The Financial Value of Networking

By Steve Davis, CERTIFIED FINANCIAL PLANNER ™

It used to be that there were two types of people in the world: the haves and the have-nots. Today, there are three: the haves, the have-nots and the have-not-paid-for-what-they-haves. While we might smile at this description, it really isn’t funny. One of the most important, if not most difficult, principles of finance is to spend less than you earn.

So how do you do that in today’s economy? Many folks focus on trying to cut costs; they skip their morning Starbucks in favor of coffee brewed at home, for example. But really, how much does this help when gas prices go through the roof? Admittedly, there are some ways to cut significant monthly expenses by refinancing to a lower home mortgage rate, or switching insurance coverage for your home, auto or health. But there is only so much you can do to cut your spending. Earning more income, however, may be a better option to meet the goal of spending less than you earn.

One way toward increased earnings is through building better relationships. Long before Facebook and LinkedIn, a wise man once said, “It’s not what you know, but who you know that makes the difference.” The reality is that income is often derived from the relationships we build and nurture. Think about it for a moment. What happens if your relationship with your boss and your coworkers sours? You lose your job – your income goes down. What happens if you build stronger relationships with your boss and your coworkers? Your income goes up – you get raises and promotions. For many families, adding income means taking a second job or starting a small business – and there is nothing better than having a strong network of friends and associates to help you get the interview or find more clients.

Jen Vondenbrink is co-host and producer of the upcoming “Not Business as Usual” networking conference. She says, “The key to networking -- whether it’s online or in person -- is to enjoy it. Gone are the days of merely collecting business cards. Today, networking is about demonstrating your willingness to give and add value before ever asking for anything in return.” With some willpower and effort, developing an extensive network of friends and business partners is attainable. Having good relationships -- true friendship and reliable business partnerships -- is one secret to happiness, wealth building and career success.

Here are two tips to get you started:

1. Talk to people. Surround yourself with people by going to where the people are. Attend conferences and conventions and meetings.

• The Chamber of Commerce offers all sorts of opportunities such as small seminars and a monthly networking event called “Business After Hours”. They’re currently holding a membership drive too so now is the time to join if you’re not already a member.
• The “Not Business As Usual” Conference will be held at the Mansfield Holiday Inn on October 27 and according to Vondenbrink, promises to “connect you with innovated strategists, business professionals and industry experts who will inspire you to “take-action” towards growing your business and becoming more profitable”.

2. Follow up and Keep in Touch. If you say you’re going to do something, by all means do it. Otherwise you’re just another schmoozer. According to local business coach Greg DeSimone, “Sharing information – whether it’s a website, article, report of referral -- builds your credibility. When you meet someone you would like to keep in touch with, send a quick follow-up email inviting them to connect with you on LinkedIn.” DeSimone continues, “You build relationships by being useful to the other person and helping them. If you can do that consistently without expecting anything in return, a funny thing happens -- people reach out to help you.”

This article was written by Steve Davis and appeared in the column "Talking with Davis about Money Matters" found at http://mansfield-ma.patch.com/

Financial Routines for Financial Success

By Steve Davis, CERTIFIED FINANCIAL PLANNER ™


There’s a different routine in my house these days. I’m writing this on the first day of school for my younger two boys and over the past few weeks my older two sons have gone to their respective colleges (VCU in Richmond and MassArt in Boston). The lazy days of summer are over and the kids are going to bed early and getting up at the crack of dawn. And with the older boys out of the house, there is no more having to wait up until they’re safely in the driveway after a night out with friends. It’s great!

For many families, the beginning of the school year marks the start of new routines -- packing lunches in the morning, extra-curricular activities in the afternoon and homework at night. At dinner tonight, our family talked about the day’s events and about the changes to our schedules and routines. We spoke about how success in the classroom often starts with having a good attitude toward school. And this got me thinking about personal finance and how simple changes in one’s attitude and routine can often have a profound effect.



Eat Your Brocolli



A lot of people view personal finance as complete drudgery, a task to be avoided in favor of … pretty much anything else in life. For folks who keep that negative attitude, personal finance success will be very difficult. Instead, we should view it as a personal challenge – just like eating our broccoli. Who knows, if you go into it with a positive attitude, maybe you’ll find it isn’t that bad after all. It took me a long time, but I finally realized broccoli doesn't taste so bad; in fact, I think it's delicious.

 

Perhaps you’ve got the equivalent to cold broccoli sitting on the corner of your empty dinner plate. I can’t begin to tell you how many people I meet who have sizable amounts of money saved up in their old company’s 401k plan, but who never really pay any attention to the portfolio; it just sits there neglected. Simalarly, you'd be surprised at how many times bank CDs get automatically rolled over at ridiculously low interest rates just because individuals don’t take the time to explore their options. If you’re ready to start a new financial routine, you need to start with a checkup.  

Create Habits to Handle Personal Finance

Take a moment and think about how you currently handle your personal finances. Do you have a system for paying your bills on time? Letting a bill sit on your desk even one day too long can cost you in hefty late payments or lost discounts. How about your investments? Do you check your portfolio regularly and know what you’re investing in? What about the way you budget for vacations or big ticket purchases or expenses? After some self-examination you should be able to determine whether your existing financial habits are good ones or bad ones in need of change.

The goal, of course, is to create good financial routines which become habits that are burned into your subconscious – things you do because you’ve trained your mind to do them automatically. It is financial routines like this that play a huge role in financial success.



This article was written by Steve Davis and appeared in the column "Talking with Davis about Money Matters" found at http://mansfield-ma.patch.com



Does the Stock Market Have You Worried?

Buy Low; Borrow Low.

By Steve Davis, CERTIFIED FINANCIAL PLANNER ™

The huge swings in the stock market last week may seem all too familiar. Perhaps you’re worried about a repeat of the 2008 financial crisis. Before you dump your holdings and run for cover, consider this surprising fact. According to the Employee Benefit Research Group, most retirement plan account balances have bounced back to pre-2008 levels. Account balances didn't recover entirely from the strength of the market -- those automatic paycheck deductions helped a lot too. Investors who cashed out and remained on the sidelines missed out on the profitable years since the crash. Still, the roller-coaster volatility we have experienced recently with the Dow dropping 600 points one day and rallying back 500 points the next is enough to cause some participants to consider getting out of their plans all together. For many people, this could be a big mistake.


Buy Low: Legendary investor Warren Buffett once counseled, "Be brave when others are afraid, and afraid when others are brave." If you want to heed Buffett’s advice, the best time to buy low is when everyone else is scared. It is their collective fear and the group-think selling that drives stocks to deeply-oversold bargain prices. History has shown that the rallies coming out of these oversold positions often occur quickly and are highly profitable.

Don’t you just love a bargain? I was recently shopping at the Borders book store at Mansfield Crossing. Activity was brisk and I can’t begin to tell you how many customers were leaving the store with stacks and stacks of books, all purchased on sale. Often times when we read about the Dow Jones Industrial Average dropping, or watch the TV news anchors emotionally-charged segments about Wall Street, we worry and think that these market corrections are always a bad thing. If you’re young and have many years before retirement, however, market drops can be a very good thing indeed. When else can you purchase your mutual funds on sale?

Another consequence of the turmoil in the stock market is plunging interest rates. Last Tuesday, the US Federal Reserve pledged to keep interest rates at an “exceptionally low level” until the middle of 2013. This news could be a boon for families looking to buy or refinance their homes.

Borrow Low: "There’s a huge increase in mortgage applications," said Jerry Maguire, Senior Mortgage Advisor at Province Mortgage Associates, a local mortgage lender. With rates on conventional 30-year fixed-rate mortgages falling near, and in a few cases below, the 4 percent level, homeowners locally have been rushing to refinance in recent weeks. You’ve probably heard the old rule of thumb that says it only makes sense to refinance your mortgage if the new interest rate is at least two percentage points lower than your current one. “Not true” says Maguire. “Many people worry about their adjustable rate mortgages resetting at higher rates in the future. Even if you can’t lower your monthly payment by refinancing, many families can benefit by exchanging the uncertainty of a floating rate loan for the certainty of a fixed one.” Additionally, today’s low rates may allow some families to reduce the term of their mortgages from 30-years to just 15 or twenty years and potentially save thousands in interest costs.



Of course, everyone’s situation is different. As a financial advisor with more than twenty years experience, I’ve been down this road before. I understand that the number one question on the mind of most investors is, “What should I do now?” The answer to this question is the same for everyone: Talk with your advisor.

Oh, and if you’re worried that this is 2008 all over again? It’s not; there are major differences between then and now. Yes the equity markets have experienced recent losses, but today’s economic growth, while weak, is still positive. The banks in the United States are in much better shape than when the housing market collapsed. And corporations are producing solid earnings even in a weak economy. As an investor, I find that reassuring.


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This article was written by Steve Davis and appeared in the column "Talking with Davis about Money Matters" found at http://mansfield-ma.patch.com/articles/does-the-stock-market-have-you-worried





The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.