Why Think Positively?

This is a big problem. If you have negative expectation on something, you won’t take action aggressively or even care about it. You won’t face the problem and have solutions to solve the problems. This cycle will get you get deeper in trouble and your thinking becomes more negative. It just a cycle that will ruin your life.

You can pay attention on those successful people. They never think negative on themselves even they are in big trouble. They never doubt about their ability. Instead, they think positive and keep trying. This is why they are success. This has also proven to us that positive thinking really help us to solve problem and become successful.

With positive thinking, we can generate motivation and faith to move forward while negative thinking just holding us from taking action. Therefore, the more negative thinking you have, the harder to can get out from the problems.

How to think positively?

I know and also understand that many people’s finance is being affected because of this recession. Many people lost their jobs and their income. Their life is on hot water. Many people lost their assets because of the crashing of stock market. Many people is worry because of the falling in house pricing or even foreclosure. Many people’s retirement plans also are affected too. For them, it seems like it is really hard to think positively.

But we have no choice but have to change our thinking. Positive thinking is the first step to turn the circumstance around. It really doesn’t matter whether you believe the law of attraction or not, life is always easier and better if you can think positively. In fact, postive thinking can let your mind and subconscious figure out the best solution to solve your current money crisis.

Before this I read a book call “Awaken the Giant Within” from Anthony Robbins, one of the greatest motivation guru in the world. I’m a great fans of him because he is a master who is teaching you how to control and motivate yourself to success. Self-control, self-motivation and take action are the key to success.

Inside the book, he is teaching some questions that we should ask ourselves to change our emotion each time we encounter problems. Those questions are really helpful. Now we can use it to make us think positively here:

1. What is great about this problems? - Something that you must learn
2. What is not perfect yet? - Something that you must pay attention on
3. What I should do to make it the way I want it to be? - something that you must take action
4. What I no longer do in order to prevent the problems? - something that you must avoid or change
5. How I can enjoy the process while I do what it necessary to get what I want it to be? - something that can motivate you take action easily and continuously.

Once you keep asking this question again and again, your focus will be moved and then your state of emotion will be changed too. Eventually you can find the solution and solve the problem instantly because those questions above are asking your subconscious to provide solution instead of negative reasons.

If you think properly, we usually think in certain way. For most people, the first thing they think every time they encounter a problem is the reason why this happen on them. This will lead them to become frustrated and blame for something. This thinking never end because your mind keep focusing and thinking about the problem and not the solution. This won’t help you but let you suffer more.

But if you ask the different question, you can almost change your state of emotion instantly. If you ask, “What is so great about the problems?”, you actually moving your focus to think positive things about the problems. This will greatly change your emotion so that you can move on and figure out the best solution.

You can pay attention on people around you or those media that are reporting the latest news about our market status. You will find that they are just full of negative news, emotion, thinking and worries. All this won’t help you to pass the tough time. It just let you to get drawn deeper and deeper. Yes, we need to read those news and information so that we are updated and follow the market, but at the same time we must hold a positive mind and emotion to handle the problems.

You need positive thinking to think solution and let your life continue the way you want it to be and not negative thinking that make you suffer more and more.

So first step - think positively and ask the question - What is great about recession?

What is great about Recession?

Let me share some of the answers that I have in my mind:

1. Recession is just a normal cycle. Recession is a part of the economy cycle and it happens from time to time. It just a natural circumstances where we will face again and again from the past to the future. So we must prepare our personal finance for it so that what you are suffering today won’t happen in future. Learn the lesson and get ready for the next recession.

2. Recession is good time for us to start over. Everything is down in this seasons. Sales is low for businesses, layoff is happening in many companies, salaries is on hold or income is in trouble. Everything seems to go back to starting point. So this is a great time for you to do something and start the next part of your life. Maybe you want to start a business in this recession period, maybe you want to change your occupation and etc.

3. Recession is a wealth exchange period. Since the first day I learned about financial freedom and getting rich, I was told that recession is a great time for wealth exchange. That means, those unprepared will be getting poorer while their wealth will be transferred to those who are well prepared. For example, currently, most of the companies stock price is getting lower and the housing price is dropping too. Those who are not prepared will lose money. But for those who are well prepared, that can get a lot of good deals for your investment portfolio in this season. Besides that, foreclosure is getting higher and even more deals are available for you to build your wealth. But of course, you must have extra money to do all this because risks are still there.

4. Nothing is secure! All the time, my friend will argue with me that job is good because of its security. It is very dangerous to start a business just like me. But if you look properly, if anything happen to the market like recession, nothing is secure. Currently job security is just being cracked and unemployment rate is getting higher. Real estate market that we usually claim that never fall down just showing the negative figure in front of us. Bank which is a good business system to make money crashed and caused all this problem to the financial market.

5. Learning how to manage risks is a must. Since nothing is secure, we cannot avoid the risks but learn how to control it within our means. You can get a job but you cannot count your life or future on it. It can crash in next recession. so you must do something to recession-proof your assets and wealth.

Problems Tell You Something That You Must Change

I believe that problems are not really a disaster. They are trying to tell us that something is not working and we must change something to get it things back on track.

If you are suffering from this recession, then you must think about your personal finance and the way you handle your money. You must change something and do something so that you won’t get into the trouble again in next recession as it happens again and again in future. If you think in this way, you will make your personal finance stronger and stronger. Eventually there are no crisis can let you down because your foundation is strong.

Start thinking positively today! and your life will be better.

All this time, we only discuss the inflation rate. We care about inflation because it can affect the value of our money. Inflation can reduce the real value of money and also our buying power along the time. This is the reason why it can affect our financial planning and also our retirement. For example,  if you are putting your retirement money in a saving account at 3% interest rate, but the inflation rate is 3% on average, then your money is going no way but remain at the same value in future. This won’t help you if you want a better retirement life. Therefore, we must invest our money in the matter that can generate average returns greater than inflation rate. This is why we must pay attention on inflation and change our financial planning accordingly so that it won’t eat up all our money.

Today the market is different. All this time we are having the positive value in inflation rate. But according to some economists and statistic reports, negative figure of inflation is happening. Negative inflation is what we usually call deflation. Again, this is another factors that can affect our retirement and financial future. We should not take this easy instead we must understand it and change our plan accordingly.

What is Deflation?

Deflation, also called Disinflation, is the opposite meaning of inflation. While Inflation drops the value of our money and increase the price of goods, deflation increase our money’s value and decrease the price of the goods. Therefore you might see the “price dropping” trend happens around the market in deflationary period.

Deflation is a decline in general price level that often caused by a combination of four factors:

1. The supply of goods goes up.
2. Demand for goods goes down.
3. The supply of money goes down.
4. Demand for money goes up.

Understand The Theory of Supply and Demand

In order to fully understand how supply and demand on money and goods will affect our market, following are some of the example that I would like to give:

For factor 1, the supply of goods goes up, let assumes that we usually spend $10 to buy product A. The ratio between the money’s value and goods’ prices are always remained at the same level.

Deflation happens if the supply of product A goes up. For example, we can use technology to double the production speed of product A. At this moment, if the supply of money is maintained at a certain level, then the supply of product A will be overflowing. Sellers have no choice but have to drop the price so that selling speed of product A can be maintained. This is why deflation happens.

This is a good deflation as the price of goods drop because of high production. This can increase the GDP rate and provide even more job opportunities to the market because those factories will demand a lot of labors for their productions At the same time, consumers have their jobs and they can continue to buy product A again and again. In a nutshell, the business cycle is not affected here.

Deflation happens too if the supply of money goes down. Fed’s decision on interest rate will determine the supply of money and how wealthy people is. If Fed raises the interest rate, less money will be pushed out to the market and hence lower down consumers’ wealth. Consumers will become less interested to spend money and hence drop the demands on product A. Guess what, deflation happens again as sellers have to drop the price in order to push the selling

Above is an example of bad deflation. This is because the business cycle is being affected.  When the sales of product A drop, the retailers and manufacturers will be greatly affected. In order to maintain their business, they may cut jobs and big layoff will happen. The problems will go back to consumers because they lost their jobs and become more demand on their money rather than spend it. Therefore, another chain effect happens that can let our economy down.

Guess what, bad deflation happens!

However, if something bad happens to the market such as recession, spending confidence of consumers will be greatly affected too. People will save their money rather than spend it. The demand for money goes up. Since people will not exchange their money for any goods, then the demand for product A goes down. Bad deflation also happens.

If we look back to the history, deflation always happen due to the high supply in goods(increased productivity) without the increasing on the supply for money. One of the biggest deflation that caused Great depression happens in Japan in the early year 1990 where the demand for goods and supply for money are low. It was the worst economic scenario that no body wishes to happen.

The Negative Effect from Deflation, Even Good Deflation

Some people thought that deflation is a good thing since the price of goods are trending down and they can buy some cheap stuff. However, in most cases, many economists and experts are worry about deflation because of its negative impact on our money.

Like what I said, if deflation happens because the increasing of the goods production and make their price drop accordingly, this is a good deflation. However, deflation cannot happen for too long because it can generate massive of negative effect on the market. This is why our board of Fed uses the Interest rate system to control the market’s inflation and avoid the deflation.

The primary effect of deflation is that it can affect consumers’ buying decision. If all the goods drop in price continuously, consumers can feel the trend and delay their spending so that they can get the goods for a better price in the future. This is another starting point for the chain effects on the economy. If the products sales drop, business will slow down and eventually great layoff will happen and hence making consumers increase their demands on the money.

Besides that, if the price drops continuously, eventually companies cannot afford the low price and they have to cut off their employees in order to cut their business operating costs. Again, this will affect the business cycle and hence start the bad economy chain effect.
What You must Prepare for Deflation

Today, we can see that deflation is happening in the market. According to the latest article from Business Week Magazine, consumer prices in U.S. fell nearly 13% in the last three months of 2008. This includes all sorts of goods, ranging from clothing to electronic products.

Deflation for this time has the negative impact on our economy. We are currently having a big recession period and deflation for this time is happening due to the over supply of goods to the market. This is nothing to do with the high production but because of the low demands of people on to the products. Unemployment is getting higher each week and big layoff happens in most big corporations. This greatly decrease the confidence of consumers to the market and they are not willing to spend money. All the business are being affected because of this and this has caused deflation.

So the most important things for us to do now is spend our money more wisely. We cannot assume that deflation will happen forever. So we must buy something that is valuable for us if possible at this time. A lot of great deals are available at this time.

If you want to do some investment, maybe now or sometime later will be a good timing for you to buy assets such as properties, stocks, bonds etc. Deflation will affect the price of those assets and if you have extra cash on hands, you can buy them to build wealth for your portfolio.

If you don’t have extra cash, now maybe is time for you to save up some money on hands. Deflation reduces the price of goods and your expenses should be reduced too. Just remain your lifestyle, spend the same amount of expenses and you can save up some money for your account.

No matter what happen to the market, the basic of personal finance is spend less than you make, save the extra and invest it. This is the basic step to gain wealth and financial freedom. You don’t have to make everything complicated, keep them simple and you can take action easily.

Good Luck!

Today, the market is bad and the unemployment rate is getting higher and higher. If you are the unlucky one and just lost your job in this recession season, you will have a lot of planning to do for your personal finance and future.

In normal financial planning, we are advised to keep at least 3 to 6 months of living expenses. If possible, keeping an emergency fund that equals to our 3-6 months of full income is even better. This is the money that you can use if anything emergency happens in our life, for example downsizing.

Now if you lost your job and you never keep any emergency fund or even including this “disaster” in your financial planning, then you should take action now and compile a better and more completed financial planning for your future. If you can afford, you should consult the financial planners or advisers for their professional opinions. But if you are tight in money and you lost your job in this recession period, then you can carry out the following steps for your personal financial planning.

Keep a record!

Yes, it might be too late to keep a record on your expenses now if you never do it before. You should have completed this before any financial disaster. But in this tough time, it becomes more important for you to know where your money is going. This will allow you to have a clear picture on your cash flow and spending habits. If you never keep a record before, you will never know that there are a lot of tiny, unwanted and not necessary expenses actually taking money out from your pocket. Besides that you will never know how you are going to plan for your finance and future without any information on your income and expenses. We can plan because we have certain knowledge and information on our head that we can forecast what will happen in future. Therefore, you will never make a good financial planning if you don’t understand your current cash flow.

So start from today, just write down how you spend every penny and along the way please analysis what kind of expenses that you can cut or lower down. Keep doing this for at least 15 days to get the first picture of your cash flow. You can continue and keep 30 days of record for better understanding.

Start a budget

You will have a lot of information on your hands after keeping a record for 2 weeks. Just analyze them and you can start budgeting and gain control over your money. You just lost your income source(job) and you should change your spending habits and spend wisely. Now you should only spend money on something that is necessary, important for your life for example foods, cloths etc. But this doesn’t mean that you can eat something very expensive or wear something that is luxurious. You should spend minimum to get the maximum returns. You should control your expenses and lower it as much as possible.

Now you should forget about all the new gadgets that you plan to buy. In this tough time, you should not add extra expenses to your budget.

So start a budget, limit the expenses and spend according to your budget. I wish you can feel the uncertainty and panic because you lost your income. Now you have to spend wisely so that you have enough money to pass this downsizing period. This should be a motivation for you to start a budget. Please don’t complain that living under a budget and below your means is tough. You really have no choices as you just lost your income.

Hold a Family Meeting

You are not alone. No body is alone in this world. Your family is the one who always stay besides you. So please don’t keep all the financial problems from them because they have the right to know the facts.

In traditional family, people think that it is bad to talk about money, family expenses in front of their family and children. Some of my friends even think that parent should take care all the financial problems and the children should only concentrate on their studies. I don’t agree with this.

Today, financial literacy among the youngsters is very low and most of the new generations don’t even know how to manage their money properly. This is why today’s students have a lot of debt even before they get their first jobs! and the main reason is they are never exposed to the financial issues.

Therefore, I strongly agree that parents should let their children knows about family financial problems and status. This will let them become part of the family financial planning and let them have earlier education on money management. Therefore the next thing you should do is hold a family meeting and announce that you have lost your job. This is very crucial and you must do this because you need their supports to start your budget and your plans. You won’t go anywhere if you want to save money while others keep their spending habits and lifestyle without cooperation.

Downsizing is a tough time and you definitely will become stressful. You need supports from others to keep going. Therefore, please announce your condition to your family so that you all can pass this hard time together.

Change Your Lifestyle

Ok, let’s face the fact. You just lost your jobs and if you have no other incomes other than your jobs, then you have to change your lifestyle. Financial Security is what you want to have right now and not financial comfortable.

Therefore, if you have more debts than cash on your hands, then you have to do something on your liabilities. Maybe you can sell your car if you have extra cars in your house. Maybe you can move to a smaller house with lower rental. Or even rent half of your house to others so that you can share you housing burden with someone. Be creative to lower down your debts, your financial liabilities, your expenses and get more cash on your hands.

Cash is king in any financial disaster. I know you don’t wish to lose your big house, nice car or any luxurious gadgets. But I tell you, these things won’t help you in your financial disaster. They are liabilities and they are taking money out from your pockets. In normal day, you have your job to afford them. But today, you lost your jobs and you definitely cannot afford them. So please let them go…

The theory is very simple here: Change your lifestyle, lower your expenses and have more cash on your hands.

Conclusion

Yes, it might be troublesome to keep track your expenses, it can be hard to live with a budget, it can be shameful to announce that you lost your job in front of your family and it is hurt to lower down your luxury lifestyle. But now you just lost your job and don’t you worry about your future? Don’t you think you should do something to pass this critical time? If you say yes, then you must do something and not stay away from the fact and keep your mind away from the disaster. Face it and take action! You can do this, I believe you can!

Personal finance is part of our life. This is why one of the greatest way to learn personal finance is by observing how others manage their money.  It has been a habit of mine to study and observe how others think about their money and how they manage the money. It is always great to learn from others experience.

Lately, more and more news about global economy crisis has been coming out and saying that we are in a big economy crisis that we never had  before. Finally, United States was finally declared in recession and it already started since last December 2007. In fact, every country in the world is having recession problem too.

It is a common sense that we should keep more cash on hands at this tough time. This is because cash is the king in down economy. But it seems like not everybody can understand the condition.

Last week, I found that one of my friend just bought a new car. This really makes me shock! No, she doesn’t really need this car because she already has 1 for her family. Furthermore, there are only 4 members in her family and her 2 children are below 12 years old. So 1 car is just enough for her whole family. But somehow she still buy the new car.

For the past 2 years, her income has been increasing persistently. She is running a book keeping small business which can generate some steady incomes for her. But I also can see that she has been buying a lot of things in the past 2 years. She is just like the typical people, make more money and buy more liabilities.

On the other hands, she has credit card debt and she has a bad credit because of it. She almost bankrupt due to these debts before. But she never learn the lesson as I can feel that she never thinks or plans to pay them off and increase her credit score. If you read my post about credit score, you will know that how important credit score is in our financial planning and on the road to getting wealthier.Therefore, we must control our credit score and keep it high.

If I was her, I would have maintain the same lifestyle and keep all the extra money generated from business properly. I will concentrate on 2 things. First, I will use that money to setup an emergency fund. Once I hit this goal, then I will concentrate on paying off the debt and increase my credit score. Once my credit score is increased, I can talk to the bank and consolidate the debt to a lower interest rate loan. This is the common steps in personal finance. But my friend still cannot follow it even though she is good in accounting.

So do you think that people will change their spending habit? Will people become smarter in personal finance because of this financial disaster? I really doubt on this.

I’m a repeat visitor for a popular Internet marketing forum, The Warrior Forum. I like this forum so much because I can always find some know how, information, success stories or learning materials from that forum. It just like a big live library for me on Internet marketing and online business.

Last month, I came across a 10 pages old thread about how a normal guy’s Adsense income was shooting up from $0 to $35 per day in 7 weeks. I love this thread very much because the owner, John are so helpful and really share a lot of information with people. He doesn’t charge any money for this and all the advices are free. For every question people asked, John answered it directly with full information and details. I really learned a lot from this thread.

I’m not a big fan for Adsense but I’m so motivated by John’s story and would like to give Adsense a try. Just by following what John has done. This is not because of his Adsense income but I’m more motivated by his persistence and hard working. It definitely great to see the end results that we achieve after working hard.

According to his info, it can be easy and also be hard to make money from Adsense using his method. You will understand what I’m talking after you understand his method to make money from Adsense.

How John’s Method Works

Without further ado, below are the information that I collected and rearranged from John’s thread over the forum. It contains the true way to make money from Adsense.