right amount of disability insurance coverage? How much is the right amount? Put yourself in a situation where you are disabled and you are no longer earning income. How much would you want? If you are accessing how much you could get by on, just realize that there might be additional expenses. Things like having to put a ramp in your house, and you might be home more often, and you have to have someone taking care of you. There are a number of factors that can increase your expenses in the case of a disability, and if youre having to live on half of what you had before, thats almost like planning for bankruptcy, because could you live on half of what you are making right now? If the answer is no, then why would you reduce your disability benefit coverage? So, the final question for disability insurance: Do you have the right amount of coverage? Yes, no, or unsure. Medical Insurance Now we are going to address a very hot topic. Im not going to get too political here, but lets move on to the subject of medical insurance. Plenty of people are talking about medical insurance and the issues with it, and we are going to make this very simple for you. First question, do you have medical insurance? Yes, no, or unsure? Next, do you know what your lifetime benefit is or lifetime cap? This is how much coverage you actually have before the health insurance company says that youve used it all up. This varies a lot. Its all over the place, from as little as $100,000 or $250,000 to a million to two million to five million. So you can imagine, one major ailment, and you could easily use up $250,000 all at once if thats when your medical insurance cuts off. After that it would all be on you, your family, and your personal assets. Now, we have clients that have had situations like premature babies, and those babies took up a million dollars or more of that lifetime benefit and that lifetime cap in a matter of just a few months. So, they are very concerned because they only have two million and there are these preexisting conditions that could make getting 2009 Garrett B. Gunderson. All rights reserved.

more coverage in the future very difficult, or even impossible. So they are wondering what they should do. It can create a lot of complexity in their lives. It creates a lack of freedom, and plenty of uncertainty. This lifetime cap is absolutely essential to understand. How many people out there do you know that have had some major ailment like cancer, or had some sort of illness that has hospitalized them for a while? If that

happened to you, could your medical bills start to pile up? How much does it cost to be in a hospital today verses 30 years ago? So this lifetime cap is absolutely essential for the protection of you, your family, and your assets. Do you know the amount? Yes, no, or unsure. Is it the right amount? Yes, no, or unsure? Do you know what your deductible is, and is it the right deductible? Yes, no, or unsure? Some people might have a very low deductible, which makes the premiums quite high, and then they do an audit and discover that theyve paid a lot in premiums even though they never went to the doctor all that much. So maybe raising your deductible would have saved you a lot of money. This is something to investigate. Do you have the right deductible? Yes, no, or unsure? Final [ 25 ]

question for medical insurance: Is it a group policy or an individual policy? The reason I ask this is because there are some exclusions that if you have a group policy and then you want to go start your own business, that you might be paying cobra, but eventually you have to be getting your individual policy and might have some exclusions. Or, if you have a family member that gets sick, you dont want to leave that first policy because its a group policy, and so you stay with the job that you dont enjoy because you feel like you have to. We see this happen all the time at my firm. There are so many people that feel stuck in their job, just for their health benefits. How could you be more empowered? How could you find a situation where you have an individual policy? This is part of the financial audit. This is part of something we call The Accredited Network that I mentioned briefly earlier. This is where we tap into the expertise of different professionals. Some do property and casualty insurance while other do medical, but whatever they do is part of their Soul Purpose, their passion, and thats where they focus. They dont try to be a jack-of-all-trades, or pretend to be an expert in everything having to do with finance. However, they all subscribe to the same foundational philosophy, so its a clear and consistent experience for you. That saves you from the kind of messes that Ive had to deal with, like in the example I shared with you earlier where I had an accountant and a lawyer who didnt see eye to eye and it created a huge problem for me financially. There is a gentleman in the network that knows so much about medical insurance. He went to MIT and has all these letters behind his name, just in designations for health insurance. I am glad that he is that big of a nerd, so he can figure all of that out, so that we wont have to. We dont have to spend years becoming experts in medical insurance, because we get to utilize his expertise. I dont recommend that you rely on the expertise of others, but that you utilize it. So the question is: Do you have an individual policy that no matter what happens, you know that you will have coverage? Yes, no, or unsure? 2009 Garrett B. Gunderson. All rights reserved. [ 26 ]

Chapter 4: What Are You Worth?

Protecting Your Greatest Asset For the last aspect of insurance (but not the final aspect of protection), we are going to talk about life insurance and how it works. There is far too much of

of money that would leave your family with the lifestyle you would want them to have? Thats the REAL question. Is your policy protecting your economic value? Meaning that if you could never earn another dollar for the rest of

There is plenty of misinformation about life insurance out there.

your life, does a million dollars sound like nearly enough? The thing that a lot of people misunderstand about life insurance is not to just look at the big lump sum of money that comes in when you die, but instead, how much income would that money produce over the rest of your familys life? If you view the policy pay out this way, then all of the sudden that number looks different. So, do you have the right amount of life insurance? Yes, no, or unsure?

misinformation about life insurance circulating in the media, so its important that you understand how to use it effectively and how it can work for you. The first investment I ever put money into was actually a life insurance policy that was sold to me as this great investment where I wouldnt have to pay taxes. I was 19 at the time, and I wasnt paying that much in tax anyway. I was told that I didnt need life insurance, but that it was the best way to invest my money. I was just so excited to invest in anything, that I went ahead and did it. I think that this happens to new investors quite often. They get so excited about investing in something anything -- that you could slap a sticker on a box, call it an investment, and these people would buy a box of useless rocks. As I stated before, there is a lot of confusion about life insurance, and because they arent fully educated, I see people bouncing back and forth from one policy to another. First your brother-in-law sells a type of life insurance so you buy it. Then you hear from a different insurance agent and he swears he can get you a better deal. Additionally, insurance companies are constantly coming out with bigger and better products that cause people jump shipWhen its all said and done, I find is that there is a lot of money lost that way. So that you dont get caught up in this ebb and flow, lets get to the fundamentals of life insurance and help you understand it better. As always, the first question is, Do you have the right amount of coverage? If you were to die tomorrow, would you be leaving behind an amount 2009 Garrett B. Gunderson. All rights reserved.

The next question is, Do you have the right type of policy for you? You have to consider your own situation to know if its the right type of policy for you. Personally, I think I have owned just about every kind of policy at one point or another, for better or worse. As I mentioned earlier, when I was 19 years old I bought my first life insurance policy, which was called Variable Universal Life. I now refer to that type of insurance as very ugly life. Next I bought was some term [ 27 ]

insurance, and then I bought whole life insurance. After that I bought something that was like a blend of term and whole life. What on Earth was I doing, you ask? I was getting all these different pieces of information to learn how they worked. To be completely honest, early on in my career I was just excited about anything new that came along. Whatever the newest thing presented to me happened to be, is what I started to think was probably the way to go. So basically, when it comes to life insurance, Ive been there and tried it all. I hope my mistakes can help you do it right the first time around and save you the grief that I went through. The Three Types of Life Insurance Life insurance can be broken down into three major types of policies. Everything else is just a variation or a combination of these three types: Number one is term insurance, which is just what it sounds like. Its insurance for a specific period (term) of time. It might be a Renewable Term meaning that every year, as long as you pay your premium, you will still have the term insurance. However, its important to note that your premium will go up significantly as you get older. The second type of policy is Universal Life Policy. Before I explain how a Universal Life Policy works, let me mention a few different types of universal life policies. For example there is one where the interest rate you can earn varies from year to year based on investments made by the policy, and another one that does investments, but also has a minimum interest rate. In other cases you might participate in interest rates from the stock market up to a certain point, but you would have a guaranteed minimum. Or you have ones like the first one I bought, which had a stock market base. So there are several different ways to earn cash value with universal life policies. Universal life is a combination of buying some term insurance and investing the difference elsewhere. Its built upon insurance that goes up in costs as time goes on (just like regular term insurance) which can be tricky. Its initial appeal is often that people like that its a 2009 Garrett B. Gunderson. All rights reserved.

little bit lower cost, and its more flexible than Whole Life, but its a very dangerous policy for most of the population. Why? Because whatever guarantees (such as a minimum guaranteed interest rate on cash value) come with the policy are usually lost if you dont make a payment. Also, if you touch the cash value in the policy, you lose the guarantee. What often happens with Universal Life is that later on in your life, the cost of insurance starts to get greater (because the Life Insurance portion of your investment is term insurance), but you still want the insurance coverage so you keep paying on it. Eventually the costs of the policy start to eat away at your cash value until its gone. Now on the illustrations that the insurance salesman shows you, it doesnt necessarily show this problem because if the presentation shows a 12% rate of return in the stock market for 30 years, it looks like the policy earned a whole lot of money. Back in the 80s when these types of insurance policies first came out, interest rates were up to 17%, so people thought the same that I did when I was 19, Oh I just need to put $50 a month in this thing, and I am going to be a millionaire because of the high interest rates. But when interest rates went down those numbers all changed dramatically. So universal life is just a bundled way to buy term insurance and have some of your left over money go into cash value. Whole life on the other hand typically has the highest premium up front, but unlike the other 2 policy types, Whole Life has a fixed premium for the duration of the policy. Whole Life policies also offer a minimum interest rate, and there is a guarantee on the death benefit. So to compare a little: Term Insurance is the cheapest up front but costs more as you get older. It also gives no cash value so if you pay the premium, youll have the coverage, but if you stop paying then the coverage is lost. With Universal Life you have a higher premium than Term Insurance, it builds a little bit of cash value inside of the policy, and you might even put more cash into it. Then you have Whole Life with a fixed premium for the duration of the policy that has a cash value. [ 28 ]

So, the question is: Do you now understand the different types of insurance policies, and do you have the right one for you? Yes, no, or unsure? Do you have any areas of exposure with your policy? Do you have the right beneficiary? If you dont have a beneficiary assigned properly, then whatever the life insurance company decides is best will be where the policy goes. One area of exposure is figuring out what you are going to do in the future if you have a term policy or a universal life policy? This is because as you get older the premiums increase and can become unaffordable in your later years. At that point its too late to switch insurance because youre too old to qualify for ANY type of affordable insurance. Another type of exposure is asking if you have a whole life policy that has such a high premium that you will have a hard time paying for it? So ask yourself, Do you have any areas of exposure? Do you understand what settlement options are with your death benefit? Typically people have areas of exposure with their current coverage, so most people are going to mark No because they dont know exactly whats going on with the policy. However, if you have no areas of exposure, you would mark YES. Something to note about life insurance is that Im yet to meet a widow that felt like they had too much coverage. That probably doesnt surprise you, but while people are alive they often drastically underestimate what theyll need in the event of a death. Imagine having a very small amount of life insurance, having a death happen, and then being in a rough economy where the stock market is down, and where interest rates are low. Is that the type of coverage you want for your loved ones? If not, you need to be realistic about the coverage youd need to handle an untimely death and decide if you have the right amount. Estate Planning As we move on to estate planning, the question is: What is estate planning and why is it important? There are 2009 Garrett B. Gunderson. All rights reserved.

several aspects to this subject including: Wills, Trusts, Powers of Attorney, Medical Directives, and more. The reason that estate planning is important is because it determines what happens to your money after you pass away. For example, if you died, you would probably want to make sure that your kid doesnt just become a Trust Fund Baby, right? Youd likely want to make sure that they understand who you were and what you stood for. Youd want them to have the best opportunity to understand your values and live the best life possible, wouldnt you? Thats the importance of having a good Trust. Some people think that estate planning is just about saving taxes so that when your kids get their money its just about avoiding probate. (Probate happens when you dont have a Will or Trust at your time of death. The state assigns an attorney to go through all of your information and assets to determine Who gets what. It is all done through the court systems to divvy out your assets and it all becomes public knowledge.) A lot of people want to avoid probate, and so they create Trusts to protect their assets. To clarify, a Trust is a document written in Legalese that basically says, In the event of my death, here is what I would like to have happen, and how I want my things distributed. The Will says things [ 29 ]

about where you want certain items to go specifically, and if you forget to put something in a Trust, the Will covers your assets by stating that the forgotten asset was supposed to be in the Trust. Some people hand-write their Will, but a Trust is typically done with an attorney. Some people try to do their Will online, did you? Yes or no? Hopefully you are not marking yes, because that is usually a bad idea and probably indicates that you dont have good legal counsel. There is an expertise and valuable knowledge that an attorney can provide, if its the right attorney, when doing your Will and Trust. The attorney can save your heirs a lot of hassle and confusion by creating your documents in the right way. Now for some more estate planning questions, ask yourself, Do you have a Will? Yes, no, or unsure? Do you have a Trust? Yes, no, or unsure? Do you have a Living Trust? Yes, no, or unsure? Is your Trust revocable? Some people have irrevocable Trusts, which mean that you gave up control of the Trust and cannot get it back without their permission. So, if your Trust is revocable mark Yes. If you dont have a Trust, mark No. Hopefully, this book is helping you see how you can find areas where there could be exposure within your financial life, and how these things can be taken care of through a financial audit. It definitely helps to have professionals who are willing to coordinate and orchestrate all the different aspects of this blueprint for you, to make sure you dont have unnecessary exposure, duplicate coverage, or wasteful costs. Youll want to recover those costs and make sure that you are fully protected, so that (even under the worst-case scenario) the situation isnt devastating to you and your family financially. What if you arent in a position to make decisions for yourself ? Do you have a Power of Attorney set up? A Power of Attorney is used if someone becomes incapacitated. It will allow your spouse (Or whoever you designate) to still handle all of your finances on your behalf. Yes, no, or unsure? 2009 Garrett B. Gunderson. All rights reserved.

Next, do you have a legacy plan? Within a Trust, you can include a Legacy Plan, where you can create a family bank to control your assets. To help with directing the family bank, you can create a Board of Directors who will help your heirs to understand your philosophies, what you stood for, and to pass on your values. For example, many people want their childs inheritance to involve incentives to achieve, so that the child is empowered to create value in society, rather than to turn into a Trust Fund Baby. Have you made sure that not only your property assets transfer to the next generation, but your human life value as well? That is the idea behind a Legacy Plan. Do you have a Legacy Plan with your Trust? Yes, no, or unsure? There is definitely more information to cover there within Estate Planning, but now you at least understand the basics. Lets now go into checking and savings account plans. The first thing is to make sure you understand the solvency and quality of your bank. Always consider the best route to keep your money safe because youll want to have some liquidity in the event of an emergency. I recommend that you have at least the equivalent of 6 months worth of living expenses set aside in a savings account that would cover all of your expenses if necessary. Do you have six months expenses covered? Yes, no, or unsure? How about having cash on hand at home? If we look at an extreme situation like when Hurricane Katrina hit New Orleans, the banks shut down. People had no access to credit cards, and if they didnt have cash, they didnt have any ability to get certain necessities. So I would recommend that you have at least one months worth of enough cash to cover your expenses in a safe at your home. Do you have that much cash in your home? Yes, no, or unsure. For some serious recession proofing and worst case scenario insurance, I recommend having a minimum of one months expenses in precious metals kept in a safe [ 30 ]

too. Sometimes the dollar may not be the most effective way to exchange, and having some precious metals can act as a bit of a hedge. Do you have this extra recession proofing? Yes or no? The Importance of Insurance The most important reason to have the right insurances and emergency plans is not just to covers your losses, it is so that you can focus on being productive in your life. You are able to be more productive with your time, energy, and money when you dont have fear, doubt, or worry consuming your time and energy. Also having the

Understanding how insurance helps you, rather than seeing insurance as a necessary evil is an important distinction. Here is how I view insurance: Insurance companies have the expertise to provide a solution to protect my assets, and they do it far more efficiently than me doing it on my own. For example, if you had to insure my home on my own, you would have to have enough liquid assets available (at all times) so that you could replace your house if something happened; But because of the insurance companies, you only pay a homeowners insurance

The most important reason to have the right

insurances and emergency plans is so that you can focus on being productive in your life.
right insurance coverage means you wont find yourself in a circumstance where you are forking out dollars for the rest of your life (or giving up your retirement savings) to handle something insurance could have covered. premium of $1,000 a year, so that you dont have to tie up $400,000. Thats pretty efficient. Additionally, this allows you to be more productive because if you have access to $400,000 you can easily

2009 Garrett B. Gunderson. All rights reserved. [ 31 ]

out-earn whatever youre spending on the homeowners insurance and a whole lot more. Basic Protection The final aspect of the protection component is to make sure that you are bullet proofing your financial plan with some very basic forms of insurance. A couple questions to consider are, Do you have an emergency preparedness plan and food storage? Do you have an evacuation plan for your home that your family understands? Or, In the event of a fire or an earthquake, do you know where youre family meeting point is? Do you know where youre going to evacuate to if there is an emergency? Do you have a bat, or some way you could knock out a window and get out of your house in case there is a fire? Do you have this plan in place? Yes, no, or unsure? Lets jump into these areas briefly, Do you have at least one year worth of food storage? If you didnt have an income coming in for a while, that food storage could help sustain you. What if there is an interruption in the distribution of the food at some point? If there are any catastrophes, such as an earthquake or other natural disasters, it would be nice to know that youll be able to survive until the food distribution was reestablished. These kind of scenarios may sound extreme, but they do happeneven in first world countries. So again, do you have at least one-year food storage in your home? The last piece of emergency preparedness is having a 72-hour kit. This is a backpack that is filled with water, clothes, and other basic survival items that could sustain you and your family for at least 72-hours if you had no other resources available. Do you have a 72-hour kit? Yes, no, or unsure? Some of the forms of protection and insurance that we have covered are things that most people have never thought through. Unfortunately, many people wish they would have been more prepared when an unplanned incidence occurs. At my firm we hear these kind of sad stories on a daily basis where people say, If I had 2009 Garrett B. Gunderson. All rights reserved.

only known about this sooner. I wish I would have prepared differently. The bottom line is that extreme situations come up more often than you think, and being unprepared costs a whole lot more than having what you need already in place. Avoiding If Only Ive shared all of this information with you, so that you dont end up being one of those people filled with regrets and If Only in regards to your personal finances. You now have the knowledge to see where you have unnecessary exposure and fix it. I hope that this is empowering to you and that it has given you the desire adjust your financial picture and protect your assets. You can now use this comprehensive financial audit as a tool for you to get your big picture complete, but you need to take action. To implement you new found knowledge properly, using experts can save a great deal of time and research, and through this book you now have access to advisers that will help you. As part of your purchasing this book you get a free financial audit with a professional from the Accredited Network that I mentioned earlier. To get started bulletproofing your finances and protecting your assets, call 1-800-400-5206 now, or you can contact us at : schedule@ with REQUEST AUDIT in the subject line. There is absolutely no charge for this initial consultation, so you have absolutely nothing to lose. An adviser will schedule a time to sit down with you, or speak with you over the phone, and go through your finances on a complimentary basis. We want to make sure that you have access to all of the resources youll need in order to make sure your financial blueprint is complete, including attorneys, accountants, property and casualty insurance, disability, medical insurance & life insurance experts and others. If you use it, this financial audit has given you an opportunity to take care of things that will allow you to live a happier and more productive life forever more. I urge you to stop procrastinating and get your finances in order now, because taking care of things later often becomes taking care of things too late. [ 32 ]

The Business of You Weve covered the protection component, and now were going to move into the Production Component. But before we do, I want to have a conversation about YOU. In particular, I want to discuss something I refer to as the Business of You. You may or may not have your own business, but everyone is an entrepreneur on some level. You may think that youre not an entrepreneur because you dont own a business and you arent running a business, but you are mistaken.

inevitably your personal stock price in the Business of You will increase. So, whats your unique value, and how do you increase your value even further? How do you have an appreciation of and with your Soul Purpose? The word appreciation is interesting because when we use it with regards to real estate it means to go up in value, but the same thing happens when we appreciate our talents, abilities, and our gifts they go up. We personally go

Let me explain - In your daily life you have clients, and you have people you create value for, right? These are your customers. Each and every one of us also has what I refer to as a Soul Purpose, which is a unique combination of passions, abilities, talents, and the natural proclivities you possess, that allow you to fulfill your highest purpose for being on this planet. Everyone has a Soul Purpose, and each of us is responsible for finding it, living it, and expressing it - which in one way or another becomes a form of your business. The reason why I want to bring up the Business of You is because each choice that you make throughout the day can increase or decrease the value of your business. You have the choice to align with your Soul Purpose or put it off, and as long as you are moving toward it, it doesnt matter if your decision is popular amongst others or not. When youre making appropriate decisions that help you to live and express your Soul Purpose, then

up in the value that we have inside of ourselves and the value that we can create. So take a minute and have a good look at yourself. Recognize that YOU are your key asset, and that there is no greater asset financially (no home, no stock, no bond, no mutual fund, no money market) that is greater than you. YOU are your own greatest asset. How are you investing into yourself ? Once you understand how valuable you are, then you can see how having your protection component structured properly stops the leaks that would cause depreciation in your own personal stock value. Thats why its so important to protect yourself, so that you can be more productive - Protection is first, production comes second.

2009 Garrett B. Gunderson. All rights reserved. [ 33 ]

Chapter 5: Identifying Resources

The Production Continuum The bridge between financial Protection and Production is the Production Continuum. If you are familiar with accounting at all, then you know that in accounting there is something called a balance sheet, which shows your assets versus your liabilities. When you have more assets than you have liabilities, then that means you have a position of equity. Some people call that net worth. On the other hand, when you have more liabilities (meaning those things that take away from net worth) than you have assets, then thats a position of debt. There are many people that are in debt, or worried about debt, currently. The core solution to this worry is the Business of You. The key is to produce more than you consume so that you are creating a positive on your personal balance sheet. Ask yourself, Are you creating more value in the world than you are taking away? When I began this audit with the financial article I saw in a newspaper, youll recall that the author didnt mention anything about production, rather, he reinforced the idea that you make money by gambling (what he called investing). He basically recommended that you turn your valuable resources over to someone else, and just

hope that it all works out. That mentality has become a huge liability for many people, and its the reason that there has been so much loss for so many people in the past few years. My main point in taking you through this financial audit is so that you can build more equity in yourself, and turn that equity into more happiness & prosperity while living the kind of life that you want. Going back to the idea of a Production Continuum, the first half of the continuum is the balance sheet. There are three parts to it. (See example at the end of this chapter.) The first section is for assets, the second section is for liabilities, and the third section is the interpretation of assets vs. liabilities, which I call Resources.

Resourcefulness has to do with how you utilize and capitalize on your assets.
Addressing Liabilities Its not always the person with the most financial resources that wins. Often, its the person who is the most resourceful who wins. Resourcefulness has to do with how you utilize and capitalize on your assets, and how you address your liabilities. As I view it, there are 3

2009 Garrett B. Gunderson. All rights reserved. [ 34 ]

main types of liabilities: productive, consumptive, and destructive. Certain types of liabilities, if not addressed, can start to tear into your assets do a lot of damage. However, there are some liabilities that are actually productive because they give you access to an asset. For example, if I use a mortgage that gives me access to a house then that mortgage is a liability, but the house can be an asset, right? This is an example of a Productive Liability. On the other hand there are liabilities that are purely consumptive. For example, if I buy a new couch simply because I want a newer looking couch, then thats a Consumptive Liability. This type of liability is not being used to help offset itself with some sort of asset that will increase you production. Thats not necessarily bad in and of itself, but if I have more consumptive liabilities than I have productive assets, then Im inevitably going to go into debt. Its that simple. The third type of liability is Destructive Liability, which means that its a liability that actually destroys assets. Destructive liabilities would be something purely counter-productive in nature, such as doing heroine. The way to identify destructive liabilities is to identify that they use up your money without giving you any real benefit in return. So to break it down, you want to avoid and get rid of any destructive liabilities. You want to properly manage any liabilities that are consumptive, and you want to utilize liabilities that give you access to an asset and can be productive. The Art of Being Resourceful To be truly resourceful, you are going to consistently be asking yourself questions and looking for ways to improve your current situation. Most of your questions in regard to resourcefulness are going to fall into 2 categories: 1) you ask yourself, How can I better utilize an asset? 2) you will ask yourself, How can I address my liabilities? A very valuable resource can be the expertise and talents of others. Your friends, family, business partners, and anyone you meet is a potential resource. If you do a personalized financial audit with The Accredited 2009 Garrett B. Gunderson. All rights reserved.

Network, for example, you will have access to all of those professionals combined expertise, and youll be able to utilize them as a resource. Youll have their knowledge, their capabilities, their tools and models, and youll have their extended networks. Thats an example of a resource that could help you address liabilities and overcome areas of concern that fall outside of your areas of greatest knowledge. As an example, you may not know the best ways (or options) to get out of debt effectively. Attempting to remedy this liability by yourself, its going to be hard to get out of debt because you dont understand the fundamental problems involved in overcoming debt and how to address them. Being resourceful is not just referring to money, it works well beyond just financial capital. In fact, there are three basic types of capital that function in our world. One is Financial Capital which is what most people focus on, but there are other two types of capital too. The other types of capital are Mental Capital and Relationship Capital and they are equally important

A very valuable resource can be the expertise and talents of others.

to financial capital. During your financial audit process, you can tap into the relationship capital of all the individuals in The Accredited Network. In fact I helped create The Accredited Network out of personal necessity and the need for more relationship capital in my life. I was tired of seeing how different professionals (with disagreeing philosophies) could so easily create chaos in their clients personal finances. Using relationship capital was born out of necessity for me, because even though I made a really good income and worked in financial services, I didnt know what to do with all of my money. I decided to create my own personal board of experts, and it took me four long years to get a decent board of experts together. It was [ 35 ]

consuming and expensive to find the right professionals to work with who understood both the philosophy and practical application of wealth creation. It ended up being worth the effort, but I realized that I should share the results of my searching with other people, so that they didnt have to waste many years (and probably many dollars) finding a great team like I did. So I started to build the format to share the fruits of my labor with my clients. Now this relationship capital that Ive built up with other experts pays me (and my clients) in many ways on an ongoing basis. Next is mental capital and a good example is this book. I created it to give you more mental capital and help your prosperity. Mental capital is the knowledge that you have acquired through your learning and experiences allowing you to create value for others. All of the three forms of capital can work synergistically with each other to help you increase your capital in every area. This means that if you increase your mental capital, it increases your capabilities in both your relationship and your finances. A formula I like to use to illustrate this point is: Mental Capital x Relationship Capital = Financial Capital Ill give you a specific example. My firm had some clients, a husband and wife, who requested a financial audit. They had found themselves completely frustrated and feeling stuck because they believed there was absolutely no way to get out of their situation. They had an immense amount of credit card liability. (In fact, they owed over $70,000 on credit cards, and that was more than their combined income for the year!) When they sat down with us, they didnt realize that they could actually utilize some of their financial assets more effectively to help improve their situation. They thought that their assets were locked up in their 401(k), and could only be used for retirement. I asked them what the best possible scenario would be for them in regards to their 401 (k). They said they were hoping that it would gain maybe ten or twelve percent, but it had, in fact, been losing.

I asked them if it was guaranteed that that were going to get 10 or 12%. They acknowledge that it absolutely was not, and in fact they had no guarantee that their 401(k) was ever going to stop going down in value. I then asked what interest rate they were paying overall on their credit cards and it turned out that they were being charged between 13% and 29%. So, even the lowest interest rate on their credit cards was still a higher interest rate than the best return that they could expect from their 401(k). I pointed that out, as well as the fact that credit card interest is a guaranteed cost (meaning that it is a guaranteed interest rate) and the 401(k) return isnt guaranteed. I explained that even in a best-case scenario (highest 401(k) return and lowest credit card rate available), they would still be losing money monthly. Once I showed them this reality, they discovered that they had a resource that they hadnt even recognized. Once they unlocked their unused resource, they were able to utilize the expertise of others to identify how to tap into that resource. Immediately, they rolled their [ 36 ]

2009 Garrett B. Gunderson. All rights reserved.

401(k) over, avoided the tax, and found a way to take care of all of that credit card debt which freed up $3,000 a month that they could use for production. They were able to use mental capital to identify the solution and use relationship capital by having someone help them structure it. Again, mental capital (like this book) and relationship capital (like having a network of financial experts to work with) are valuable tools in helping you increase your financial capital. Anytime you have networks, associations, affiliations, family and friends, people with specialized knowledge, and other people that are willing to help you - then that is relationship capital. Unfortunately, most people dont recognize their relationship capital nearly enough and therefore rarely use it. This is a shame because nearly any problem youre facing financially can be solved with relationship capital or by increasing your mental capital. Period. So again, assets, liabilities, and resources are your balance sheet and comprise the top half of the Production Continuum tool. We start with the balance sheet, because it represents the natural way that life works. For instance, when youre born into this world you have a balance sheet. In the beginning you have a lot of liabilities like the need to be fed or youre going to die or that you cant verbally communicate very well. Fortunately, while you

Your income statement is a by-product of how effective you are at utilizing the assets and managing the liabilities from your balance sheet. The more effective you are at controlling your balance sheet, the more income youre going to produce in relation to your expenses. Think of assets, liabilities, and the difference between those totals as resources (or what we might call potential). How well you utilize that potential to create income is your production, and going from potential to production is at the heart of this Production Continuum. One of the advantages of going through a financial audit is when you meet with professionals in The Accredited Network, you will leave with the Production Continuum tool and use it to get greater clarity of what needs to happen with your particular situation. This tool isnt just some sales model, its a practical way for you to make sense out of the chaos of the financial world and be able to see through the marketing that would keep you confused. You will also be able to interpret opportunities that were unrecognized before and take advantage of them. At that point finances become a lot of fun and is why Im excited to give this powerful tool to you. With the Production Continuum you have the balance sheet first, and the income statement second. One thing I like to frequently point out is that Dollars Follow

nothing will happen unless you take action on what you have learned
had a lot of liabilities and few assets (other than you were really cute) you had someone who took care of you. This persons investment in you helped build your assets by creating value for you. The better they created value, the more favorable the conditions were for you to expand, to understand your gifts and talents, and go out into the world and be productive, right? Income Statement Now lets move on to your income statement. An income statement simply measures your income vs. your expenses. When you have more income than expenses, we call that profit or Production. When you have more expenses than you have income, we call that loss. Value. How well can you create value for others with your already existing financial assets, your already existing mental assets, and your already existing relationship assets? You can always increase your financial literacy and mental capital even if the rest of the world wants to tell you its impossible. In fact, just by reading this book you already know so much more about insurance than your average person, (maybe even more than your average insurance agent) and you were able to learn all of that within an hour or two. You learned what most financial professionals wouldnt bother explaining to you because they would tell you that it would take you years to fully understand.

2009 Garrett B. Gunderson. All rights reserved. [ 37 ]

However, even with all of the great information in this book, nothing will happen unless you take action on what you have learned. Actually, now that you know the importance of creating a solid financial foundation, (and what could happen if you dont) it would be a little bit disturbing if you didnt take some immediate action. To ensure your success, and to cross the bridge to taking tangible action, I want to make sure that you understand that there is help available to get these things implemented into your financial blueprint. So, at the risk of sounding a bit redundant, I want to make sure you know what your next step is. Call 1-800400-5206 and set up a free financial audit. You will then have someone who really gets everything that weve talked about (and more) who walks you through how to optimize your financial blueprint for your own individual situation.

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Production Continuum
Liability Asset Resource / Amount





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Chapter 6: Increasing Your Wealth

First Things First
Now were going to move away from the protection component of the Production Continuum and look at the production aspect. I know that production seems a lot more exciting than protection for many people, but when the protection component is not handled properly, production can become derailed by making inappropriate choices or not having the right information. If this happens it can really hurt your passion and perspective. So thats why we tackle protection before moving on to production, to build a strong foundation that keeps you secure as you take the next step.

have an installment loan, (such as a car loan) did you know that it actually hurts your credit? Its surprising to many people that sometimes getting a loan will actually help improve your credit. Many people also believe that if everything is paid off completely, and all of your payments are made on time, that youre going to have the ideal credit score. This isnt necessarily true because account balances and payment history are only part of the scoring system. Another fact that surprises people is that revolving credit (such as credit cards) can help your score too. Having three personal, revolving accounts is going to help optimize your credit score because the credit reporting companies look at how much revolving credit is available to you currently. They also like to see that you use credit, but want to make sure that you use it responsibly. So if you have a lot of credit available to you and youve used less than 30% of it, (meaning you dont ever go over 30% loan to value on your credit card limits) thats going to help you to optimize your credit score. Of course, paying things on time is obviously a good idea but if you are late, your credit doesnt typically reflect a late payment unless a bill goes past 30 days. So if you are paying late charges because your bill gets paid a few days late, chances are good that it isnt hurting your personal credit score. Business Credit Outside of personal credit, theres also a different type of credit, which is business credit. If you have any type of business and you get a business line of credit, many times that doesnt show up on your personal credit report. Typically if you have a high percentage of your personal credit thats being used (so your loan to value or your debt to income is too high) - that would hurt your credit score. However, if those high balances were on a business line of credit, then that might not impact you at all because it wouldnt show up on your personal credit score (because its a business credit line). So, do you have a business line of credit? Yes, no, or unsure? More Credit Strategies There are counter-intuitive things that can hurt your [ 40 ]

Now that your foundation is built, we can start building the more exciting aspects of your blueprint, so lets begin with banking. Were going to with understanding the different functions of banking, and how to make sure that youre doing the right things when it comes to banking. Or if you arent, how can you effectively change course? Credit Lets begin with a credit score. Question number one, Do you know what your credit score is? Yes, no or unsure? Number two, Is your credit score over 760? Yes, no, or unsure? If it is under 760 or even if its above, Do you understand the things that allow you to obtain and keep an optimal credit score?

Lets talk about a few of those questions and your answers to them. First, there are different types of credit listed on your credit report and each type can effect your score in a different way. As an example, if you do not 2009 Garrett B. Gunderson. All rights reserved.

credit score too. For example, lets say that you find out that 4 years ago there was a bill that you didnt pay, and its hurting your credit score. Naturally, if you want

of how youre going to pay toward that mortgage is absolutely critical to make sure that youre not putting your home & family at risk, and that youre doing it

You want to make sure that youre keeping as much money for you as possiblerather than giving the bank as much money as possible.
a higher credit score, you will pay that off as soon as possible. But did you know that paying it off might actually lower your score even more? Why? Because your credit bureau used to see it as an old account, and count it as less relevant on your current standing. Paying it off and having it reported as paid brings that issue up to date, so its figured into the report as a more relevant factor. If something like this is happening to your score, then youd want to make sure you negotiate to get a letter of deletion from the collection company before you pay off the account. That letter will allow you to contact the credit bureau and be sure that the collection account is deleted completely rather than just showing up as a paid account. Having a credit score over 760 could help you lower your interest rates on existing loans or have access to credit that you cant get right now. That might be for businesses, investment opportunities, or it might just be to pay off things that are creating negative cash flow situations. Credit is definitely important if you know how to use it correctly, and it can do a lot of damage if you use it recklessly. Are you sure that youve maximized your savings and production when it comes to your credit? Yes, no, or unsure? Mortgages The next thing that were going to talk about is mortgages and your different options for using them. There are plenty of mortgage types to choose from, and there are plenty of techniques for structuring one to meet your needs. I want to discuss philosophically that whether you want to pay off your mortgage, or continue have a mortgage, is a personal preference. I wont try to convince you one way or the other, but the method 2009 Garrett B. Gunderson. All rights reserved. as effectively and efficiently as possible. Youll do this while making sure that youre keeping as much money as possible in your possessionrather than giving the bank as much money as possible. Heres an example: When I was in high school, I went to my math class and my teacher showed us the difference between what is paid out on a 15-year mortgage and a 30-year mortgage. I rushed home to check with my parents because the teacher showed that the difference paid out is hundreds of thousands of dollars! I was thinking, I hope my mom has a 15 year mortgage! I showed up at home and immediately asked my mom if we had a 15-year mortgage, and she assured me that we did because we wanted to save all that interest. I was quite relieved to hear that she had made such a wise decision. But theres more to the story We later ended up having to sell that same house because my Dad worked in the local coalmines, and his union went on strike for 9 months. Needless to say, there was no income coming in during that 9 months and my parents were put into a bad position because they were locked into the higher 15-year payment. They tried to work with the bank when they didnt have the funds to pay that higher mortgage, the bank didnt say, Youve been such a loyal client. Youve paid extra money, and youre only 7 years away from paying this thing off. Were happy to help you out. Instead they said, No, we cant help you. Theres no job and no income right now. You better keep finding a way to pay, or else theres going to be a problem. So they had to sell quickly in order to keep from losing the house. If my parents had been in a 30-year note, they could have still made the 15-year payment, but they wouldnt have [ 41 ]

been forced to make the larger payment if things got tight. Instead of keeping control, they lost control to the bank because of the way that their loan was structured. Later on when I started to learn about economics, I had a talk with my Mom about her mortgage strategy, and this was probably one of the most heated discussions Ive ever had with her. I asked her why she didnt just make her regular payments, save the difference in an account somewhere, and then just write the bank a check with one swoop when shed earned enough. I explained that it would actually help her maximize her tax deductions, because interest is deductible. (Although I wouldnt make tax deductions your primary reason for doing something. That was simply one benefit.) I also pointed out that it would give her more control over her money. Shed then be able to have a side fund of money, so that if anything happened, like an unexpected strike, she could use that cash to make the mortgage payment instead of having to sell the home. I pointed out that she could actually even earn interest if she invested wisely. What it comes down to is the difference between Method and Objective. The objective was to have the mortgage paid off, but the method of just giving the bank more money didnt necessarily help her out. About half of the foreclosures in the US during the 90s were with people who had become disabled. Most disabilities are temporary, but in the mean time, many people couldnt continue to pay their mortgage payment because they didnt have enough savings in reserve. For many of those individuals, if they would have used a strategy of keeping their money separated from the home (and tied up in equity), then they wouldnt have had to go into foreclosure. There is also another lesson that can be learned from the situation with my Moms house. I remember her telling me that in addition to being on a 15 year not, we were also accelerating the mortgage even more by doing bi-weekly payments. (Bi-weekly payments mean that youre making one extra payment per year because rather than paying on your home once a month, youre paying every two weeks). By using this method the theory is that youre making an extra payment each year, and people think that by using this method theyre going to pay their house off 5 years early. 2009 Garrett B. Gunderson. All rights reserved.

However, what was interesting is that the banks were charging extra to set up a bi-weekly plan, so my family had to pay an up-front fee. This fee basically counteracted the bi-weekly payment advantage and if my mom would have just saved the money that she paid for the fee in some side account, she still could have still paid off the home early with that one payment per year just by writing an annual check. The thing to glean from this situation is that there are a multitude of possible techniques out there, but many of them are NOT in your best interest. Refinancing Your Home After having that last conversation, the next logical question is of whether you should refinance your home and go invest that money somewhere, right? Well, this is where things get into a more cloudy situation. Ask yourself, Where would I be investing it? How certain am I that the investment is going to work? And am I sure I want to put my home at risk? It goes back to you resources and your Production Continuum tool. Ask yourself, Whats my human life value right now? Whats my knowledge base? Next ask, Whats the asset vs. the liability going to be? Because pulling the equity out of your home is a liability, but it could also be an asset if you had a place to use it properly. There are a lot of people that have gotten themselves into trouble by pulling equity out of their assets and not having a good plan of how to utilize the money.
What you are trying to achieve will probably determine how much, and what type of loan you get (because banks offer all sorts of different loans). With the right qualifications you can get a ten year loan, a fifteen year loan, a thirty year loan, some banks will even do forty year loans. There are interest only loans, loans where youre not even covering the interest, and even loans that pay you out of your own equity.

My point is that there are a lot different kinds of loans when it comes to mortgages, but its all the same when it comes to economics. Some people think that theres some sort of Magic in doing a 10 or 20-year loan rather than a traditional 30-year loan, but there isnt. If you can earn 6% on an investment and save it somewhere, or you pay that same 6% to the bank every [ 42 ]

month, it will pay off your house in the same amount of time. The only differences are that in a 10-year loan youd be paying all of the money to the bank and have no access to it if you needed it for an emergency or an investment. Heres an example, lets say you talk to your banker and the 10-year loan payment is $2000 a month, and the 30-year loan payment is $1000 a month. If you took $1000 and paid your 30 year mortgage and then took the additional $1000 (that you would have paid toward the 10 year loan payment) and invested at 6% somewhere. In ten years youd be able to write a check out of that investment account and pay off the home. Interestingly banks dont charge the same rate for shorter-term loans than they do long term loans. They usually tell you that that shorter-term loans are better for you in most of their marketing, but ironically, they charge you a lower interest rate if you get a shorterterm loan. This doesnt add up because banks base your interest rate on the amount of risk the see in loaning the money. The higher the risk, the higher youll be charged on your interest rate. So do you really believe that the banks are saying its better (and safer) for you, yet theyre going to give you a good deal and charge you less? Of course not They are simply marketing the idea as a good idea because they want you to pay more money to them each month so they get more cash flow. They also want more control, and the more equity they have by you making payments, the less risk that they have on their end. However, less risk for the bank equals more risk for you. Now its time to consider all of the factors in your loan including: the type of loan that you have, the interest rate, the deductibility, the amount of liquidity, and how important is it to you to pay off the loan (or not pay it off)? Its that simple. So the question is, Do you know if you have the right mortgage for you and your situation? Yes, no, or unsure? Another important thing to know is that when it comes to banking, it can help to incorporate a form of relationship capital. If you have a private banker, for example, and you develop a relationship, its amazing how there are additional benefits and additional features available that most people dont ever hear about. 2009 Garrett B. Gunderson. All rights reserved.

Historically private banking has been somewhat exclusive by only catering to very high net worth individuals, but these days its quite possible to open a private bank account with much less money than used to be required. An institutions private banking division can provide all kinds of extra services such as: wealth management, savings, inheritance and tax planning. The difference in private banking means sometimes paying a lower interest rate, or getting a loan approved faster. Other times its just making sure that if there isnt money in an account, then theyll call you before they bounce the check. There are a lot of ways that having a relationship with your banker can make your life easier. So, Do you have a private banker? Yes or no? If youre unsure then the answer is that most likely you dont. Another question: Is the amount of money you have insured or not insured? Meaning how much do you have at any one bank, and what are the financials with [ 43 ]

It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.
that bank? Are you comfortable with them, and do you know that that bank is financially solid? Yes, no or unsure? Your Own Personal Bank I really like the concept of becoming and creating your own banking system. Have you ever considered that you can create your own system where youre doing very similar things to the bank? Well tie this back into insurance for just a minute. Whats interesting is most of the banks in the United States take a good percentage of their reserve, (and a reserve requirement is what they have to keep available as far as money on hand) and they can legally put up to 30% of that reserve into insurance contracts - and often they do. The reason they do this is because insurance contracts have cash value that the banks dont have to pay taxes as the earnings are going on. They also do this because they still have the access to that money, and they dont have to wait until fifty-nine-and-a-half. They can also have some cost recovery, because they can buy these insurance policies on executives so that if the executive dies, then the death benefit funds come back to the bank to help them recover some of that lost human life value. Theres a way to create your own banking system, so that you have access to your own capital, and you dont have to go through the process and the systems that the banks relegate you to. The question is, Do you have your own personal banking system? Yes, no, or unsure?

~Henry Ford

Accounting Now lets move on to accounting. Im guessing that youre not jumping for joy over this exciting topic, so Im going to go through this quickly - but its important. Accounting started out as a profession not necessarily to be about tax deductions, but really to be about bookkeeping. Its really about keeping records and about measuring production. So, Do you personally have tracking and book-keeping systems? Yes, no or unsure? Now you might be your own bookkeeper, and that would be fine, if youre actually keeping track. Some questions to ask are, Do you know if youre making more than youre spending? Do you have a cash flow analysis? Are you optimizing your cash flow? If not, why? Having a bookkeeper might be the solution for you if you are very busy. How about tax strategy? Are you ahead of the curve when it comes to tax strategy or are you just waiting until the next year and hoping that things will somehow work out in your favor? Are you proactively, before the tax year ends, looking at the strategies that you could implement to save taxes? Yes, no or unsure? [ 44 ]

2009 Garrett B. Gunderson. All rights reserved.

There have been plenty of changes in the tax laws over the years, and there are constantly new things being updated. Its wise to work with someone who has knowledge and expertise on the subject. If you are proactive, many times you can save thousands dollars if you just stay current on what new write-offs are available. Heres an example: I remember finding out that if business owners bought a vehicle over a certain weight then they got a bigger tax deduction. At the time, I was about to buy a vehicle that was 100 pounds under the requirement. I changed it to 100 pounds over, and I saved $17,000 in taxes! Why? Simply because I was proactive in my tax strategy. In another case, due to a quarterly phone call with my accounting firm to discuss tax strategies, I was able to get back $27,000, because the IRS changed some rule. Using a proactive tax strategy will save you money. So, Do you know that youve optimized your tax strategy? Yes no or unsure? Taxes Is your business set up optimally from a tax perspective and a legal perspective? Yes no or unsure? If you dont have a corporation, then this wouldnt apply to you, but if you have a business and you dont have a corporation then mark no, because you definitely dont have your business set up optimally. More things to look at are, Have you overpaid any of your estimated quarterlies, or have you had more withheld than necessary from your W2? The way that you would know if youre over paying is that every year youre getting a check back from the government. Realize that if youre getting a check back from the government, theyre not paying you any interest on your money that they have been holding, and youve lost the opportunity to earn interest on that money while it was in their hands. Some people get excited about getting a tax refund, but what it really shows is that youre ineffective (or at least inefficient) with those dollars. So, ask yourself, Have you overpaid on your W2 or your estimated quarterlies by getting tax refunds from year to year? Yes, no or unsure? 2009 Garrett B. Gunderson. All rights reserved.

Other questions that might apply to you are: If you own a building, are you using cost segregation? Cost segregation allows you to write things off much more quickly than if you dont use cost segregation. Things that may be losing value and depreciating will also count towards a tax deduction. Then the final question for accounting is: Have you coordinated your strategies for the future? Or more specifically, If you are putting money in a traditional IRA or a 401(k), do you know how youre going to get that money out tax free? Yes no or unsure? If youre not paying tax today, and its being delayed into the future for any reason, do you have a way to make sure that youre not paying that tax some time in the future? Have you coordinated your strategy and have an exit strategy to know how to minimize tax [ 45 ]

Chapter 7: Smart Investing

Compound Interest: Miracle or Myth? Investing is obviously a very critical and core component to the production arena. Lets begin with just some of the fallacies and myths that revolve around some of the most touted financial philosophies that are out there. First of all, there is a lot of confusion around compounding interest, which is when you invest money and as you earn interest you just reinvest it. Weve all see charts where over a long period of time your money starts to grow (as they would say at the institutions) exponentially. Actually, compound interest doesnt look that good over ten years; it looks better after 20 years; in fact, it doesnt really start to look good until 30 years. However, if you are willing to go 40 or 50 years, then the returns really start to look really incredible. The problem is that compounding interest usually doesnt work the way that financial institutions claim

with. Basically, there is a lot more to compounding interest than were typically told, and the part that gets left out is usually not what we want to hear. The other consideration is that with this accumulation theory, you are assuming that the financial institutions are going to care about your money the way that you would care, and that they are going to be around for a very long time. But honestly, how many people do you know of who have become wealthy because of compounding interest (other than the banks)? I personally have not met many people who got rich that way, and I have been in the financial services for over a decade. What Ive seen is that people who are rich make money from other things (good jobs, investments, etc) then lose it in the market or set it aside, but theyre not rich due to compounding interest. When investing, here are some critical things to consider: First, Do you have proper documentation? Yes, no or unsure? What I mean by this is, if its a private investment, are you collateralized for sure? If

it will. If your money is just in a regular mutual fund, or if its invested in something that can be taxed every time you earn interest, then that will take away from money that you would have gotten back in your tax refund and effect your return. Another glitch is that you may actually have to have money come out of pocket in order to make the miracle of compound interest happen.

how many people do you know in the world that have actually become wealthy because of compounding interest, other than the banks?
you are supposed to be collateralized, is the LLC really in place? Do you have a promissory note (if thats how youre doing it), or the stock certificate? Yes, no or unsure? The second thing is, do you have a true knowledge of the value proposition? What I mean is do you know how you will benefit. How do you Win? How do the people that you give money to Win, and how does the marketplace, or those who are being served, end up Winning? We evaluating an investment, its important to realize that value proposition is three-fold. Its not just you and the people that are investing your money that are involved. You also want to understand how that investment will impact the marketplace. There has to be a real value for the end consumer who will use the product or service. If there isnt, then you are risking your investment on [ 46 ]

So, when someone tells an individual something like if you just invest $100,000 and earn 12% over the next 30 years then it will grows into $1,740,000. What they fail to mention is that if you pay tax out of the account (rather than out of your pocket) your money might only grow to a million or less, because it wouldnt have the same momentum. What Financial Experts also usually dont talk about much is the fact that if the market fluctuates even a little bit (which it always does) then those projections are pretty much meaningless to begin 2009 Garrett B. Gunderson. All rights reserved.

Its all too easy to see what has happened in the past and to speculate that it means you should get involved in something.
the greater fool theory, which means that you buy something hoping that someone else will buy it for more and that person is also hoping that someone else will buy it for more, etc. With this type of investment, eventually someones not going to be willing to buy it for more, and at that point, whoever is the last person to buy it gets stuck with something worthless. So ask yourself, Do you have proper knowledge of the value proposition? Yes, no or unsure? A good rule of thumb is, if you cant state the value proposition in one sentence, or at least no more than a short paragraph, then you dont understand what youre getting into. Either youve made it way too complicated, or its something you probably shouldnt get involved in. The Man Behind the Curtain Sometimes people seem to forget that a fund is only as good as the person managing it. Do you know the details about the person that is behind the generation of the returns? For example, the Fidelity Magellan Fund has been around for a very long time, but it has had different money managers that were responsible for the buying and selling of stocks throughout the years. Even though its technically still the same fund, and the financial adviser trying to sell it might talk about the returns over a long period of time. Its important to understand that if its a different person running it, then those past returns are not really relevant. Its all too easy to see what has happened in the past and to speculate that it means you should get involved in something. Unfortunately, when people suddenly jump into something just because there is supposedly so much money involved, it can backfire. If a fund gets a flood of money or if they have a good year, then everyone gets excited about it. But if pay attention, you 2009 Garrett B. Gunderson. All rights reserved.

will notice that the fund rarely continues to get the same returns because it has been saturated. So, back to the original question, Do you know the person, or at least details about, the person responsible for generating the returns? Yes, no or unsure? A prime example of this is how most people that are contributing to a 401(k) dont know a single name of any of the money managers. They cant even tell you the stocks they actually own inside a mutual fund. What is really interesting is that this person might be someone who is completely against smoking, but they own tons of Phillip Morris stock because thats one the money manager picked. So, Does it matter to you how you make money? Are you happy with the current performance of your investments? Yes, no, or unsure? Another question is, Have you applied risk mitigation strategies to your investments? Increasing your knowledge about risk mitigation can definitely help you lower your exposure to danger. An example of a risk mitigation strategy would be having a stop loss on a stock, which means that if the price drops to under a certain point then the stock is automatically sold. So ask yourself, Have you looked at different risk mitigation strategies to minimize the risk you have in investments? Yes, no or unsure? [ 47 ]

Next, Do you have a clear exit strategy? Often its easy to invest, but sometimes its harder to disinvest or get your investment back. For example, it may be much easier to buy real estate than to sell that same property later. So the question is, Do you have a clear exit strategy? If you dont, then you only have ink on a piece of paper (which isnt worth much) if it cant somehow be converted into cash. Have you looked at, and do you understand, how your investments coordinate with your insurance strategies? Even something as basic as your savings account should coordinate with your insurance strategies. For example, if you have a lot of liquidity with money sitting in a savings account, then you could take a higher deductible than someone who is just living paycheck to paycheck. Another way to coordinate your investment strategy with your insurance strategy is to implement your own banking system within an insurance policy such as a whole life product. This can allow your dollars to work for you in several different ways simultaneously. Money Velocity While were on the topic of multi-tasking your money, lets talk about money velocity. Something to ask yourself is, Is your money having as many turns as possible? Are you velocitizing it? Here is an example of getting multiple benefits out of the same dollar, which I refer to as Velocitizing. When I bought my first property I had a cash value life insurance policy that I used to make the down payment on the property. Then I took the cash flow from that rental property to pay back the cash value on my insurance plan. Later, as the property appreciated in value and rents went up, I refinanced it and took out some of its equity. With that equity, I paid cash for another property and owned it free and clear. Next, I took the cash flow from the newly purchase property and actually over-funded my insurance policy. Eventually that money turned what I used to buy the building that I now operate out of. As you can see, I just used my dollars effectively by upgrading and keeping them in motion, rather than just setting them aside and forgetting about them. That is the Velocity that I am referencing. Keep in mind that 2009 Garrett B. Gunderson. All rights reserved.

if you earn 5 percent two times, then that is better than 8 percent one time. So, Are you getting more than one turn on your money? Do you feel educated in and empowered with your investing? Yes or No? I want you to be educated and empowered in your investing versus being one of the people who feel fearful and frustrated with their investments because they know nothing about where their money is invested. Also, Are you systematically investing into yourself and into your financial IQ? Yes or No? You may be wondering what it means to Invest in Yourself, so lets explore that concept a bit. Part of the way that you can invest in yourself is through education (just as you are investing in yourself right now by reading this book). You can also invest in yourself by speaking with other people and tapping into their knowledge (such as learning how you can improve areas of your financial life). Increasing Your Financial IQ There are so many different ways that you can increase your financial IQ and invest in yourself. Reading a good blog or book on financial topics, working with The Accredited Network of financial advisers who can teach you more about personal finance, or attending a symposium or workshop are all examples of how you could invest in yourself and improve your financial IQ. Another way might be starting a business by turning your favorite hobby into something where you can make a little bit of money. Thinking of your current investments, Do you really understand why you are investing in those specific vehicles and how they fit into your overall blueprint? Yes, no or unsure? Do you understand the fees that are associated with all of your investments? The fees are important because they can impact your overall returns dramatically. Yes, no, or unsure? Before we move on to the next section, theres one more very important question that applies to investing. Have you thought about what would happen in a worst case scenario? It took me a while to figure out how important this is because Im an optimistic person, and I tend to think that most things are going to work out one way or another. [ 48 ]

No one has ever pitched an investment with Hey this is going to be absolutely terrible, and youll probably lose all of your money. Are you interested? Everyone (well, at least everyone who is honest) thinks that any investment they are pitching is probably going to work out, and its always promoted that way. But do you understand what could happen in the worst-case scenario? The worst-case scenario in investing is always the same: You could lose everything. You can never fully understand all the ramifications, repercussions, and circumstances surrounding an investment until you experience it. Back in the year 2007, if people had been told that within a couple of years the banks would not be lending like they were at the time -- even for people with excellent creditmost people wouldnt believe it. Yet it happened. Its part of the worst-case scenario that most people didnt imagine. People wouldnt have believed you if youd told them that the stock market could lose 2009 Garrett B. Gunderson. All rights reserved.

50 percent over a two-year period of time. I know that people probably wouldnt believe you, because they didnt believe me. I was on Fox News with Neil Cavutos show shortly before people started losing their retirement savings in 2008. I explained to Neil why in spite of what most financial institutions would have us believe, 401(k)s are not the safest place for most people to store their money. Neil flat out told me that he didnt believe me. He disagreed with my message that people should stay in control of their finances and not just hand it off to someone who they dont even know. I wonder if he remembered our conversation later as many thousands of Americans lost their life savings in 401(k)s. These losses were because of decisions made by money managers that the investors didnt even know, and careless financial institutions that were more concerned with making a quick buck than with protecting their clients best interest. [ 49 ]

If something is supposedly risk free but paying a huge rate of return, then there are definitely some questions to ask...
Again, the worst-case scenario is that you could lose every penny you have invested, so keep that in mind. Im not reminding you to scare you, Im pointing it out so that you can hopefully avoid that type of situation. Thats why risk management, risk mitigation, and understanding what youre doing are critical. Also, investing in things that are in alignment with who you are, what you know, and things you are interested in will be better than investing in something youre just mindlessly hoping will generate a rate of return because someone told you it would. Some other considerations in investing are to realize that some things you believe are investments are not actually investments, such as IRAs and 401(k)s. They are not an actual investment these types of plans are only a tax code where you deposit your money and give the government control of your funds. Do you understand the implications of putting money into those plans? Do you understand how it is (or is not) going to benefit you now and in the future? Are you currently participating in these plans to the detriment of your prosperity and in lieu of investing in yourself? Real Estate Next lets talk a little about the popular investment of real estate. There are a few types of real estate such as residential real estate or commercial real estate, and there are plenty of programs and information about investing in real estate. Almost everyone knows someone who has invested in real estate and who thinks that everyone should invest in it. I personally believed that at one time myself. I was convinced (like a lot of my peers) that to be wealthy you 2009 Garrett B. Gunderson. All rights reserved.

need to invest in real estate, but thats not necessarily true. For the right person, real estate is a great strategy, but for the wrong person, its not a great strategy. Let me explain, one individual could buy a home and then have to sell that home for a loss while the person that just bought the home from them could immediately turn around and make a profit from it. How? The reason is education. Its knowledge, and its the individuals aptitudes and talents. Another distinction to understand is that the house isnt the asset, it only becomes asset when someone utilizes it. In the example above, the person that bought the property and makes a profit from the house may be able to do that because they have a big network of people who are looking to buy real estate. Whereas the person that lost money didnt really know much about real estate or how to go about selling the real estate for top dollar. The difference between the Winner and the Loser in the example comes down to their individual knowledge and understanding of the investment, because in real estate there are different strategies for different types of markets. Some strategies will last for a while, and for other strategies there may only be a short window of opportunity. There are many, many strategies when it comes to real estate, so if you are getting involved with real estate, its [ 50 ]

the same old questions: What is your exit strategy? How are you going to benefit from this? How will the other person who is going to utilize the real estate benefit? And how are you both better off? If you cant answer those questions its probably not the right investment for you. Before you get involved in anything, ask yourself, Do you know how to capitalize on current markets? Yes, no or unsure? Do you have not only an acquisition strategy but a selling strategy? Yes, no or unsure? Do you understand the additional tax benefits that you may have in owning additional real estate? Yes, no or unsure? You can also run real estate opportunities through the same previous questions that had to do with banking, lending, and investing to get a better idea of whether a particular real estate opportunity will work for you. Commercial real estate is just a little bit different from the loan standpoint. The loans are a little bit different for commercial properties versus residential, and tenant agreements are different too. Sometimes in commercial real estate you can have a longer tenant lease agreement than when you just have someone that is renting from a residential place. Also, different market conditions and trends might make renting very popular because people dont have the ability to utilize their credit to get the homes that they want, so they are willing to rent homes. At other times the markets are such that credit is so easy and so cheap that it makes sense for nearly everyone to buy property. In more extreme circumstance there are times where people get really excited about property values going up, so they buy a property and hold on to it just long enough for it to go up in value and they immediately sell it for a profit. (This is called speculating, not investing) One of the problems with flipping properties is what can happen to your cash flow along the way. In some markets, such as Las Vegas throughout the early 2000s, the prices of homes went up like crazy. There were a lot of people buying homes, but the majority of buyers were investors, which meant that there was no one actually living in the homes. Once the investors decided it was time to sell, there was a lot of housing supply and not nearly enough demand. Also, real estate is not regulated 2009 Garrett B. Gunderson. All rights reserved.

to the same degree that the stock market is, so believe it or not, there are a lot more inefficiencies. There are a lot of things to consider with real estate, but first and foremost youll want to consider if its even something youre interested in because if it isnt then youre better off avoiding it. So, Is real estate something that you have a passion for or an interest in? Yes, no or unsure? Public Investments We are now going to take a look at public investments. Do you understand money markets and how they work? Yes, no, or unsure? There are a lot of shortterm notes, and they are almost synonymous these days with savings accounts, but they are not quite the same thing. There are government bonds, corporate bonds, stocks, mutual funds and many different forms of public investments. Most stocks are traded publicly, but there are private stocks as well. Private stocks can potentially be more risky because when you are buying into a private company versus a public company, there are different disclosure rules. With a private company the stock price might just be invented, versus with the public market where you pretty much know what people are willing to buy the stock for, so its a little bit more efficient. There are private investments like hard money lending, promissory notes, private placement memorandums, and some types of business loans. Just like with public investing, there are all sorts of different private investment options out there that many people dont know about. In general, I would say that it takes even more due diligence when you consider a private investment rather than a public investment, but private investments are sometimes better opportunities. Its just a matter of whether its the right opportunity for you. No matter which of these opportunities you consider, you have to go back to the fundamental investing questions that we asked about exit strategies and the value proposition to make sure that you understand whats youre getting into. If something is supposedly risk free but paying a huge rate of return, that is usually an investment that I will question highly. One question I like to ask if the private individual says the investment is guaranteed is: Are you [ 51 ]

willing to put your house on it? If possible, I would actually see if you can attach a lien to the borrowers house if they are claiming that its guaranteed, and youll quickly find out if its a bluff or not. So there are public investments and there are private investments, but the very best investment that you can make, every single time, is an investment in you. Youll never go wrong by investing in your own knowledge, your capabilities, the things that youre passionate about, and the things that you want to know more about. Its never about what investment is the right investment for the general population, its about what is the right investment for you. The degree of risk is more in the individual and their knowledge than it is in the investment. A particular investment could be risky to one person, yet completely safe for another. For example, we could all own the same stock as Warren Buffett but our degree of risk would probably be much higher because even though we own the stock, it doesnt mean well know what to do with it like Warren does.

its in alignment with who you are and your experience or expertise? If someone is trying to sell you on an investment based on emotion, then the terminology theyll use is One time only! or You gotta do it today! or Youll never see another opportunity like this Dont believe the hype because its all marketing. In fact, you should immediately question why you dont have enough time to do your due diligence. Emotionally you may feel worried that youre going to miss out on something big, but its usually a mistake to make a decision based purely on emotion. Youre better off considering whether the opportunity is truly aligned with your Soul Purpose and if you fully understand it. Is it a good solid investment, or is it just some stock thats going to be the next big thing. How many of those have there been that did NOT turn out to be the next big thing? Ill tell you first hand that the Busts happen a lot.

Another thing to note is that its okay to miss out on an investment that turned out to be a moneymaker, if it wasnt the right investment for you. Overall, youll be a lot better off if you stay away from investments that dont have anything to do with who you are or the areas were you have experience. People often get involved in an investment because they get emotional about it. They dont necessarily think things through because they believe its the ticket to riches, and that its going to get them that great rate of return. They skip doing their due diligence because theyre so excited that the investment is going to pay for their dreams. Unfortunately, if they didnt do the due diligence, and if they didnt make sure it was aligned with their Soul Purpose, then all too often its a disappointment. Because of that, the next question is, Are you investing because of emotion and excitement, or are you investing because 2009 Garrett B. Gunderson. All rights reserved. [ 52 ]

The very best investment that you can make, every single time, is an investment in you.

Net Worth & Retirement Im now going to ask you some questions that are not the yes, no or unsure type of questions. I want you to take time to reflect on what Im going to ask you. First question is, Right now, is your main wealth strategy (or goal) to build net worth? Thats an interesting question because building Net Worth is usually about compounding interest and tightening the belt. Its saying that youre going to sacrifice and wait 30 years before you start enjoying your money, and theoretically one day youll get to live this great retirement. Well, the truth for most retirees is that retirement isnt really all that great. USA Today did an interview where the retirees interviewed said that their number one fear is of running out of money. They were always taught the conventional methods of compounding interest, of sacrificing, and saving, of delaying, and of not enjoying life today. They didnt look at their plan comprehensively, they just put their money in the stock market, and if it didnt cooperate, then they didnt get to have the dream that they wanted. Do you want your dreams to be reliant upon the stock market doing well? What if it didnt? More questions to answer are: Are you living in your ideal home? Are you doing the work that you want? Is it the right career for you? Are your investments creating more abundance for you mentally, as well as financially, and bringing forth the right mindset? Do you have a clear financial plan that brings you confidence and that you know is aligned with your Soul Purpose? This question goes right back to the very fundamental questions that we began each section with: How do you know if you are paying too much in taxes? Do you have an insurance plan and do you know if there are unnecessary or duplicate coverage? Do you know how to optimize your credit? Do you know the different investments you have? Are they organized? Are they accomplishing what you want them to? Is your financial blueprint as clear as the blueprint used to build your home? (Otherwise, you know its not organized.)Where do you personally have exposure or unnecessary risk? Where would you say that you were investing before reading this, that you would now admit is actually gambling? What are you going to do about those gambles? 2009 Garrett B. Gunderson. All rights reserved.

No one is going to care more about your financial situation than you -- period. Its up to you to take action. Education + Implementation = Prosperity, but implementation without education equals a guessing game. Leverage and ignorance can create some startling results. People leveraged a lot of things during the past real estate and economic boom, but they didnt really know what they were doing, which is a big part of what created what we now call the credit crisis. Loose Ends To tie up any loose ends in regards to your personal finances, lets go through and see where you have some room to optimize your finances, and lets look at whether you are living as close as possible to your ideal life in regards to your financial capital. Take out a pencil and get some paper, because we are going to go through a little exercise.
Rank on a scale of 0 to 10 what best describes your situation in reqards to each question. [ 53 ]

The Financial Optimizer

Are you living your ideal life with regards to your personal finances? Complete the below exercise and review the results to identify the areas where you have room to improve. On a scale of 1 to 10, select the number that best describes your response to each question: 1. How do you feel about your current financial situation? (0=uneasy 10=fantastic )

2. Do you feel like your personal finances are highly productive & organized? (0=not at all, 10= completely)

3. If you were to lose your job today, how far into the future would you have enough money to be able to maintain your same lifestyle? (0=1 month, 10=10 months or more)

4. If you, or your spouse, were to lose your ability to work or generate income today (through accident or illness), would your insurance policies protect you to the point that you and your family could keep the same lifestyle indefinitely? (0=not at all 10=completely)

5. What percentage of your income is derived from Soul Purpose activities (doing things that you are passionate about and love to do)? (0=0%, 10=100%)

6. Do you consider yourself a lifetime learner, or someone that regularly invests in your own financial and/ or productivity potential through coaching and education? (0=hardly ever 10=very often)

7. How clear is your economic plan for the future? (0=pitch black, 10= crystal clear)

Total Score

2009 Garrett B. Gunderson. All rights reserved. [ 54 ]

If you scored close to 70 then congratulations! Your current financial situation is a great platform for production. There is little repair work to do, so you will mostly want to focus on increasing your cash flow, expanding the expression of your Soul Purpose, and optimizing your assets. You will also want to focus on how to increase your moneys velocity (or getting the same dollar to create value multiple times as explained in my New York

could build an amazing creation. In other words, financial products are merely tools that in the wrong hands are absolutely destructive, and in the right hands (where there is the right knowledge and the right education) they are productive. There is no one-size-fits-all solution when it comes to finances because your financial blueprint comes from your ideal life blueprint. What do you want in life? Your version of an ideal life is not going to look like your

Its easy to get what you want. Its just hard to find people that know what they want!

Times bestseller Killing Sacred Cows), and aligning your finances with your lifes ambitions, dreams, and goals. But if you scored less than 60, then there are some holes in your financial picture that must be addressed in order for you to become truly financially productive. By taking care of these issues, you will be in a position to start creating an optimal and comprehensive financial blueprint. Once you have outlined the way to your ideal financial life, you will be ready to begin implementing those steps. If you feel uneasy about your current financial situation, then work on mapping out an effective course to get you from where you are, to where you want to be. If you make a dedicated effort, you will be able to impressively improve your financial situation, and enjoy greater peace and prosperity in your life. In going through this information, if you were looking to find out specifically whether you should be investing in REOs, or covered calls, or in _________ (you name any financial instrument), and the answer is always the same: It depends. The investment is just a tool or a product and the skill to use it resides in you. Saying that the investment creates the outcome would be like saying, If I had the most perfect hammer in the world, then I would be a master carpenter. To dispel this myth, you could simply put a hammer in my one year-old sons hand. It would not only be dangerous, but it would inevitably be destructive. However, in the hands of someone with the right skills, even a hammer held together with duct tape 2009 Garrett B. Gunderson. All rights reserved.

neighbors versions so it is important to discover who YOU are. How do you want your life to look? A good way to uncover this is to ask yourself, If there were no limitations and no people telling you that you need to do This or That, then what would you do? If there werent those voices, and instead you had the confidence and the knowledge that you could set forth and accomplish what you truly wanted to, what would that be? [ 55 ]

Chapter 8: Living Your Dreams

What Do You Want? Its easy to get what you want when you know what it is Its just hard to find people that actually have a clear vision of what they want! This happens because what they want is convoluted and clouded with social opinion, myths, and fallacies that hold people back from their potential. Of all the areas of life, the financial aspect is one of the most destructive arenas that keep people from living a good life. Many people wake up and some of the first thoughts on their mind are about money (usually in a negative way). They wonder if theyre going to make it financially, and they ask themselves how they can make more money. What would be a lot more powerful for these people is if they instead asked, What am I passionate about? How can I create real lasting value? What problems do I have the ability and passion to solve? Those are powerful questions, but too many people are looking for something outside of themselves to show them the way and save them. They are hoping that the market will cooperate with their plans, or that a great investment will land in their lap. By doing this they are forgetting that there isnt a magic product (just like there is no magic hammer), because if it existed, then we would all buy it. But there is no magic financial product. The only magic is in understanding your Soul Purpose, and realizing that you are your own greatest asset. When you are armed with this information, the right questions, and you have the right team that can bring you organized expertise, then you can build a blueprint to match your vision. At that point youll be able to design the architecture of your financial future, and your team can help you to build it. Taking Action We start clients with a financial audit at our firm because we want to make sure that you are going down the right road from the very start. Financially speaking, ask yourself if your brakes are about to go out? Or do your headlights need to be replaced? Is there a pothole ahead that you arent aware of because the media is telling you to ignore it? Does the media have you so focused on something irrelevant, that you 2009 Garrett B. Gunderson. All rights reserved.

cant recognize when you might be going in the wrong direction? Our #1 priority is to make sure that you increase your financial literacy, so that you can focus on the things that are the most important in your life. One thing is for certain, you will have to deal with your financial situation (for better or worse) sooner or later. You will have to spend the time it takes to increase your financial IQ and address the holes in your financial blueprint or youll end up learning The hard way. Either way youve got to learn the lesson, but how painful the learning process is depends upon you. If you dont start taking care of this today, then you will remain in bondage and because of the choices that you didnt make today. If you do not take care of yourself and your family, and prepare yourself financially to be both protected and productive, then it will inevitably haunt you. How your financial picture changes from here is completely up to you, and you have 2 choices: You can do whats hard right now, to make life easier later on. Or you can do whats easy now, and ignore what you know you should do, and life will be harder later on. Sometimes in life it is the most difficult decision to just admit where you need help. There are some things you might even feel embarrassed about financially -- I know, because Ive been there. There have even been times where I have been speaking about how to optimize ones personal finances when Ive realized, Wait a second, I dont even have that taken care of myself, and here I am telling everyone else to do it. Thats hypocritical of me, and I needed to take care of those things. There is no reason to be embarrassed no matter what your situation is, because its only those people that are willing to take action (regardless of how they feel in that moment) that are going to get the resources they need in order to have the prosperity that they deserve. Its like being afraid to get help with a diet even though you know that you are overweight. No one in this world has a financial statement that reflects their true potential, but the only way that its going to get better is if you do something about it and move forward improving any area where you answered unsure or no. I congratulate you for any yes [ 56 ]

answers you have, but all it takes is one hole in your plan to have a life changing impact. I want to see you live the life that you deserve, and the life that you want --regardless of external circumstance. There is so much yet to be gained in your life financially. The Accredited Network that I mentioned earlier is a group of advisors, individuals, and firms that are dedicated to the philosophy of wealth and have all the resources youll want to get your finances in order. True wealth has to do with money, but it also has to do with your Soul Purpose. It has to do with your mentality, your physical wellbeing, and your relationships it is all encompassing. When you have the financial part of your life taken care of you, then you are much more free to focus on the things that are most important to you, rather than on whats most pressing. If youre ready to start getting your finances organized and optimized, call 1-800-400-5206 and request a free audit, or email with the word AUDIT in the subject line. Giving you a free audit is our gift to you, but it is up to you to use it. It is our Soul Purpose to help people like you to become financially free by protecting and expanding your own Soul Purpose. We look forward to helping you make that progress and begin a journey towards living a life where money is not the primary reason for doing, or not doing, anything. The Questions Ive actually asked you many more question than this throughout this book, but Ive selected the 101 that I believe are among the very most important to address. Some of these questions may seem simpler than others; yet, they are all tough questions that need to be answered. They will require you to reflect, weigh your options, and take action. Theyre tough, because they require you to research, investigate, and become more knowledgeable about your current financial circumstances. The answers to these questions, and more, can be found within these pages, but many will require you to do some work on your own. Find the answers and discover the secret to living a more powerful life through them: 2009 Garrett B. Gunderson. All rights reserved.

1. Are you currently gambling with your investments? 2. Do you believe that High Risk=High Return? 3. For whom does High Risk=High Return? 4. Does a bank loan money based on High Risk=High Return? 5. Banks require credit scores, personal information, job history, pay stubs, and collateral. Do you have a similar level of information for each of your investments, or are you gambling? 6. Why did you purchase car insurance? 7. Are you protecting only the asset (your car), or are you protecting your income and potential income? 8. What is more important, protecting your car or protecting your current and future income? 9. What are your limits of liability on your car, and do you understand why you have this amount? 10. What are your limits for Uninsured and Underinsured on your car, and do you understand why you have this amount? 11. Do you know what Personal Injury Protection or PIP coverage is? 12. Do you know the amount of PIP coverage you currently have, and do you know if it is enough? 13. Why do you purchase home insurance? 14. What is your current deductible on your home insurance? 15. What is your dwelling limit on your home? Do you understand why you have this amount and why you have this coverage? 16. What is your other structure limit on your home? Do you understand why you have this amount and why you have this coverage? [ 57 ]

17. What is your personal property limit on your home? Do you understand why you have this amount and why you have this coverage? 18. Do you have Loss of Use on your home? Do you know the limits? Do you understand why you have this amount and why you have this coverage? 19. Do you have a video inventory of everything in your home? 20. If you have a video inventory, do you store it in your home? Do you have a safety deposit box? Do you have a fireproof safe? 21. What is your personal liability limit on your home? Do you understand why you have this amount and why you have this coverage? 22. Does your homeowners policy cover medical expenses and for what amount? Do you understand why you have this amount and why you have this coverage? 23. Did you know that it is not the amount of a claim, but rather the frequency of claims that make your insurance premiums higher? 24. What are your current deductibles for your homeowner policy? 25. Does your home owner policy cover Actual Value, or Replacement Value? 26. Do you have an umbrella policy? 27. What are your limits of liability for your umbrella policy? 28. Do you know which events an umbrella policy covers? 29. Does your umbrella coverage include uninsured and underinsured coverage? 30. Do you have disability insurance? 31. Do you have the right amount of disability coverage?

32. Does your policy have an automatic increase of future purchase rider, and do you know why? 33. Do you know your elimination period for your disability policy? 34. Do you know to what age you are covered by your disability policy? 35. Does the policy cover own occupation or any occupation, and do you know the difference? 36. Does your policy have a residual benefit, and do you understand what this benefit does? 37. Do you have medical insurance? 38. Do you know the amount of the Lifetime Cap or Maximum, and do you understand how this could affect you? 39. Do you know your health care deductibles, and are they the right amount? 40. Is your health coverage a group policy or an individual policy? 41. Do you find yourself saying, I hate my current job, but the benefits keep me there? 42. What is the purpose of life insurance, and do you have it? 43. Do you have the right amount of life insurance coverage? 44. Does your life insurance coverage provide adequate income to sustain your familys current lifestyle, for the life span of your family, if you were to die tomorrow? 45. If you were to die tomorrow, would you want your family to be in a better, same, or worse off financial position then they are in today? 46. Are your current beneficiaries the people you actually want to benefit from your policy?

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47. Are your children listed as the secondary beneficiaries on your policy? Do you understand the restrictions if they are? 48. Do you have a trust, and do you understand how it benefits you and your family? 49. Do you have a will, and do you understand how it benefits you and your family? 50. Do you have a Durable Power of Attorney and do you understand how it benefits you and your family? 51. Do you have a living will and do you understand how it benefits you and your family? 52. Is your trust set up as revocable or irrevocable? 53. How solvent is your current bank? 54. Do you have the cash equivalent of 6-12 months of expenses set aside in liquid form that you could access in less than 2 days? 55. Do you have the cash equivalent of 1 months expenses on hand at home in a safe place? 56. Do you have precious metals, gold and silver, equivalent to 1 months expenses on hand at home in a safe place? 57. Do you have an emergency evacuation plan, and does each of you family members understand and know the plan? 58. Do you have at least 1 year of food storage for your family? 59. Do you have an updated 72-hour kit for each of your family members? 60. Do you have the proper business entity in place for your business? 61. Do you have business insurance? 62. Is your business set up to be taxed optimally, and do you understand the tax requirements of your business on a quarterly basis? 2009 Garrett B. Gunderson. All rights reserved.

63. Do you have all protection aspects in place before you invest in production? 64. Do you know your credit score? 65. Do you understand the benefits of having a credit score above 760? 66. Do you have at least 3 revolving credit card accounts? 67. Do you maintain a balance on those accounts of less than 30% of the available balance? 68. Do know and understand your current debt to income ratio? 69. Is your current mortgage right for you? 70. Do you have a private banker? 71. Is your money insured? 72. Do you have your own banking system? 73. Do you personally track your monthly income and expenses? 74. Do you have a tax strategy? 75. Are you using cost segregation on your commercial property? 76. Do you have an exit strategy for your current qualified plans in regards to tax savings? 77. Do you have proper documentation for each of your investments? 78. Do you have true knowledge of the value proposition for the investment? 79. Does this investment create a win-win solution for all parties involved? 80. Do you know the details about the person behind your current, or perspective, investment? [ 59 ]

81. If you own a 401(k) or mutual fund, do you know the name of the fund managers and their value systems? 82. Are you happy with the current performance of your investments? 83. Have you hedged your investments or mitigated your risk? 84. Do you have an exit strategy, as well as a contingent exit strategy, for this investment? 85. Are you velocitizing and getting multiple turns out of your money on this investment? 86. Do you feel empowered and educated about your investments? 87. Have you invested in yourself? 88. Why are you investing in your particular investments, and how do they fit into your overall plan? 89. Do you understand the fees involved with your investments? 90. What is the worst-case scenario from investing in this product? 91. What is your exit strategy on this real estate? 92. What is the value proposition for investing in this real estate? 93. Do you know how, and have a plan, to capitalize on this real estate in any market condition? 94. Do you understand the tax implications behind investing in this type of real estate? 95. Do you understand the different types of mortgages available to you? 96. Are you investing because of emotion and a rate of return, or because this investment is in line with your Soul Purpose?

97. Are you willing to do the required due diligence and learn about all the facets behind the investment, including the people involved, the industry, and any other information pertaining to the success or failure of past and current investments of the same kind? 98. Do you feel like your finances are organized and fully productive? 99. If you lost your job today, how many months could you maintain your current lifestyle? 100. If your spouse lost their job today, how many months could you maintain your current lifestyle? 101. Are there things about your current financial blueprint that you would like help implementing? If so, call 1-800-400-5206 for a FREE consultation and start answering these questions now. The sooner you start implementing your blueprint, the sooner your loved ones can look forward to a brighter financial future.

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