Every day I speak to people who want to know how to permanently reduce their taxes. This makes sense, since I am a CPA and I have spent 30 years showing business owners and investors how to permanently reduce their taxes by 10-40%.

Sometime during my conversation with them about taxes, invariably they ask me about how to build long-term wealth. They think I must also know about this because I'm a CPA. The good news is that I do know how to do this. But not because I'm a CPA. Most CPA's I know, in fact, know very little about how to build wealth. I know because I have done it myself.

The reality is that most people are 3-6 months away from bankruptcy and some are only a couple of weeks away. If you lost your job, how long could you live without a paycheck? If it's not at least one year, you are in bondage to your job. As the economy continues to weaken, you are more and more at risk for losing your job, your home and your ability to put food on the table.

Sounds pretty bleak, doesn't it? But I am here to tell you some GOOD NEWS! The American dream is alive and well and will live on throughout any recession or depression we might encounter. During the Great Depression, there were thousands of people who made lots of money and became millionaires. How did they do it?

They had a clear Wealth Strategy. They had built a business around their investing and continued to make money in the worst economy this country had ever seen. They were truly FINANCIALLY FREE! They didn't have to worry about a job, whether they could pay their mortgage, or if they would be able to take a vacation. Because asset values, such as real estate, plummeted, they made even more money than they had before the depression.

YOU CAN TOO!!! But you need a solid Wealth Strategy and a great Wealth Team. How do you develop a Wealth Strategy and a Wealth Team? Let ProVision show you how. We are about to launch our School of Wealth Strategy. Each month, you will learn key concepts about wealth, including leverage, velocity, tax strategy, business, team building and systems. I have taught thousands of people how to do this and how to make more money with less risk than they can with the typical financial advisor.

So join me in our School of Wealth Strategy and learn how to build Permanent Wealth. Coming soon to http://www.provisionwealth.com. Remember that Financial Freedom is Closer Than You Think. You just have to learn the rules.

Warmest regards,

Tom

I was sitting in church the other day and the speaker was talking about budgeting and otherwise watching what you spend so you don't get into financial difficulty. He was suggesting that we can never be truly financially free unless we have control over our spending habits.

This started me thinking about the relationship between spending habits and eating habits. As many of you know, a few years ago I reduced my weight by over 20%. I had tried losing weight before, but had never been totally successful. I love to work out and had always figured that if I worked out enough (i.e., used enough calories), then I could pretty much eat what I wanted. After all, this theory worked well in high school when I was on the swim team. The problem, of course, is that unless you are working out 8-10 hours a day, you can never work out enough to overcome bad eating habits.

So, this last time, I followed the WeightWatchers program and changed my eating habits. I started eating less, including less fat, while increasing my fiber intake and making sure I was getting lots of protein. The result was pretty dramatic. In six months, I lost over 40 pounds. But what has been even more dramatic is that I have kept the weight off for over 2 years. Statistically, only 3% of the population has ever lost 20% of their body weight and kept it off for more than 2 years.

So what made this time different? Simply, I finally got the message that good exercise habits cannot compensate for poor eating habits.

What does this have to do with building wealth? There is a direct corollary between eating habits and spending habits. Just as you cannot exercise enough to overcome poor eating habits, so you can never make enough money to overcome poor spending habits? Want proof? Just ask M.C. Hammer, Scottie Pippin or dozens of other celebrities who have made millions and spent every penny of it.

So, while our goal is to create enough wealth to live our ultimate lifestyle and while we always want to focus on our wants, not just our needs, we still need to learn to manage our spending. We need to set aside funds every month to go into our wealth building. We need to set aside funds every month to donate to good causes. The rest we can spend. But spend wisely, whether you are in your wealth building years or whether you have achieved your ultimate lifestyle. For more on building wealth and achieving your ultimate lifestyle, visit our School of Wealth Strategy, coming soon to http://www.provisionwealth.com.

Warmest regards,

Tom

Do you know people who make lots of money from their job or their business but never seem to have any money? Or maybe they have money now, but they don't have any assets other than their home, their cars and their boat?

I keep running into this situation and I always come to the same conclusion. Making lots of money has nothing to do with wealth. Nor does it seem to have much to do with financial knowledge or wisdom.

Just this week, I was talking to a new client who runs a very successful business. He makes hundreds of thousands of dollars each year, but has more liabilities than he has assets. The reason seems to be that while he has made incredible efforts to make his business successful, he has never devoted the time or energy to learn how to make his investing successful. This is not a criticism of this client. It is a part of our society. We are taught to work hard at our job or our business and to turn our finances over to some financial advisor who may or may not know what he or she is doing.

In addition, this client was given some poor advice regarding his taxes, so he is in deep doodoo (yes, that's a technical term) with the IRS. Now, he has to work even harder to pay back taxes that with proper planning may not have been owed at all. Again, our society teaches us that taxes are too difficult so we need to "hand them over" to some tax advisor who probably only knows a little more than his client. In reality, you cannot "hand over" your taxes to a tax advisor. You have to learn enough of the rules to know when to go to your tax advisor for advice. He or she cannot be with you every minute of the day.

The answer for all of these high-income, low-wealth people is the same. It takes knowledge to be financially (and tax) free. That's why, at ProVision, we have created a brand new course to teach investors of all income levels how to create permanent wealth. I'm off to Minnesota today to introduce this product to a group of Internet marketers. You can get this education too, by enrolling in our School of Wealth Strategy, coming soon to our website at http://www.provisionwealth.com/products.

Remember - Financial Freedom is Closer than you Think - but only if you have the knowledge to obtain it.

Warmest regards,

Tom

I'm speaking to a group of about 600 people at T. Harv Eker's Extreme Wealth yesterday about how to create their own personal wealth strategy and I'm sure many of them were wondering if this really works to speed up the growth of a person's wealth. After all, I showed them how you could turn a 5% appreciation on an investment into a 60% return just by using the concepts of leverage, velocity and tax savings.

Sounds too good to be true, right? While it may sound too good to be true, the numbers speak for themselves. I give a demonstration of this on our free cd download at http://www.provisionwealth.com/wealthcd.

The truth is that very few people will ever reach their financial dreams unless that have a wealth strategy and a proven system for building and implementing that strategy. My partner, Ann, and I have been using our system for over 6 years and it has proven to do three things:

1. Increase our returns on our investments by 2-3 times
2. Reduce our risk
3. Allow us to control our investments while spending very little time on them

If you don't have a wealth strategy or you think your strategy could use some improvements, call us at 866.467.5809. Our mission is to bring financial freedom to the world. That's why I am traveling all over the world (Las Vegas today, Canada in two weeks and Australia in November).

Remember that financial freedom is closer than you think! You just need a good strategy.

Warmest regards,

Tom

Debbie from our School of Wealth Strategy asks the following question:

Q: My life partner and I purchased two single family homes this year as rental properties and see advice as to what entity should be established to take full tax advantage/asset protection. One of these properties is in the Go Zone and we seek advice as to allowable depreciation on this property.

A: Seems like a simple question, doesn't it? As simple as it seems, we actually have multiple questions and sub-questions. Let me address them one at a time. The first question is which entity is best for tax purposes. This, of course, depends on your ultimate strategy and where you live and where you invest. In most states, we recommend forming an LLC that is taxed as a partnership. Especially because you are not married, we suggest you have an attorney draft an operating agreement for the LLC. We also suggest you get with your Tax Strategist make the most of the tax benefits of the LLC. If you don't already have a good Tax Strategist, please call our office at 866.467.5809 and we will be happy to get you lined up with a qualified Tax Strategist.

The second question is closely related to the first and this is the asset protection question. Again, in most states we would recommend an LLC, but ALWAYS recommend you speak to a qualified asset protection attorney. If you don't know one, call us at we will recommend one that will meet your requirements.

The third question is about the depreciation. And this has a couple of sub-questions. If you qualify for the GoZone depreciation, you can take 50% of the cost of the property, not including land, plus ordinary depreciation on the remaining 50%. But even if you qualify for the GoZone depreciation, you may be limited as to how much you can take this year, depending on whether you are passive or active in the real estate, your adjusted gross income, and whether you qualify as a real estate professional. For answers to all of these sub-questions, I recommend you go to our website at http://www.provisionwealth.com/products and subscribe to our School of Tax Strategy where you will get a new course on a specific tax strategy each month, including a course on making the most of your real estate tax benefits and one on depreciation.

It sounds like what you really need is a good Tax Strategy. For this, I strongly recommend you speak to my assistant, Beth Rojas, at 866.467.5809 and set up an appointment with one of our Tax Strategies to determine the best approach for you.

Warmest regards,

Tom

Jerry, one of our new School of Wealth Strategy students, asks the following question about buying an aged company for credit purposes:

Q: Hello Tom I was on the Oct Wealth Strategy call, had signed up just the week before!, and now am doing all my homework for the Dec Massive Passive call. I am also currently 4 weeks into the Chris Wise Credit program with 4 more weeks to go. Just wanted to bring you up to speed on where I stand. My question is regarding the purchase of an aged company. My goal is to purchase an aged company sooner than later so that I can access a business line of credit soon. The next step is to use that capital to purchase more growth assets and sources of passive income. I plan on the company ultimately being a real estate investment business but not for holding the actual properties. Therefore, should I purchase an LLC, S-corp or C-corp? I do not plan on employees and I have no kids (only a dog!). I will want to be able to maximize all the tax benefits of the corporation. Hopefully this is sufficient info. Thanks for your time and reply Jerry Durham.

A: There are two issues here. The first is which type of entity is best from a credit standpoint. I will refer you back to Chris for this part of the question. (Alwaystake maximm advantage of your mentors for their expertise.) The second question is a tax question and the answer to all tax questions is, "It depends." Tax planning depends largely on your long-term wealth strategy. And the best answers always come from the most information.

However, there is an entity that will give you the flexibility you need until you have your wealth strategy in place. This is an LLC, or limited liability company. LLC's can be taxed any way you want them to be taxed. Just be sure when you purchase the LLC, that an entity election has not already been made for the company. Also, I would suggest that you also set up a holding company to own the purchased LLC. The reason for this is that purchased companies always come with skeletons. You don't want to purchase assets inside of a company that already has a history, included potential lawsuits.

Instead of making your investments directly from the purchased company, make them from a sister company that you have set up. For more information on entity set up, please see our School of Tax Strategy modules on Entity Fundamentals and Building Your Perfect Foundation at http://www.provisionwealth.com/products.

Warmest regards,

Tom

Here is another question from one of my Aussie friends, Anita:

Q: Dear Tom, I need to be financially self-sufficient in 2 years so that I can retire and live a fulfilling life style. My husband and I currently have Real Estate to the value of approx. AUS$1,700,000. $650,000 of that is our family home. $920,000 is owed to the bank, monthly interest is $6,000 and rental income is $3,500/m. Credit card debt is $60,000 some of which is at 20%(Yeah I can hear you gasping) I have now been pre-approved for a further loan of $460,000 @ 7.14%. Question: How best can I use this money on the 30% strategy you talked about when you came to Australia? This loan must repay itself and more.(My preference is for Real Estate.) Extra Question: How can I get a goal plan worked out such as the example of the woman which you demonstrated. P.S. Will your tax tutorials be relevant to Australia, what is an IRA?

A: First thing you do with the $460,000 is pay down that $60,000 of credit card debt that is at 20%. Next thing you do is to get your spending under control so you are not racking up additional credit card debt. After that, you need to create your wealth strategy that builds so much wealth you can spend whatever you want without worrying about credit card or other debt.

Begin by going through the 17 Secrets course you acquired at the Chris Howard seminar in Sydney. This is the same material that others can acquire (though without all of the bonuses) through our School of Wealth Strategy at http://www.provisionwealth.com/products. Once you have been through the materials, consider hiring a ProVision Strategic Wealth Coach. A ProVision wealth coach will give you advice that is relevant to your specific situation, will hold you accountable, and will help you build the team and the systems that will allow you to achieve your 30% investment returns.

Remember, that the key is not the investment, but rather the method of investing. This is what we teach in our School of Wealth Strategy at http//www.provisionwealth.com/products. Be sure to ask any questions you have either through the AskTom link or in our monthly coaching calls. I would suggest waiting to borrow the $460,000 until after you have developed your wealth strategy, unless you can borrow it as a line of credit that allows you to draw down only the amount you need at any one time, in which case I would suggest you obtain the line as soon as possible to pay down your expensive credit card debt.

Again, please feel free to ask these and any other questions on our monthly coaching calls. The next call is tomorrow at 7:00p.m. MST, 6:00p.m. PST. I believe this is in the middle of your day in Australia.

Warmest regards,

Tom

P.S. - See tomorrow's blog for the answer to your question about the tax planning bonus course you are getting with the 17 Secrets course.

I am so glad to be getting questions from my new friends in Australia. Let's start with a question from Maya.

Q: How different is your U.S taxation system to Australias,and will these differences be taken into account during the coaching programme when it commences? Eg How does your IRA differ to our Australian Superannuation?

A: Australia and most other countries, including the U.S., have net income tax systems. This means that you are taxed on your income, less any income that is specifically nontaxable (excluded) and less deductions. While the exclusions and deductions will be different from country to country, many of the basic principals remain the same. These are the principals we talk about in our bonus course on tax planning that comes with our course on Wealth Strategy.

For example, in the U.S., we have individual retirement accounts (IRAs), profit sharing plans, SEP's and pension plans. All of these are ways to defer income from today until some later year. In Australia, you have your Super and in Canada they have their RSSSP. All of these plans effectively function the same, in that the government controls how much and who can contribute to the plan, how the plan can invest its assets, when you can take money out of the plan and how the money you take out is taxed.

As we discuss in our bonus course on tax planning, most individuals rely heavily on these plans for retirement planning and tax planning. At ProVision, we believe there is a better way. That way is to create a Tax Strategy that produces permanent tax savings. Again, all countries have tax credits, income exclusions and deductions. While they may be different from country to country, the principals are the same in all countries. These are the principals we discuss in our bonus session on tax planning.

Of course, we recommend you find an experienced, creative tax strategist local to your country to be on your wealth team. Our course on Building Your Wealth Team that comes as part of our School of Wealth Strategy (http://www.provisionwealth.com/products and that was included in the course you purchased at the Chris Howard seminar teaches you how to find the right people for your team. When it comes to a tax professional, however, one thing you need to be sure of is that your tax strategist looks at taxes from a big picture, strategic point of view and focues on permanent, rather than temporary tax savings.

The value of such a tax professional in incalculable. You can save thousands of dollars in taxes that you will never have to repay that can be used to create millions of dollars in wealth and passive income.

I look forward to having you on our monthly coaching calls. Please be sure to ask lots of questions during those calls as well. I'm sure you are not the only person with your specific questions, so your questions help everyone.

Warmest regards,

Tom

We had a great call last night. Thanks to all who were on the phone last night. We had great questions and input from several people. It really helps everyone when you ask your questions, as others will have the same questions.

One of the questions that came up was how to decide on what type of investing to do. How do you choose the category that is right for you? In our course materials, I say repeatedly that you can make money in any type of asset and that what works for one person will not work for another.

The choice of investment is a very important decision. After all, you will be spending years devoting yourself to this specific type of investing, whether it be the stock market, real estate or a business. There are three ways to choose.

First, you can choose the way most people do it. We call this the DWEED process or "Do What Everybody Else Does." Most people choose there investments based on a random recommendation from a friend, advisor, or cab driver. This is why most people are scared to death of the current global economy. They have no strategy and no idea of what they are doing with their money. And they probably lost a lot of money when the markets went down.

Better is to evaluate what you enjoy doing. In our course called, "Massive Passive Income," we go through this decision-making process. We focus on a list of personal investment preferences in the workbook. By going through this evaluation process, you can get a pretty good idea of what type of investment will be right for you. Remember, that you will be most successful doing something you enjoy doing.

The best way to choose your investment category is to consult with a qualified Strategic Wealth Coach. A qualified coach, like those at ProVision, will start by listening to your concerns and your goals. Then, they will ask you probing questions to find out what you enjoy. Because of their vast experience with hundreds of other investors, they can quickly help you identify which type of investing will be most enjoyable for you. Our ProVision coaches also use an online tool that helps identify your natural instincts. Knowing your natural instincts quickly narrows the role you should take in your investing and the type of investing that will be most comfortable for you.

Feel free to call us anytime at 866.467.5809 or visit our website at http://www.provisionwealth.com to learn more about ProVision Strategic Wealth Coaching. We are here for you and your family, so be sure to call.

Remember that when you are investing the right way (the ProVision way) and in the type of assets that you enjoy, you will be wildly successful and you will always be able to sleep at night because you know that "your financial freedom is closer than you think."

Warmest regards,

Tom

I have been asked to speak to several church groups over the next two months on the topic of financial preparedness (ward conferences for you LDS folks out there). So I have been preparing my talk these past couple of weeks. I have 10 minutes to speak, so I have to make it count. So I'm wondering would could provide the greatest benefit to these people in that short of a time?

When I have heard similar talks about financial preparedness in the past, the focus has always been on budgeting your expenses and making sure you live within your means and save money. Not only is this boring, it is extremely negative and pretty much worthless. I want to inspire people and I don't think anyone is inspired by the thought of depriving themselves of what they want and need through the idea of a budget. Both "budget" and "save" are negative terms that are all about scarcity.

Instead, I have decided to talk about creating a wealth plan, or strategy. See, if we focus on a plan, we have something positive to look forward to. As I mentioned the other day, the first step of a plan is to determine your goal. And the first step of forming a goal is to decide how you are going to celebrate when you reach the goal. So, by focusing on a strategy, we are now talking about the most positive topic possible - celebrating!!!

I would encourage all of our readers to get rid of your budget, stop saving, and start planning for a great celebration when you reach your goals. Instead of saving, begin by investing but go the next step, as we discuss in our School of Wealth Strategy (http://www.provisionwealth.com/products, i.e., creating a wealth business. Doesn't having your own wealth business sound a whole lot better than saving money and budgeting? Not only is it more positive, it is the ONLY WAY TO BUILD PERMANENT WEALTH. All great wealth has been created through business.

And it's really not very difficult once you have a system or recipe to do it and especially not if you have a great Strategic Wealth Coach to guide you through. For more information on ProVision Strategic Wealth Coaching, go to our website at http://provisionwealth.com or sign up for our School of Wealth Strategy at http://www.provisionwealth.com/products.

And wish me luck in my presentation this Sunday. I can use your good vibes. I will be speaking at 11:00a.m. MST on Sunday.

Thanks for all of your positive energy.

Your financial freedom is closer than you think.

Warmest regards,

Tom

I blew it and I'm sorry. My resolution was to blog every week day and I missed yesterday. But here's the thing about resolutions. The tendency is to drop them if we goof. Instead, I prefer to admit I made a mistake and keep going. So, I'm going to keep blogging every day even though I'm already not perfect this year.

Today's question comes from one of our School of Wealth Strategy members. Jerry has a tax question. This is totally appropriate since taxes have such a huge impact on wealth building.

Q: Do the S-Corp minutes need to declare a per-share dividend in order to take quarterly distributions? If so, do I need to hold quarterly meetings to declare them or can I make a blanket declaration for the year? Thanks for your help and the great courses and workbooks. I’ve learned a lot and am applying it as I go.

A: You do need to declare quarterly distributions in an S corporation. The key is to act as if you are a regular corporation, like IBM. Each quarter you hold a meeting to declare the dividend and then you pay the dividend. Of course, you may want to hold your meeting with your spouse at a nice restaurant and make the meal deductible. But you do need to maintain minutes of your meeting and keep them in your corporate book. For more about how to handle S corporations, meals & entertainment and corporate formalities, I suggest you subscribe to our School of Tax Strategy (http://www.provisionwealth.com/products)where, just like the School of Wealth Strategy, each month you will receive a new course on a different tax strategy topic. All three of these topics are complex enough that we have created a separate course for each of them.

Thanks for being patient with my goof yesterday. Keep reading and feel free to send the link to my blog to your friends.

Warmest regards,

Tom

Debbie from our School of Wealth Strategy asks the following question:

Q: Tom, what do you mean when you say we should build a business around our investing?

A: This is the question of all questions and gets to the core of ProVision and what we are all about. Let's start with a little background.

Historically, all great fortunes have been built in business. Whether it was Andrew Carnegie, John D. Rockefeller, Bill Gates or Warren Buffett, all great fortunes have business as their foundation. You really don't hear about great fortunes being made by investors. Ever wonder why? It's because business done right provides the most leverage, greatest velocity, and least amount of risk of any money-making activity.

I come from a long line of entrepreneurs. My father owned a printing company, his father owned an insurance agency. I learned early on in my life what it was like to run a business. But my father, while a great printer and a wonderful person, was not a great businessman. So I have spent my life learning what makes the difference between a great business and an average business. Why do some businesses grow and grow while others seem to hit a ceiling past which they can't grow?

The answer to this question lies in the foundation of the business. Small businesses stay small when the owner spends his or her time running the business. Effectively, these people own their job. They have no time to work on the business because they are always working in the business. The key is how to get the owner out of the business operations and focused on the business growth. The answer is for the business to create a strategy and a set of systems that implement that strategy. Then, and only then, will the business owner have time to grow the business. When the strategy and systems are in place, the owner only has to manage the systems, not the people. The owner isn't doing the work, the employees and other team members are doing the work.

In case you think this is a fantasy, let me explain that I have done this with my accounting firm. My partner, Ann, is a systems genius. My expertise is in strategy. So once I created the strategy for the firm, Ann created the systems. The result is that Ann doesn't spend any time at all on the accounting firm and I spend about 3 hours a week. If it can be done with a professional services firm, it can be done with any business.

So, back to Debbie's question. What does this have to do with investing? I have discovered that the business principles of strategy and systems can be applied to investing. Investors who create a business of investing, by developing a strategy and implementing systems, can enjoy the same results enjoyed by a successful business owner, i.e., higher profits, more growth, less time spent on investing, total control over their investing and less risk.

These are the principles I teach on T. Harv Eker's stage, Chris Howard's stage and Robert Kiyosaki's stage. These are the principles I have followed to create an accounting firm where I only spend 3 hours a week managing the firm. And these are the principles I follow in my real estate investing.

The good news is that Ann and I have decided to share all of our strategies and systems with you. And we have made it as inexpensive as possible. How? Through our School of Wealth Strategy and our School of Tax Strategy; two inexpensive subscriptions that each include hours of training materials and a monthly coaching call with me. To sign up, simply go to http://www.provisionwealth.com/products. It's fast and it's easy.

We want to share more of our strategies and systems, so we are continually adding more sessions to our Schools. The response from our current members has been fantastic.

Thanks to Debbie for asking this question.

Warmest regards,

Tom

Last night, I had the great privilege of being a guest on Kim Kiyosaki's webinar that she does each quarter for PBS. The topic centered around our current economy and whether this is an adversity or an opportunity. Kim asked me a very important question:

Q: What are you recommending to clients in this current economy about how to deal with financial challenges?

A: Education, education, education. I explained that as our knowledge about finance and investing increases, two things happen. First, our risk goes down. The more we know about any investment, the lower the risk because we know how to invest. Second, investment returns go up. We are able to take advantage of better investments when we know how to deal with them and how to find them.

I went on to say that after knowledge, the next key is FOCUS. It's critical that you focus on a single type of investing activity. I was very clear that the idea of multiple streams of income from multiple types of investing as recommended by several of the "gurus" is garbage. It simply doesn't work. In fact, it cannot possibly work. How can you possibly master multiple investment strategies?

We teach our clients how to determine the right investment category for them and how to create a strategy that will be successful for them in our School of Wealth Strategy. If you haven't had a chance to review this wonderful educational product, please go to http://www.provisionwealth.com/products and check it out.

In reality, the only way to solve your current economic situation is to get educated in a new way to look at wealth. The old ways simply don't work anymore. Come visit us and let me know what you think.

Warmest regards,

Tom

I was reading my scriptures this morning and came across a passage that really struck home. The verse says, "I know that he (God) granteth unto men acccording to their desire...; yea, I know that he allotteth unto men...according to their wills...." What struck me was the relationship between desire and will.

How many of us have heard the idea that if we desire something, it will happen? We read this in several great books, including, "As a Man Thinketh," and "Think and Grow Rich." And, of course, the recent phenom, "The Secret." There is no question that our desires play a major role in what we receive (especially our subconscious desires).

What I find is that the desire has to be so strong that, like this scripture explains, it becomes our will. Let me give you an example in my own life. I have long had a bad habit of biting my fingernails. Not a major challenge, perhaps, but not exactly socially approved. Not only do the fingernails look bad, there are the hangnails and other unsightly and uncomfortable results from this habit.

I tried for years to break the habit. And I have been unsuccessful until now. I set a new resolution this year to not just not bite my fingernails, but to keep my hands entirely away from my face. Unbelievably difficult. So far, though, so good. (Actually, of my 5 New Year's resolutions, this is the only one I've been close to perfect on.) I haven't bitten a fingernail in three months. I actually have fingernails that are all the same length. Amazing. I've even been thinking about getting a manicure. (Question to the guys who read this blog) - Do I lose my Guy Card if I get a manicure?)

So what's the difference this time around? It comes back to that scripture. Not only do I desire not to bite my fingernails, it has become my will. This principal doesn't just work for fingernails; it also works for all of the bad financial habits you may have. Do you spend impulsively? Do you put off your bookkeeping? Worse, do you put off your tax return filings until you are late?

All of these bad habits can be overcome if you desire it AND it becomes your will. You must will it. It has to be so important to you that you think about it not just occasionally, but ALL THE TIME. Remember, Napoleon Hill did not say, "Think once in awhile and grow rich." He said, "Think and Grow Rich." This means all of the time. It has to become your will.

As the old say goes, "where there's a will, there's a way." The converse is also true, "without a will, there's no way it will happen." (This last quote is mine.)

Focus, focus, focus on your wealth and make it your will and it WILL happen. Then and only then will your financial future be closer than you think.

Warmest regards,

Tom

I had the opportunity to speak to the MAP trading group yesterday in Sacramento. These people are serious about trading in the stock market. 40 of their roughly 100 members gathered to participate in 3 hours of discussion regarding how to reduce their taxes. Of the 40, 4 decided to go to the next step of joining our School of Tax Strategy to continue their efforts to reduce their taxes.

These numbers are instructional. Of the 100 members, only 40 of them were willing to spend 3-4 hours learning how to reduce their taxes on their trading income. Of the 40, 4 were willing to spend a couple of hours a month and a few hundred dollars to continue learning how to reduce their taxes. So about 4% of the membership was willing to take serious steps to reduce their taxes, the single biggest expense they have and a potentially huge burden on their trading profits.

Interestingly, these numbers are about average for people who attend seminars. About 5% actually take action. Why is that? I suggest it's because reaching our dreams is hard work. As my friend Greg Habstritt says, "building wealth is simple, but it's not easy."

How dedicated are we to reaching our dreams? What will we give (see "sacrifice") in order to win? Robert Kiyosaki explained at the Rich Dad Tuesday meeting recently (go to www.richdad.com to sign up for Rich Dad Insiders to participate via the Web in these meetings) that at any given time, we have a choice between winning and being comfortable.

This really struck me as I was flying home last night. I will admit that I frequently take the comfortable route. What about you? Are you winning? Will you make the extraordinary effort it takes to be the best? Think about Olympic athletes and their mindset. It's all about winning!

Every minute of every day we are making this choice. Just remember that. And here's to winning whatever it is you seek!

When you dedicate yourself to winning, your financial freedom is closer than you think.

Tom

Here is a question that a lot of our readers can relate to coming from one of our School of Wealth Strategy students:

Q: Hi Tom Regarding the Velocity principle - What would you suggest regarding pulling equity out of the real estate investment. An equity line or a refinanace? it appears that Eq line terms are shorter duration now, and you still need to pay back principle so it would seem to me a refinanace would be in order. Best Regards!

A: First of all, congratulations of having equity in your real estate. Not too many people can say that right now. Second, I would suggest sitting down with your Wealth Coach to examine the terms that you are getting from your Bank on both the fixed-term and variable term loans.

My preference generally is more flexibility. This leans towards a HELOC. There are times that a fixed loan is preferable. If you have immediate use for all of the funds, a fixed loan is great. It's better from a credit score standpoint and you can structure it so you have a fixed rate of interest. In these times of low interest, this is particulaly advantageous.

The challenge comes if you don't have an immediate need for the money or if you want to use the money sporadically. Once you take out a fixed loan, you are paying interest on it continually until it is paid off. And once you pay down the principle, you can't go back and take it out.

If you do choose a fixed loan, be sure to build a complete wealth strategy before taking out the loan. Design your strategy so your loan is used productively all of the time. That means that when you aren't using the money for more real estate or more of your primary strategy, that you have an outlet for it, such as a hard money loan. Check with my friend, Wayne Palmer, who handles hard money loans professionally to see if he won't invest it for you on a temporary basis when you aren't using it.

If you don't have a Wealth Coach yet, contact our office at 866.467.5809 and set up an appointment with one of our Weatlh Advisors to determine what level of Strategic Wealth Coaching is most appropriate for your situation.

When you have a strong, complete, Wealth Strategy, your financial freedom will be closer than you think.

Warmest regards,

Tom

Nick asks the following question:

Q: Tom, You recommended my wife reading "The Creature from Jekyll Island" for a history of banks and the Fed Reserve. I've read "GRUNCH of Giants" as well. Are there any other recommended readings dealing with the history of finance and money?

A: The two books you mention are great books and I highly recommend them to anyone who wants to understand the current economy and where it's going. In addition, I recommend "The Dollar Crisis" and "The Trillion Dollar Meltdown." I also suggest Robert Kiyosaki's newest book, "Conspiracy of the Rich."

Let me know what you think about them after you have read these books. The importance of reading books like these is so we know what to expect and how to behave in our own financial situation. As I always say, "Knowledge is the surest way to reduce Risk."

Warmest regards,

Tom

Recently, David, one of our School of Wealth Strategy students, asked about using Quickbooks versus using some other accounting software. Is Quickbooks really that much better?

Interesting timing on this question, as I evaluated a new software, Working Point, just yesterday. What I found was that Working Point has several features not included in Quickbooks, most notably that it is an online solution and Quickbooks' online solution is not very good.

However, Working Point did not include several of the excellent features found in Quickbooks. For example, Quickbooks allows you to enter checks and deposits directly into the check register just like you would if you were doing it manually with an old style checkbook. This is a great feature because it really speeds up the time for entering data. Working Point does not have this feature. Also, Working Point does not allow you to write and print checks. Quickbooks does.

Quickbooks also has several reporting features, such as budgets and forecasts that aren't available to Working Point. And, you can do your payroll very easily through Quickbooks.

Quickbooks is far from perfect and there may be a better system out there. I just haven't found it yet. When evaluating bookkeeping software, make sure you get full reporting, including balance sheet, income statement and statement of cash flows and look for ease of reporting. Also, make sure it allows you to do online banking as this is a great time saver.

Most investors and emerging entrepreneurs can easily do their own bookkeeping in an hour or two a week with good software and using online banking. We have two excellent courses on bookkeeping, one is the Basics of Bookkeeping and the other is the Basics of Using Quickbooks. You can find these courses in our online book store at http://www.wealthstrategyuproducts.com.

Let me know if you find bookkeeping software that has the good features of Quickbooks and that you like better than Quickbooks. Especially if you find a good software that is online instead of having to load it on your computer.

Warmest regards,

Tom

My friend, Corey, recently asked me the following question:

Q: Tom, I was wondering if there is a formula or rule of thumb that you use in order to figure out how much of a down payment should be applied when buying rental property?

A: Corey, I'm a big believer in cash flow. So, I only want to buy real estate rentals that will produce positive cash flow. Of course, you can always produce positive cash flow from any real estate if you put enough down of your own money. I have a client whose retirement is from several condos that they own outright (no bank loan). Of course, this doesn't produce the highest overall returns.

In order to produce the highest returns, you want the most leverage. So here is what I do. I look at what would my downpayment have to be in order to create some positive cash flow. Then, I calculate what my overall return will be, including cash flow and appreciation (and tax benefits, of course). If that return matches the criteria I have set up in my wealth strategy, then I buy the property. If not, I pass on the property.

So once again, it's all about your wealth strategy. For more about creating your personal wealth strategy, call us toll-free at 866.467.5809 or send an email to cs@provisionwealth.com.

Warmest regards,

Tom

My friend, Mike, from Canada, asks the following question about investing in the U.S.:

Q: Apart from seller financing, are there other sources of financing available to foreign investors?

A: Yes. There are many sources of financing available to those who cannot go straight to a bank for their real estate financing. Let's look at a couple of these.

1. Using Business Credit - The easiest form of financing is to get financing in your business. My friend, Chris Wise, specializes in getting this type of financing. In fact, we just did a webinar about this a few days ago. For more information, go to http://www.creditlinemillionaire.com.

2. Investor Financing - There are many investors who are willing to lend based primarily on property value. You may not get the same level of leverage that a bank would give you or the same rates, but these lenders are plentiful.

3. Raising Capital - Similar to investor financing, there are many people who are looking for a good investment but have no idea where to find it. Anyone can raise capital for a real estate project. The project has to be a really good one and you need to have all of your ducks in a row, including good experience in real estate. If you don't have experience in real estate, I suggest you get experience by investing in your community where you can get bank financing. You also need to learn how to sell. I would recommend my friend, Blair Singer's course, for learning how to sell. You can reach Blair at http://www.salesdogs.com.

4. Partners - There are lots of people who will get the financing for properties if you are willing to do the work of finding the properties and getting them fixed up. The reality is that there are several types of capital. Two of these are financial capital, which you need, and time capital, which you may have.

5. Credit Partners - There are many people with good credit who don't know how to find, fix up and rent properties. They frequently are willing to allow you to use their credit if you do all of the work. This works especially well if you live outside of the country you are investing in and your credit partners live inside the country. Chris Wise can also help with this.

The key to all of this is experience and education. Rich Dad has an excellent course on creative financing. Just go to http://richdad.com.

Warmest regards,

Tom

My friend, Helena, asks the following question that I'm sure many of you are wondering about in these days of strict lending standards from banks.

Q: What's the best way to leverage assets if you don't have a job? For example, if I have a rental property with $50,000 in equity, how do I get access to that equity so that I can purchase another asset? In the current economy, HELOC's are hard to get, and a traditional 2nd Mortgage requires verification of income. What options can I take advantage of (instead of working an 8 to 5 job) so that I can keep investing in real estate?

A: First, I would refer everyone to my blog from yesterday to Mike in Canada about creative financing. This applies to those who don't have a job as well as to those out of the U.S.

Second, I would suggest looking to investors who would be willing to lend you money secured by a second mortgage on your property. Just like banks, you will pay a higher rate than a first mortgage, but that doesn't matter if you have a good use for the money. Investors like this come in many forms, including friends and family, business associates, and former business associates.

The issue most people have raising capital is that they won't ask for it. This is just head trash. If you don't think it's a good enough deal to ask someone for the money, what are you doing making the investment?!! I suggest everyone take Blair Singer's sales training at http://www.salesdogs.com. Blair is a terrific trainer and great salesman.

Of course, if you are married, you can use the income and credit of your spouse. This is the easiest way to get the equity out of your property.

I would also suggest you begin developing a banking relationship, preferably with a smaller, local bank who you can get to know and can give you help getting the financing you need and deserve.

It's critical that you use your money and keep it moving to build your wealth. This is called velocity and is the only way to build wealth quickly and permanently. With velocity, along with leverage and minimizing your taxes, your financial freedom is closer than you think.

Warmest regards,

Tom

One of the most powerful tools you can have in your personal investment toolbox is your personal set of investment criteria. Once you have decided on the type of growth assets you will be using in your personal investment strategy, then the next step is to determine the investment criteria you will use to carry out that strategy.

Investment criteria are simple both in description and application. These are the rules you live by while you invest. Think about a simple real estate investment. You want to buy a single family home. You look at house after house after house. What is it that is going to make you want to buy it?

Of course, your decision will be quite different if you are buying it for your personal residence. In that case, you will look at the design and the neighborhood and the floor plan. You may even look at the school district if you have kids and how close it is to your work.

When you buy an investment property, the criteria will be quite different. You are interested in cash flow and appreciation. That's it. So, you look at how it will rent compared to it's purchase price. And you will look at the expected appreciation in the neighborhood.

Just like everyone has different criteria for purchasing their personal residence, so different investors will have different investment criteria. Some investors want more cash flow, some want more appreciation and others want more leverage. How to choose your investment criteria is the focus of one of our courses in our School of Wealth Strategy entitled, "Your Wealth Strategy." In this course, we teach our students how to develop their own personal set of criteria.

For those of you who purchased our 51 Secrets package at the recent Rich Dad Annual Forum in Orlando, this course came with your purchase. You received an email immediately after returning from the Forum telling you how to access all of the 12 courses included in the 51 Secrets package on line. Last week or the week before, you should have received the hard copy of all of the cd's, dvd's and workbooks that are included in this package. If you didn't receive this, please call our office at 866.467.5809 and ask for Jessie and she will track down your packages for you.

For those of you who did not purchase our 51 Secrets package, you can purchases the individual course, "Your Wealth Vision" online at http://www.wealthstrategyuproducts.com.

We can talk more about your investment criteria in an upcoming telecoaching call. Thanks to Helena for asking this question today. Remember that when you create your personal investment criteria, you will speed up your investing, increase your cash flow and build your wealth faster than you thought possible.

Warmest regards,

Tom

In our last School of Wealth Strategy call, we talked about building your wealth team. Afterwards, Michael asked the following question about building a team in a state where you don’t reside.

Q: How do I build a wealth team if I want to invest in a different state than where I live? How can I identify good team members if I don’t live there or is it better to primarily try to invest in your local area only? Can it be a good strategy to have rentals in different geographical states if they are managed well and cash flowing?

A: Building a great team is never easy. You have to find team members who you can trust and build a relationship with. This is true whether the team member is local or in another state. The single most important team member is your wealth coach. And your wealth coach can help you find team members anywhere. That is one of their primary functions.

It can be a good strategy to have properties in different states. For example, when I saw the Arizona market heating up a few years ago, I decided to start investing outside of Arizona. I chose Utah because it wasn’t overheating. What a great decision that turned out to be. Arizona has gone down in value and in rents and my Utah properties continue to do well.

I don’t suggest investing in just any state, however. Choose a state you are familiar with and even locations you understand. Make sure you do your due diligence on the market. Remember that becoming an expert at your investing is crucial to your success. It’s very difficult to be an expert in lots of different markets. I chose Utah because I grew up there and knew the market well. Work with your Wealth Coach on choosing your markets as well as your team.

If you would like more information on building a wealth team or finding a great wealth coach, contact us at 866.467.5809 or cs@provisionwealth.com

Warmest regards,

Tom

Here is a question that was asked recently by Vita about Social Security benefits:

Q: For those 65 and older and eligible for social security, are they still able to earn something (and if so, what is the annual limit)? How does having an IRA or an employer pension plan affect their eligibility for social security? Thank you!

A: Let's start but recognizing how absurd it is that the government punishes people for working. That's right. If you work "too much" you don't get all (or in some cases, any) of your social security payments. Still, the rules are not nearly as bad as they used to be. In fact, if you wait until your "full retirement age" then you can earn all you want and not lose any of your benefits. For those who were born between 1943 and 1955, full retirement age is 66.

If you take social security payments before you reach full retirement age, then your benefits are reduce by $1 for every $3 you earn in excess of $37,860 until you reach full retirement age. If you lose benefits because of your earnings, then your benefits will increase when you reach full retirement age to start paying you back for your lost benefits.

Only earned income counts. So, investment income, passive income and retirement income from pensions and annuities don't count and you can earn all you want of these types of income. So having an IRA or pension plan doesn't have any effect on your Social Security benefits.

For more about these and other social security questions, go to http://www.ssa.gov.

Warmest regards,

Tom

I often tell my students to focus on one single asset class for building their wealth. Many students focus on paper assets, such as option trading, or real estate. Some, like Brian, want to focus on business. Business is perhaps the most difficult asset class and yet, it is clearly the one with the most potential and the fastest way to build wealth (and my personal favorite). Brian asks the following questions about building his businesses.

Q: I want to build multiple businesses and either grow them myself or earn a royalty from inventions. I assume that building scalelable businesses from stratch is the best way to achieve my cash flow goal of $14,000,000 per year or $280,000,000 in net worth. However, what should I do with my businesses to achieve that amount of cashflow? Would it be most feasible to licence out my businesses, sell them privately, or would I need to do an IPO? Do you think I have time to focus on another asset class, or should I just remain focused on one given growth asset to achieve my cashflow goal and just take the excessive cash and invest in high leveraged real estate as well as build controlling interests in established small to midsized growth companies? How do companies compensate their controlling shareholders if they aren't paying out dividends?

A: I agree that building scaleable businesses are the best way to achieve your aggressive cash flow goals. Business has the most leverage of any of the asset classes and the best tax benefits for velocity. In order to achieve high cash flow, you must first, achieve maximum tax reduction (since taxes are the biggest drain on business cash flow) and then you must achieve maximum velocity of the cash flow.

I suggest you begin with a business and tax strategy. You need a plan to build your business and keep your cash flow moving while continually lowering your taxes. This plan will include the answers to whether you license out your business ideas, franchise them, or do an IPO. It will also address the quesiton of how to compensate your shareholders and what to do with the excess cash flow.

For more information on developing a tax and business strategy, visit our website at http://www.ProVisionWealth.com or contact Gennifer at my office at 866.467.5809 and she can set up an appointment for you with one of our business and wealth strategists.

Warmest regards,

Tom

Any of you who have heard me speak about building wealth or purchased our educational course entitled, "Creating Massive Passive Income," realize that I am adamant about focusing on a single asset category, such as business or real estate or paper assets. I use the examples of Bill Gates and Donald Trump to show that this is the true way to build substantial wealth.

One of our students, Bill, has a question about this. I'm going to paraphrase his question, as it is quite lengthy. Here it is:

Q: Mr. Wheelwright, I am working through module 2 "Creating Massive Passive Income", and I here you specifically state that we should focus on just one asset class and maybe two asset classes, but no more. I think I should be investing in all of the asset categories, especially since I have considerable training in finance and business. What are your thoughts about my situation? Even Donald Trump invests in entertainment besides investing in real estate.

A: Bill, I am going to stick to my guns on this. I, too, have considerable training in finance and business, having created my own successful business from scratch and built considerable wealth. If it's okay, I would like to share my personal experiences and failings to help you understand why I feel so strongly about this.

I view investing in asset classes outside those of your true expertise as an unnecessary and significant distraction. Nobody can be good at everything. I, myself, learned this the hard way. Every time I have tried something outside of my true expertise, I have paid the price. Let me refer you to one of my favorite authors, Malcolm Gladwell.

In his book, Outliers, Gladwell explained that those who have truly excelled in their field beyond the ordinary success all shared certain commonalities. The one common attribute they all shared that is within everyone's control is that they all had 10,000 hours or more of dedicated experience in their field of success. This includes the Beatles, Bill Gates, and every other person Mr. Gladwell researched.

My own experience tells me that Mr. Gladwell is correct in this assessment. If you want to be truly great at business, you must stick to your business. If you want to be truly great at real estate, focus on real estate.

I'm not saying that you cannot be moderately successful investing in all asset categories. I'm saying that to be absolutely the best and to build the most wealth in the fastest way, you must focus on a single asset category.

You are certainly welcome to try your method of working in several different asset categories at the same time. I wish you the best of luck. This simply is not my personal recommendation. As for Donald Trump, I have to believe he would be more successful at his real estate business if he spent less time at the Miss USA pageant. Of course, this could really just be a hobby for him and I am not one to criticize anyone for their hobbies, especially those that involve evaluating hundreds of beautiful women.

Warmest regards,

Tom

In this economy, lots of people are getting laid off. Good people who work hard and are dedicated to their employer. One of these, Savas, sent in the following terrific question about his situation.

Q: Dear Tom, My name is Savas and I would like to ask you a rather complicated question. I had an food import and distribution business since 1999 up to 2008 which was closed due to lack of financial intelligence and bad advising, and I then worked as an employee in a toy company for 1,5 years, from I was fired last month due to the recession (I doubled checked with them, I always went the extra mile). So, when the problems started in my business I came across Robert Kiyosaki's and philosophy and I recently attended a seminar you had. So my question is what kind of advice would you give in a person like me, to start over and create wealth? Everybody says to continue be an employee, pay my debts , and climb the corporate ladder, however this is not me. What would you do if you had no funds to invest? How would you start? Thank you so much, Seeking desperately for advice, Savas

A: I have been in this situation before, Savas. I worked for a company that was a good company and laid off many employees who were good employees simply because the economy lagged at the time. I myself was fired from another company. Let me share a few thoughts with you.

The challenge I have with being an employee is that you are at so much risk all the time. You really have no control over your life. You cannot even earn more money by working more if you are salaried. I like the idea of having multiple customers, not just one (employer). That’s why I started my company. After I lost my job, I was concerned about my family and what would happen if I continued to look for jobs and then be at risk.

Also, it sounds like you enjoyed being an entrepreneur. That’s very important. I’m like that. After my first year in business, I told my wife that I would never go back to being an employee, no matter how difficult it became financially. Making this strong of a decision was important, so I wouldn’t look back and wonder. And I love being an entrepreneur. The control over your life, the amount you can contribute to other’s lives, and the lower risk by having multiple customers is great.

I suggest you go through our Strategic Wealth Coaching program. It is designed to get our clients who want to be entrepreneurs into the right business for them and then get them in a position where they are always improving their business and their life. Call Gennifer at 866.467.5809 and she will set up a time for us to talk.

Warmest regards,

Tom

One of my favorite types of investing is Angel Investing. With Angel Investing, you invest in a start up company with huge potential and with good management. Our question today comes from Brian, who is interested in investing in other companies in a significant way. Here is his question:

Q: I am currently focusing on building green technology and environmentally friendly companies as a repeat business builder. However, after about 10 years, I would like to settle down to my life's wealth vision. I see myself operating a private investment business remotely from my caribbean home and yacht. I have control over when I want to invest my money to build my wealth further, so I can pick up anytime and spend time exploring the globe with family and friends. My question is related to the private equity and venture capital firms vs. how I desire investing. I want to invest in energy technology companies and nonprofit companies in all stages of growth with a diversified portfolio within green technology and and non-profit with regards to capitalization of the companies, but always investing to take a minimum of 10% interest in the company of interest and continue to build my position overtime as the company grows. Can I do this remotely via technology and decide when I want to invest without operating an active private equity fund or venture capital fund, but still build a team of advisors to help me make informed decisions? I guess I am trying to wrap my head around the technicalities of investing at this level and in a more passive than active role considering I want controlling interest in the companies I fund. Also, would you comment on whether this would be considered business or paper, since I will be a passive private investor and dealing with stocks, debt, and derivatives to acquire the companies? Thanks for you help in clarifying my expectations and vision. It get more exciting everyday with focus.

A: So, Brian, you want to control companies without working in them on a day-to-day basis. Sounds like you would like to be a VC (Venture Capitalist). VC’s always want to control the companies they invest in. VC’s normally come into a start up not only with capital but also with management expertise. They want to turn around a company, build it and sell it. They put in lots of hours to do so.

I wonder, though, whether you want a controlling interest in a company you are not working. As the majority owner, you will be at the most risk for the company’s success. Personally, I would rather look at investing in more companies as an Angel investor if I were not wanting to be actively involved in the company. This spreads out the risk.

You will want to be certain that each company has excellent systems and reporting set up, including internal controls and accounting systems. For more on this, see our series of wealth strategy courses at www.provisionwealth.com/products.

This would also be an interesting question to discuss on one of our monthly calls, so feel free to bring it up on our next call as well.

Warmest regards,

Tom

Jeremy asked this question. First of all, let me suggest that you use the version, QuickbooksPro. It has features that the basic version does not have that you will want to use. There are tutorials within Quickbooks that can be very useful.

For the brand new user, we recommend two of our courses - The Basics of Bookkeeping and The Basics of Using Quickbooks. Both courses can be found on our website at http://www.provisionwealth.com/products under the School of Wealth Strategy. We designed these two courses specifically for the new Quickbooks user.

Warmest regards,

Tom

One of the best ways to speed up your bookkeeping process is to integrate your bookkeeping software with your online banking. You can simply download all of your banking transactions directly into your bookkeeping software. Sometimes, there are challenges with this such as the one posed by Alice, one of our students.

Q: Recently I found that my Bank of America accounts would not exchange data with Intuit, the parent company of Quickbooks. This was a new development. Previously the data had exchanged. Does this mark a trend of financial institutions refusing to exchange data with data consolidation programs such as Quickbooks? Will this make Quickbooks less useful in the future? Is there an alternative to Quickbooks that I should be considering?

A: There is a quick fix for this. I had the same challenge recently. Go into Quickbooks and into the Online Banking screen and reset the banking institution. You will probably have to get back out of Online Banking and then get back in and it should reset. If you have further questions, contact Intuit. This worked for me and I also use Bank of America.

Warmest regards,

Tom

There is much in the media lately about how people are making so much money in real estate right now. There are, in fact, many benefits to real estate as an investment, including tax benefits and some leverage. However, it's not the only good investment. One of our students, Richard, asks the following, very astute question:

Q: All of my financial studies point to real estate being the most robust investment for developing wealth (with its exceptional control, leverage, tax benefits, etc.). I believe I tend to gravitate toward low "people intensity" situations and -- to be honest -- would probably be more comfortable doing something like options trading, but I don't like the idea of forgoing the strongest investment vehicle based on aspects of my personality that could be changed or at least altered. Isn't there a place for getting out of one's comfort zone in order to make stronger progress towards financial goals and, in the process, to stretch one's social aptitudes? Thank you.

A: I will never change my mind on the answer to this question. The best investment is the one that suits you best. No matter how many people make money in real estate, if it doesn't suit you, it's not a good investment for you. You may do okay with it. You will just never be as successful with it as you would with something that truly fits you. The reason is that when you find an investment that is right for you, you will enjoy it, you will research it, and you will have fun with it. You will become an expert in that type of investing. Are there people right now making millions of dollars in real estate? Absolutely. There are also people right now making millions of dollars in the stock market.

Do you think the folks on Wall Street are abandoning stocks and options for real estate? Some of them are and this could get them in trouble, since it's not their area of expertise. I still maintain that you will be happier and make more money doing something that is a more natural fit for you.

That doesn't mean that once you make a lot of money in stocks that you don't end up putting some of it into real estate as a way of diversifying or hedging. It simply means that if your goal right now is to build wealth, do it using a means that works best for you, whether that be stocks, real estate, business or commodities.

Warmest regards,

Tom

The other night, I was doing my monthly teleconference call for the ProVision School of Wealth Strategy. Several questions came up about buying real estate and getting leverage for that real estate while at the same time protecting it from potential lawsuits. Brandon, one of our recent questions from our AskTom database, has this similar question:

Q: Tom, I am looking at buying a single family home for investment property. This will be my first investment property and I was wondering if I should purchase it with a business entity? I think this is probably the most wise decision, which leads me to my real question. What would you recommend for a the business entity and if its an LLC how would you recommend it be taxed? (I am a single 25 year old making about 55k a year, living with 2 roommates, and saving about $1000/month for real estate investing).

A: Which entity you use depends on both the state in which you live and the state in which you are buying the real estate. LLC's work in most states. Limited Liability Partnerships, or LLPs, work well in others. Before you go too far, I suggest you work with a qualified tax and asset protection strategist to develop a good strategy. For more about this, call Siggy in our office at 866.467.5809.

One of the questions you pose here is whether to buy the real estate in your name or in the name of the entity. I suggest you buy it in your name if you are using recourse financing. Recourse financing means that you are personally responsible for paying the debt (the bank isn't limited to going only against the property). Typically in small real estate deals, banks require you to personally guarantee the loan. If this is the case, you will get better rates if you purchase in your name and then have the title company transfer it into your entity. Just be sure they use a warranty or grant deed to transfer the property to the entity so you maintain your title insurance.

Warmest regards,

Tom

In Chapter 1 of Robert Kiyosaki's book, The Real Book of Real Estate, I told about how I decided to create my own real estate team. In fact, I found a couple of family members who were struggling in their jobs and taught them the basics of finding real estate. Richard asks the following question about this:

Q: I am struggling to find a good real estate agent and am considering training someone to find properties for me. Could you provide as many specifics as possible about how you trained your real estate finders? Besides giving them a generous commission for finding exceptional deals, what techniques did you teach them so they had the ability to find the deals you look for?

A: The key here is to develop a really good wealth strategy. You need to get very specific about your criteria. When you are clear on what you want, it's much easier to communicate this to yoru real estate agent. Of course, your finders also need to be well educated about real estate in the first place. I highly recommend Rich Dad Education courses for this. You could sign up and bring your finder as a guest to one or two of the courses.

The key being that your finders must get the education just as you must get the education. Education reduces risk, increases return and make everyone a much better investor.

Warmest regards,

Tom

Cheri wins the prize for the longest email question I have ever received. Essentially, her question comes down to this - If a friend or family member is in need of cash and has equity in their house, what is the best way to get the equity out of the house?

A: This is where a blog entry will not suffice. The answer is to sit down one-on-one with a wealth strategist and determine the best strategy based on all of the facts and circumstances for both you and your friend. The struggle I have always had with detailed questions is that I simply don't have enough information to give an appropriate answer.

One answer does not fit all in this type of a situation. Remember that investing is different than being an employee or being a consumer. It's not a matter of determining the lowest price. It's a matter of making the best investment. The cost of an investment usually includes education and professional advice. If the investment is worth making, it's worth getting the right advice from the best advisors.

So my answer isn't going to be what you probably expected. My answer is to sit down with a good wealth strategist to help you devise a plan not just for this transaction - for all of your future wealth building deals. If you would like a referral, please call our office at 866.467.5809 or send us an email at cs@provisionwealth.com

Warmest regards,

Tom

Eric asks a question that I get fairly regularly about putting a personal residence into an LLC. My answer begins with the tax effect of doing so. There are no income tax results to putting your personal residence into an LLC. However, several states, such as Hawaii, have significant transfer taxes for putting a property into an LLC. Check with your Tax Advisor about your state before you do this.

Next is the question about whether this affects the opportunity to borrow against the home. The answer is - it could. However, you can distribute out the home at any time without income tax consequences in order to refinance. Again, be aware of the transfer tax consequences.

From an asset protection standpoint, it could make sense to do this, depending on the state. Some states, such as Texas and Florida, have great homestead laws that protect your home. An LLC would seem to be an unnecessary complication in these states.

The final answer is - It Depends. Like most tax and asset protection strategies, it depends on your particular facts and circumstances. Be sure to talk to a qualified tax and asset protection strategist before you do anything like this. BTW, you really need to speak to two advisors, a tax advisor and a legal advisor. My current recommendation for the legal help is my co-instructor, Garrett Sutton at www.sutlaw.com.

Warmest regards,

Tom

Dear Tom, My name is Su, your new student, from Melbourne, Australia. I have been Robert's insider member since Nov.2007, just out of Rat race. Your Home Study Materials are brilliant. I've ordered 7 of them at this moment(loving them), will order more in near future. As Robert said,"Tom makes complicated simple..." Q: How can I practice what you teach me, safely move onto Fast Track with Pro Vision 's assistance? Through your Company, is it possible: 1.Set up right entity? 2.Become your client, to start investing in USA? 3.Find R.E.O deals through your team? 4.Go through one of the "Growth Assets" - Real Estate process under Pro Vision's supervision? looking forward to hearing from you Thank YOU! Much Respect Su.

A: Su - Glad to hear you are enjoying the home study materials. Now that you are ready to move to the Fast Track, you need a strategist. Someone who can help you use the information you are learning from our courses and apply it on a daily basis to create massive passive income. My suggestion is that you work with one of ProVision's wealth strategists. Our strategists are highly trained professionals with many years experience helping client build their wealth to move out onto the Fast Track.

You can reach us by calling Siggy in our office at 480.467.4400 and setting an appointment to speak with James.

Warmest regards,

Tom

Su from Australia asks a very interesting question about how to deal with banks once you have done good tax planning and show very little income on your tax return. Here is her question:

Q: In June Prague event, you did a great speech on Debt and Taxes. You explained so clear about the concept of " Velocity of Money." Now, I really understand your Tax Benefits Formula: "2+2=16" concept. Thank YOU, Tom!

This brings another question: How to solve the contradiction situation by :
1. paying little to no Taxes;
2. Borrowing lots of money from Banks.

A Commercial property can finance by itself according to its own rental income and expenses.

But if buying a single family home, Banks want to have a look at the latest 2 years Tax Return. If paying little or no Tax, banks won't lend the money.

At this moment, in Australia, if you are a full time employee, you can borrow up to 95%; if you are self-employed, only can borrow 80%; if you self-employed, didn't pay much taxes during the latest 2 years, banks won't lend you money.

I'm bit confused...

A: This is a challenge, though as with most challenges, there is a solution. In the last few years, banks have become lazy and began to rely on tax returns as income statements for borrowers. In the business world, banks rely on financial statements produced by professional accountants. Because most individual borrowers don't have a professional accountant, banks have begun using tax returns as a substitute for professionally created financial statements.

Now is your turn to show the bank that you are a professional investor. Hire a good chartered accountant (CPA in the U.S.) to prepare a complete set of personal financial statements for you that you can give to the bank. Your financial statements will show that, while you have successfully reduced your taxes through depreciation and other tax benefits, your cash flow and balance sheet are strong.

Banks love to see professionally prepared financial statements and they understand them. After all, their business clients always use these and the banks require them. This is another example of how important it is to act like a real business owner when you are a real estate investor.

Warmest regards,

Tom

Many of our clients and students are real estate investors. One of the most basic ideas to reduce the cost of maintenance and repairs on rental properties is to put into place a home warranty and require the tenant to pay the deductible. The result is that the tenants will likely make some of the small repairs themselves and whent here is a repair, the tenants can go directly to the home warranty company and take care of the repair that way without bothering you or the property manager. One of our students, Robert, wants to know if we can recommend any good home warranty companies.

I would like to throw this out to you. Any good recommendations for Robert?

Thanks for your help.

Tom

On our last call, we were talking about roles and responsibilities for team members. Someone asked who should be on their team. While this is somewhat different for everyone, depending on their wealth strategy, one team member is a must for those who are investing in real estate. That is a good real estate agent, or "finder." Charles and Sue ask the following question in this regard:

Q: Not to let you off the hook: can you be more specific about the criteria YOU look for from finders? I recognize that we need to establish our own--as does each investor--but Sue and I are trying to learn from those who are more experienced than we are--in this case, from you.

A: I have a few criteria for my real estate agents. First, they must be investors themselves. Otherwise, they simply will not understand why you want a run down property or a property in a mediocre neighborhood. Second, I want someone who is hungry - who really wants to succeed and is willing to work. I help with this criterion by providing bonus compensation. For more on how I compensate finders, see Chapter 1 of "The Real Book of Real Estate" where I write about "The Business of Real Estate." Most important of all criteria is that the agent is truly interested in being a partner to my success and understands that when he or she is successful for me, they are also successful for themselves.

The only way I have ever been able to accurately assess this trait is by paying close attention to the questions they ask me. I don't want them to merely ask about what type of real estate I'm looking to buy. I want them to ask about my vision for my real estate business, my goals and even my values. When they ask good questions, I'm pretty clear that they are in tune with me and will make a good partner.

Warmest regards,

Tom

Ordinarily, this blog is about me answering questions. Today, however, I'm going to let one of our students, Su Shi, from Australia, do the entire blog. This was her reply a couple of weeks ago following one of our monthly Ask Tom Live calls.

It's Su here from Melbourne, Australia.

As a royal student of your monthly Financial Education Program, I'm so happy to report to you ( because of my distant location to be qualified to make the comment) that your FIRST webinar to replace the previous teleconference was Great Success! It was so close and clear as if I were sitting at the front row of University of Arizona lecture hall, listening to your vivid and passionate lectures :o).

Thank you, Tom and your team to improve the educational tool so much better!

This month's topic was " Establishing Your team's Roles and Responsibilities". I thought I need to know clearly my Personal Role in the team FIRST, then can establish the Team accordingly. So following your Home Study Course instruction, I did Kolbe A Test through your workbook link. The result was answered many questions which I used to ask myself. As you stated in DVD, "I wish I 've done this Test long time ago..."

Through Kolbe Test, we are able to understand ourselves much more, maximize our potential natural energy, WITHOUT PUTTING ANY EXTRA EFFORT to achieve our designed goals faster. As Chinese Proverb saying, " In this world, the most Difficult Person you really understand is yourself. If you can conquer yourself, nothing you can't overcome."

Tapping into our own natural resource, focusing on our wealth strategy, the Financial Freedom is closer than we think, Definitely !

Again, thank you Tom: for your Well organized, Consistent, and now "HIGH TECH" Financial Education program, and I'm awaiting for your next interesting, new subject.

And looking forward to meeting you in the coming event in Australia.

Thanks, Su for this great insight.

Tom

The only way to truly accelerate your wealth creation is through adding velocity to your money. The two fundamentals to velocity are leverage and tax savings. Leverage can come many ways. The most obvious is through using other people's money. They key, though, is to continue borrowing so you never have much equity in you properties. Kim asks the following question in this regard:

Q: One of your strategies involve borrowing on the appreciation of real estate property to use as down payment on the next real estate property. Is this the same as a refinance on the original property (in which case cash flow would be reduced due to higher monthly payments). Or is a loan (or line of credit) that we can request from a bank...based on a new appraisal.

A: You could do it either way. The key is to have good enough cash flow from the property that as the property appreciates in value and you borrow out the appreciation, that your rents go up in proportion to your new debt service (payments). This is why we emphasize cash flow so much. The last thing you want to do is put yourself into a negative cash flow position. That's what got so many people into trouble over the last few years. Once you go into negative cash flow, by definition you have turned your asset into a liability.

Warmest regards,

Tom

Kim asks the following question about building wealth:

Q: One of your strategies involve borrowing on the appreciation of real estate property to use as down payment on the next real estate property. Is this the same as a refinance on the original property (in which case cash flow would be reduced due to higher monthly payments). Or is a loan (or line of credit) that we can request from a bank...based on a new appraisal.

A: Yes. Though your cash flow should be the same as when you purchased the property in spite of the refinance and additional interest payments. The idea is that, when properly purchased, rents should increase at least equal to appreciation. As long as the cap rate remains the same, this will always be the case with larger properties (both residential apartments and commercial property). The reason is because commercial property is valued based on the cap rate. If the cap rate stays the same, then the value of the property increases in direct proportion to the rent increase, as long as expenses also stay the same.

So the key is to look for those properties in areas where the rents are going up. Then, you have appreciation, which you can borrow out and you will have sufficient rents to pay the increase in interest on the refi, providing that your interest rate is less than your cap rate (which it should be or you shouldn't be buying the property in the first place).

I am intrigued by this, so I'm going to write a special report on it. Stay tuned for how you can get this report on how to increase the velocity of your money through rental real estate.

Warmest regards,

Tom

This is a follow up to Kim's question a couple of days ago on refinancing in order to increase her property holdings and therefore to increase her wealth. She asks the additional question:

Q: I have a commercial property that is fully paid off and currently has a tenant (good cash flow). I am interested in buying other properties without putting in additional money. Should I take out a loan on my original building (thus decreasing its cash flow) to use as down payment on a new building. What do I ask for (terminology to use) so that the bank would understand.

A: I would do exactly as you are suggesting. I want to have as little equity in a property as possible. The reason is that wealth is built through volume. The greater the overall value of my properties, the greater the overall cash flow and the faster my wealth is growing. The new property you purchase should generate more than enough cash flow to offset the reduction in cash flow from your original building. I will go through an example of this in the new special report I am writing. I'll let you know how you can get this.

The terminology you use for the bank is that you want to finance your original property. This is a cash out financing. Once you do that financing, you can use the money as a downpayment on any other property. Unless you have a really good relationship with the bank and you are working with the commercial loan department of the bank, I would probably not be telling the bank the purpose of the refinancing. That is not relevant information to them and may serve to cloud the issue.

Warmest regards,

Tom

I guess it's Kim's week for answers. She has another question following up on yesterday's.

Q: Your formula includes using earned income to buy growth assets. If I have a business, should I use the business income to buy growth assets (instead of distributing it to myself and then buying the assets post-income tax). Can I also use pretax dollars if my spouse earns a 1099?

A: How you use the money from your business to buy growth assets depends entirely on your tax and asset protection (TAP) strategy. Every investor MUST have a TAP strategy. Without it, your assets will not be protected from potential lawsuits or from the government. Begin by hiring a tax strategist who is a CPA and also who understands real estate (real estate is a specialty in the tax strategy world). Your tax strategist should be able to recommend a good asset protection attorney once the tax strategy is in place.

If you would like more information on tax strategies, please call Siggy at our office at 866.467.5809 or email us at cs@provisionwealth.com.

Warmest regards,

Tom

Charles has once again asked the question of the day.

Q: Can I go to Sterling Trust and ask who might be interested in investing in real estate? And, how do we make sure, when looking for equity partners, that we are not running afoul of SEC regs?

A: Sterling Trust is simply an adminstrator for IRA's. I wouldn't go to them for investors. The best answer I can give you for this is to join Robert Kiyosaki, Ken McElroy and myself in Sydney, Australia next week as we present our 3-day training course, "Unfair Advantage." This course will teach you what you need to do to attract investors, stay compliant with SEC rules and raise capital from banks, investors, friends and family. I know it's short notice, but this is a one in a lifetime opportunitity. You can sign up for it at http://www.provisionwealth.com/events.asp. Hope to see you in Australia. This is going to be an extraordinary, one-time event.

Warmest regards,

Tom

Richard has the following questions:

Q: Do you use cash-out refinancing in your real estate investments?

I have an offer in on a property that should have instant equity if our list-price offer is accepted, but it is my understanding that appraisers rely heavily on the most recent sale price when doing their appraisals. At this point it looks like it may be difficult to draw equity from home after we purchase it because the sale price will drag on the appraised value when we attempt to do a cash-out refinance.

Do you have any thoughts or advice? Will the weight of our sale price drag less on the appraised value if we wait a year or so?

A: The answer to your first question is a resounding YES. Cash out refinancing is critical to creating wealth. The challenge is always when and how. Doing a cash out shortly after a purchase from a bank is difficult these days. You may have to wait several months or even a year to do so. However, you may find an investor who is willing to finance this earlier. I'm about to release a paper on velocity, so stay tuned to my blog and our ProVision website for a more complete description of this strategy.

As for your sale dragging down the amount of your appraisal when you go to get refinanced, remember that appraisers are looking for comparable properties, not your property. It is possible, though, that your sale will drag down the appraisal of other properties in the neighborhood. If yours is an exception and there are others selling at a much higher price, then the appraiser should be using those other sales and it shouldn't hurt you so much.

Warmest regards,

Tom

Here is a great question from Lynn about my favorite natural instincts assessment, Kolbe.

Q: Tom, I took the Kolbe test. How do I know what my score means?

A: The Kolbe A assessment is a nice, easy set of questions that determines your natural instincts. That is, how you naturally act in any given situation. Obviously, the first place to look is to review carefully the report that Kolbe gives you. However, there is much more to learn from your Kolbe score.

Your Kolbe score can provide great insight into which type of investing you should do, your role on your team, and how your team will react to you. Your team should also be taking Kolbe (we use it for all of our employees and clients) so you can understand how they will behave.

We have created to courses to help you better understand Kolbe. The first is Your Personal Role. The second is Your Team's Roles and Responsibilities. You can find both of them at http://www.wealthstrategyuproducts.com.You might also want to do a 1-1 consultation with one of our wealth strategists. If so, call our office at 866.467.5809 to schedule an appointment.

Warmest regards,

Tom

One of the biggest challenges for those starting out in real estate is financing their real estate purchases. Banks prefer to lend to individuals, not entities. And they want to see as much income as possible so they can be assured their loan will be repaid.

From the investor side, the investor wants to maximize the number of properties he/she can purchase with cheap bank financing. In our last Ask Tom Live call, I mentioned to Harold that he and his wife should purchase their properties separately instead of jointly. June wants to know why.

Q: You told Harold (the farmer) that he and his wife should buy houses separately because they would be able to buy more. If they have the same pile of funds to draw upon to purchase the houses, how would they get to buy more if they did it separately and not jointly.

A: Most banks want to qualify their loans under the FHA rules. FHA guidelines restrict the number of loans held by any one borrower. If you purchase the homes jointly, you are both charged with the loans. So, you can effectively double the number of homes you can buy using cheap bank financing simply by purchasing them in the name of a single spouse. Of course, you still have to meet the income requirements of the bank, but for many couples this is a fairly easy test to meet for each spouse. So we suggest you always purchase the properties in the name of one of the spouses to maximize the use of cheap bank financing.

Warmest regards,

Tom

Q: Hi Tom, I am about 3/4 of the way through your School of Wealth Strategy course and have developed my wealth vision and determined I would like to invest in real estate. However, I am currently stationed overseas with the US military and do not wish to invest in foreign real estate. It will be about two years before I am back in the US and ready to actively invest. What can I do until then to advance my dream line and make me more prepared before I start actively investing? Should I start creating a wealth team including paying for a wealth coach and legal entity before I have any investment income? What are some typical shortfalls you see in clients who are seeking wealth coaching for the first time?

A: Congratulations on your decision and commitment to building your wealth. I definitely suggest you build your wealth team as soon as possible. The reality is that you don’t have to be in the U.S. to invest here. You just need a good team in place along with the internal controls, agreements and systems you put into place. I strongly recommend speaking to my team at ProVision for a good wealth coach. You can contact them at cs@provisionwealth.com. The biggest mistakes I see with clients are not getting their team in place and thinking that they need to do everything themselves. Wealth building is all about leverage and the most important leverage is using other people’s time and talents.

Warmest regards,

Tom