There's a Big Difference Between Reality and Perception

 Napoleon Bonaparte is quoted to have said there is only one step from the sublime to the ridiculous. In a lesser but similar way, I have frequently encountered people who did not realize the moment they would have made abnormal profits on the stock exchange. Worse of all, they later made wrong decisions which ensured they made abnormal losses. Let me explain.

To the financially literate, what I am about to say appears so obvious that it may seem unnecessary and a waste of time and space. Yet millions of people worldwide, through their actions, continue to prove their ignorance and consequently suffer financially when they trade in stocks and stock derivatives.

REALITY FACT 1: You make money on the stock exchange when you sell for more than you bought.

REALITY FACT 2: You make money on the stock exchange when you buy for less than you sold for.

Below are 2 examples of mistaken perception.

MISTAKEN PERCEPTION 1:
Investor buys 1,000 shares at $20 each for a total of $20,000. One year later, the stock price is $45. Mistaken investor calls his friend for a cook-out to celebrate $25,000 he has made on the stock exchange (1,000 shares @ 45 = 45,000 less $20,000 = $25,000).
Two years since the mistaken investor bought the shares, he realizes the share price has dropped to $15. He becomes angry and tells himself he has lost $30,000 ($45,000 less $15,000). In a fit of anger he calls his broker and sells the shares at $15 each for a total of $15,000.

REALITY CHECK 1: The mistaken investor never at any time made $25,000. The only way he could have made the $25,000 was by SELLING the shares at $45 - which he did not do. Therefore, there was no reason for a celebration cook out.
REALITY CHECK 2: The mistaken investor made a loss of $5,000, not $30,000. ($15,000 less $20,000= $5,000 loss) Therefore his anger was unnecessarily 6 times worse.
REALITY CHECK 3: If he had not sold the shares at $15 each and instead held on to them, he would NOT HAVE MADE A LOSS. Profits and losses are only made when shares are bought and sold.



How Would You Protect Yourself With This Knowledge?

If you understand that money is made or lost when and only when a real transaction takes place, you can protect yourself from Madoff-Stanford like financial scams.

When you get a statement from your Madoff-Stanford afiliated broker with unusually high returns, it is very tempting to say, "let all the money stay there so that I can continue to receive long account statements with big figures". Today you know better. You will constantly sell off the shares that reflect the significant increase in value and keep the profits in real money - in your hands.

Therefore, for as long as the scam exists you will continuously profit and hopefully re-coup your initial investment. When the scam begins to fall apart, you will be among the first to know because you will start to receive long explanations instead of real hard cash in your hands.

At this juncture you need to do two things immediately. Request in writing an immediate withdrawal of 100% of your funds from all your investment accounts. If you do not get 100% of your funds, contact law enforcement agencies for direction on the next steps.

Greed, Fear and Despair In December 2008 and early 2009, the Bernard Madoff investment scam was all the rave in the finance news. Madoff had managed to pull off the largest ponzi pyramid scheme estimated at $64 billion by federal prosecutors. In February 2009, R Allen Stanford appeared in the news on allegations of operating an $8 billion ponzi pyramid scheme that scammed 50,000 customers.

Do you wonder how Madoff and Stanford managed to pull such major stunts in full view of regulators and law enforcement agencies? Do you expect people to learn something about finance and investing from these saddening and disastrous sagas?

Emotion 1: Greed - Our selfish and excessive desire to acquire great wealth in the shortest time and with the least effort, sooner or later lands our hard earned cash into the merciless conniving schemes of financial scam artists.

Emotion 2: Fear - When we are part of a large crowd, our irrational apprehension compels us to act in uniformity and utter disregard for due diligence. Fear clouds our judgement and we suffer from paralysis of the will. We lie quiet and defenceless - holding in our hands cheap pieces of paper with large numbers. Oblivious to the fact that a scam artist withdrew real dollars from our bank accounts and is revelling and squandering our retirement dollars on some paradise island and a 7-million-dollar penthouse. Those statements you regard so highly as strictly confidential may as well be blank and posted at the local mall's noticeboard. They represent nothing and it doesn't matter who reads them.

Emotion 3: Despair - It is easy to feel powerless and lose hope when your life savings are gone with the wind. It is disheartening for a financial calamity to strike too late in life when time has taken toll on your earning capacity and physical ability. Yet it is not right to let the scammer take your life too. There were news about people ending their lives when details of the Madoff scam emerged. Please do not ever consider taking that route. There is more to life than money. Most often the things that bring eternal memories, profound meaning and deep joy are not based on monetary value. Love, Friendship, Family and God may provide you with a myriad reasons to live and enjoy another day.

How Can You Avoid Financial Scam Artists? 1) Asset Allocation and Portfolio Re-balancing:
Asset allocation simply means that you should not put all your eggs in one basket. Consider having near cash accounts e.g. FDIC/NCIS insured money market accounts, real estate, luxury collectibles, commodities, stocks and bonds. In the same light, do not invest all your money with one broker.
Re-balancing means that periodically e.g. every year, you will review your investment portfolio and adjust your investment in the various asset classes so as to maintain a pre-determined mix that is appropriate to your strategy. For example you may determine that 10% of your wealth should be cash, 60% real estate, 20% stocks and 10% other. If next January you review the value of your assets and realize that stocks are 30% and real estate is 50%, you will re-balance your portfolio by selling 10% of stock and investing it in real estate. This way, you will maintain the 10%-cash, 60%-real estate. 20%-stock and 10% other mix.
Most of the people who are devastated by financial scams invest almost all of their money in a single asset class.

2) Act a little strange
Someone once said that if you see multitudes of people going in one direction and a small group of mad people going in the opposite direction, just know they are journalists.
As a general rule of thumb, if you see everyone including your hairdresser and mechanic giving you the same investment advice, just know it is time to do the opposite.
When everyone is rushing to invest with Madoff and Stanford, then it is time to sell and hold on to your real dollars. When everyone if shouting from roof tops that real estate is the best and fastest growing sector then consider selling because the peak is nigh and a depression is looming. When everyone is grumbling that this is the worst real estate market and house values are plummeting, then consider buying.

Good Starting Point for Work At Home Ideas
If you are thinking about starting a business, the following 4 places will provide you with hundreds of valuable and profitable business ideas for free. The information provided offers a good starting point for brainstorming. However, when you have narrowed down your list to the most favorable business ideas, it may be worthwhile to pay for more detailed reports.

1. HOME BASED IDEAS
At ENTREPRENEUR.COM you will find an icon labelled 'business ideas'. You may click here to see the business ideas page. You will be able to browse ideas by category e.g. business services, sports and food. On the same page you will find 'home based', 'part-time', 'low-cost' and even 'unusual ideas'. This site also offers numerous 'how-to-guides' on growing your business and it is free.

2. DIGITAL PRODUCTS
If you are interested in selling digital products e.g. e-books and software either as a publisher or affiliate, then CLICKBANK.COM is the place to start looking for business ideas . At the top of the home page you will see the 'marketplace tab' which opens to reveal a list of product categories. If you click on your desired category, search for individual products using the 'sort by popularity' tab. You will see a list starting with the most popular products in the category.

If you wish to explore how you can sell the digital products as an affiliate, you may click here to read my article 'How I made my first internet marketing sale'.

3. CHEAP STUFF
If you wish to know what people are buying when they set their mind on bargain mentatility, then EBAY.COM is your starting point for low-margin product and business ideas. Ebay offers a lot of useful information although the pages keep changing. Right now you can see the hottest selling items by clicking here http://product-index.ebay.com/best_selling_1.html

If you want additional information on what is trending up or the most watched items, then you may click here www.pulse.ebay.com The products are listed in categories and sub-categories and you will also be able to see the top ten largest stores and popular searches.

4. BOOKS AND OTHER
For business ideas on popular books and other general items, AMAZON.COM provides a list of best sellers by category. Towards the bottom of the home page on the left side you will find a table of 'Features and Services'. Click on Amazon bestsellers. and start by browsing the 'movers and shakers' category.

I believe the above information will get you started on knowing what people are searching for online with their wallets open.

Since Clickbank, Ebay and Amazon are very successful businesses which offer a marketplace for buyers and sellers, it follows that you should be able to find at least 1 suitable and profitable business idea - and it will be free.

There are 3 principles of investment which many people ignore or take for granted yet they form an important part in selecting investment strategies.

1. Leverage. To what extent are you able to increase your returns by using other people's money i.e. borrowed funds?

For example; Compare two banks, B and C, which are able to lend you money at the same interest rate. Bank B requires you to put down 20% while bank C requires you to foot 3% of the initial cash outlay. If you had $3,000, this means bank B can lend you $12,000 while bank C can lend you $97,000. The amount of money that you can earn from investing $100,000 far outweighs what you can earn using $15,000.

Using other people's money usually comes with many strings attached but it affords a giant leap to someone of little means when trying to cross the chasm of poverty and being broke,

2. Probability. Every venture has a chance of success and failure. Probability puts a number that is easily understood to the chance of success or failure. For example; If 100% represents guranteed success and 0% represents guaranteed failure, then any percentage point between 0% and 100% will give you an idea of your chance of success.

As a rule of thumb, embark on a venture when the probability of success is at least 70%.

In the corporate world, mathematicians who use statistics and scientific models to determine probabilities for business are called actuaries. I do not expect you to consult an actuary for simple financial decisions but I would like you to appreciate the importance of determining the probability of success for any venture and especially in comparison with other similar ventures.

It may be interesting to note that in very simple terms, there are only 3 main outcomes to any investment venture. 1) You will make money2) You will lose money3) You will neither make nor lose money

If these 3 outcomes are equally likely, then each outcome has a probability of 33⅓%. This probability is crucial because it implies that even if you are just average at investing, and if you invest many times for a long period of time, at least you will make money 33⅓% of the time. It is sad to note that many retail mutual funds managers have failed to achieve even 33⅓% success rate.

What is the success rate of your mutual fund manager or investment advisor?

3. Risk. In the context of this article, risk is the factor, thing or event that could make you lose a significant portion of your initial investment.

In my other article titled,

Do You Know The Secret of the Safest Investment Strategy? , I introduced the importance of managing risk. You may read the article by clicking here

When considering risk I want you to deterimine as much as possible the things that could go seriously wrong and cost you to lose more than 10% of your investment? Then put measures to avoid or lessen the impact of such events. Some simple strategies may include insurance, partnerships, mentoring, consultancy, piece-meal roll out etc

In another article I will present 5 basic principles of investing which even your barber should be aware of. Experience tells me that often what we expect to be common may not be as common as we think. It may therefore pay off to have a word with your barber and then read the next article on the basic principles of investing.

The 6 main Pros and Cons on Offshore Investing  
Offshore investing by definition is simple. However, just like any other type of investing, the how and why is clouded by varying schools of thought and contradicting philosophies based on ethics and morality of business, profit-making and estate planning in foreign economies. In this article, we will avoid the complex matters of offshore investing and offer an introduction that serves the curiosity of average Joe.

DEFINITION : Offshore investing is directing assets to a foreign country with a view to preserving value and/or earning income and profits. A foreign country is any country other than your main country of residence. Assets in this context mainly refers to money when people are discussing offshore investment in general.

PROS
1- Lower Taxation - Some regions e.g. Cayman Islands, British Virgin Islands and Nauru have a reputation as tax havens. You can read more about the speficic tax advantage of each region at http://en.wikipedia.org/wiki/Tax_havens Taxation is these tax havens can be influenced by source of income, residency and citizenship.
2- Higher Rates of Return - It makes business sense to invest in regions which maximize shareholder earnings in the long-term by either reducing the cost of doing business or increasing revenue.
3- Confidentiality - Some regions do not have stringent disclosure requirements which enables individuals and companies to hide business ownership and wealth information from the public and predatory legal suits.

CONS
4- Money Laundering -Money and assets generated through illegal means in one country may be temporarily diverted to another as a means of hiding the true source. Money laundering and profiting from crime is illegal.
5- Unethical Business Practice - Example: Investing in a country which does not enforce human and worker rights so that you can knowingly endanger the lives of your employees by not spending money on safety and fair working conditions. The focus in this respect is profit maximization by practising policies which are illegal in your country of residence.
6- Tax Evasion - Hiding income from tax authorities in your country with a view to not paying tax. This is illegal.

Is Offshore Investing Good or Bad? It is worthwhile to mention 3 issues of discussion which arise when offshore investing is discussed in academic circles.

1- Is it fair and acceptable (ethically and economically) to direct wealth earned in one region to be invested or spent in another region? Does offshore investing contribute to economic decline of the region from which assets are removed?
2- Does offshore investing contribute to the general lowering of taxes and wages and thereby adversely affecting quality of life by encouraging transfer of capital to regions with lower taxes and wage rates?
3- Does offshore investing contribute to market inefficiency by circumventing rules on disclosure of financial information and lack of transperancy?
4- Should offshore investing be considered a valid and necessary means of wealth diversification on the basis of region only?

Let me read your thoughts on the good and bad of offshore investing by writing your comments below.

3 Marketing Tips For The Streetwise Marketer.

  If you have unlimited funds, marketing becomes very easy and any college text book will be a sufficient guide. However, if your funds are very limited then you need to pull some magic tricks by sniffing out the secret tricks used by streetwise marketers.

In this article I will reveal 3 critical concepts for a newbie marketer which you may not find in a marketing text book.

First Marketing Tip - Who is my Target customer?  The basic purpose of marketing is to create and increase demand for a product or service. Secret number one is to identify and classify your most profitable customer. 80% of your efforts and budget should specifically target this customer.

Second Marketing Tip - Where does my target customer congregate? Always keep in mind that your target customer belongs to a particular group of people and such people congregate in particular places. Identify places where your target customer congregates and direct 80% of your advertising efforts and budget towards these specific places.

Third Marketing Tip - What is your irresistible offer? Since marketing is about attracting people, you need to prepare an irresistible offer that will invite your target customer and any other prospect to at least try your product or service. Below are key ingredients of an irresistible offer.

1- Offer something for free. Everyone loves to get something for free. If you are sincere and truthful and give away something of value for nothing, you will attract a huger part of your target customer and many other prospects. The free offer should be funded out of your marketing budget.

2- Remove any risk. Prospective customers may fear to order because of indecision and fear of making a wrong decision. Remove this fear by making all orders risk free and fully refundable for 60 days or more.

3- Offer assurance. Increase customer confidence by getting at least 3 people who fit the description of the target customer to give positive product reviews.

4- Simplify, Simplify, Simplify. Make it extremely easy and simple for the customer to enquire about and buy the basic product. Be accessible by phone, email, post, walk-in etc 24-hours a day without queueing. Accept all forms of payment online and off-line. Have only 2 similar products in one advertisement. Make sure there is a large price difference bewteen the 2 while making it very easy for the customer to differentiate the main features.

2 Additional Tips for the Newbie Marketer Fourth Marketing Tip - Differentiate the buyers from the onlookers. In order to maximize the benefits of your future marketing efforts, it is important to identify the people who are ready and willing to spend money on your products now and in the future. The way to accomplish this is to offer something of value for a $1 to all those people who accepted to receive the free valuable item that was part of the irresistible offer.

Anyone who accepts to pay you $1 will surely buy something expensive from you in the near future. You should maintain this list with utmost cherish because all you need to make abnormal profits is to bombard this list with varying offers month after month. You should be able to sell to 20% of the customers on this list month after month. (On average, a general marketing campaign achieves less than 3%).

Fifth Marketing Tip - A customer's decision to buy is based on emotions. Most people will tell you that they make buying decisions based on logical reasoning. However, savvy marketers know that customers buy because of their feelings at the time of purchase. Your marketing message should therefore focus on how the customer or someone related and valued by the customer will feel after your customer purchases your product or service. Appeal to the customer's emotions when you explain the advantages of your product or service.

You may also read a short article on marketing tips for a newbie internet marketer at http://hubpages.com/hub/internet-marketing-tips-for-a-newbie_

Only 4 Things Can Happen to Your Investment. Which One Is Critical?

I am very happy to answer the question,"Which is the safest investment strategy?" According to the association of stock brokers, there are millions of individuals who invest in stocks. Unfortunately, only 3% of investors are able to consistently make profits. Now you understand why the common person thinks investing is too risky.

If you look at these statistics, you can deduce that 1) 97% of individual investors lose money by trading in stocks and 2) (sadly or fortunately, depending on your side of the trading game), 3% of individual traders/investors earn all the millions of dollars lost by the 97%.

What does the 3% know that the 97% does not know? This is the secret that I will reveal to you today. The concept will sound very simple and obvious that you may be tempted to ignore and forget it. However, I urge you to remember this simple concept and your investments will be safe.

The Secret

Whenever you invest, there are 4 things that can happen.
1) You can make a big profit
2) You can make a small profit
3) You can make a small loss
4) You can make a BIG LOSS

The secret is - NEVER MAKE A BIG LOSS!

Making a small loss will cancel out with making a small profit over the short term. The pedestrian investor focusses on making big profits and forgets to safeguard against making the big losses. It is the big losses that ruin your finances.

It does not matter what investment vehicle you use, the secret of safe investing is to put in place a strategy in your investment plan that will eliminate any chance of a big loss.

If you are not sure how to protect yourself against the big loss, please seek the help of an independent Financial Advisor. If you first prevent a major loss, you will retain the big profit and safeguard your initial investment capital.

In another article I will discuss several ways of preventing the big losses.

Homework: Implement a strategy in your current investments that will prevent a big loss from wiping out your capital/principal and future profits.

5 Truths That Explain My Laziness
1. Fact. I have learnt that the world is uncomfortable with handling the truth. Instead of telling the whole truth and nothing but the truth, I have often said what can be believed. Today I will let the cat out of the bag and please forgive me if this hurts you. I am poor because I am lazy. I am not sick and I am not stupid.

2. Work. I was very shocked and afraid when I saw Larry Winget's book,"It's Called Work for a Reason". It is then that I realized that the likes of me have been discovered and there is no reason to hide. I discovered two crucial facts about employment. One. I get paid for showing up, not how I much or how hard I work. Two. Fringe benefits, thanks to the union. I get full pay for calling out sick whenever I sneeze on Monday morning. I get full pay for taking 5 personal days off to watch re-runs of football playoffs. I get full pay for going on vacation. For the likes of me, that's irresistible free money.

3. Luck. I am a strong believer that my best chance of crossing the river of misery, poverty and lack is scratching a million dollar lottery ticket. According to statistics, chances of winning at least a million dollars in a lottery are 1 in 18 million while the chances of dating a millionaire are 1 in 215. That means, it is easier for me to date 75,000 millionaires than to win the jackpot. Hhhhmmmm, they say numbers do not lie but i would not like to be a gold digger. It still sounds like doing work. That is why I choose to buy ten one-dollar scratch tickets every week and I will be doing it till my dying day.

4. Meetings. I also discovered very early in my career there is something excluded in my job description that my employer approves of during working hours. You guessed it. Attending meetings. I attend all possible meetings and training sessions in my department. I call for meetings in my office so that I can look busy and also to manouvre myself from responsibilities and to delegate my job to others. I do not hesitate to hold impromptu meetings at the water sprinkler and in the cafeteria. Woe unto you should you smile at me on the hall way. I will find a topic and a reason to follow you like a shadow back to your work place to discuss something.

5. Team Work. The management genius who introduced team work on the job never heard about the likes of me. I let others do the work then share in the team glory. It is for this single reason that you will never find me doing anything alone.My survival tactic is to cheer and praise those doing the hard work.

3 Truths That Explain My Poverty1. Education and Them. I know that going to college will significantly increase my ability to earn more and it will also increase the number of jobs that I can apply for. However, I prefer to work 45 years doing low-paying odd jobs instead of going to college for 5 years and working 40 years on a high paying professional job. Why don't I go to school if I am sharp enough to know this? They say the higher you go up the corporate ladder, the harder it is to hide among the crowd. And you lose the protection of the workers' union. They also say reading is harder than manual work and it gives you white hair prematurely. Somehow, I always find it easier to listen to "them" instead of myself or the others.

2. Reason and Religion. I would never accept to be an atheist. I find in divinity and theology a veil to hide my laziness and justify my poverty to those who do not know the truth. "The poor will always be with us," said Jesus, the great teacher. I know He did not specifically declare that I am the one who will remain poor throughout the ages, but i choose to interpret scripture conveniently. Reincarnation. This is even more interesting. Reason 1. I am poor because I was a bad person in my earlier life. Therefore I should patiently endure misery in this life as fitting punishment. Reason 2. May be in my previous life I was a good dog that didn't do bad things, like chasing and biting the neighbors kids. Therefore I am lucky to be born a human being. However, I have to start at ground zero on the wealth and richness scale and slowly work my way up - in several lifetimes. Either way, there is no hurry to do anything.

3. Ponzi, Madoff and Pyramid Schemes. Due to my affinity for easy and quick cash and my endearing propensity to avoid real work, I have fallen for and wasted my savings on all manner of get-rich-quick scams. My greed for easy money and instant riches far surpasses my fear of dying poor. Any small amount of spare change that I do not gamble on the lottery, I have willingly given it away to some fraudulent schemer. I do not regret being poor today. If I had a million dollars last year, for sure I would have entrusted Madoff with all of it, so today I would be reeling on ground zero. You may wonder why i haven't learnt my lesson. Didn't I mention that learning is a job - a hard job?


3 Ways I Manage To Escape Blame1. Politics and Friendliness. Simply put, I am a master of the game. I know how to play corporate politics to the letter. I am the most likeable person in the whole company. I appear at all company functions as long as I am not equired to do real work. I am also very careful about those non-sensical things that bosses care so much about yet they mean nothing. Like arriving on time at work and at meetings and being the last to leave the parking lot. I have also memorized the birthdays of all bosses and their immediate families. Not to mention that I always send each one of them a card, thanks to the dollar store that sells 20 cards for a dollar. My boss would never dream of firing me - the whole company would revolt. I am such a nice guy that no one really questions what i really do.

2. Sickness and Laziness. For some reason my doctor does not recognize laziness as a form of sickness. During my last physical examination, he did all the tests and blood work and declared I was as fit as a fiddle. But i decided to disclose the truth and informed him that I am very lazy. He quickly looked at my file then calmly acknowledged, "But I see you have a job". "Yes, doctor but I am all the same lazy and I avoid work as much as possible," I insisted. For some reason he decided not to pursue the matter further. I guessed there was no recommended prescription for laziness that my insurance would pay or probably my doctor thought I go to my job to work and my comment was inteded to be a joke.

3. Politicians, the Rich and everything else. For some reason I cannot fathom, when causes of poverty are discussed, laziness never shows up on the agenda. People are quick to blame poor schooling, low-paying jobs and drug abuse. At another level, these causes are presumed as a direct consequence of the politicians in government or the wealthy people owning the businesses. The buck keeps passing over my head yet I know the real reason for my poor state is sheer laziness. And I am not alone!

Where Were You in 2008? The beginning of a year has a monumental significance in your life. It is a time to reflect on the events of the past year, shedding a tear or two for the people and things we lost yet managing to smile for the good memories you hold dear. More importantly, the start of a new year is a time to set new goals, conjure up new aspirations and expect the best of luck in the coming months.

What we often forget is that we bring into 2009 the same habits and attitudes of 2008. We must therefore start by examining our habittudes (habits and attitudes in short) towards money. Then accept to take corrective action where necessary.

By looking at how you earned money in 2008 and how you spent, saved and invested it, you will get a simple and quick insight into your habittudes towards money. Please go ahead and answer the following 7 questions.

Q1. How did you earn money in 2008? 1a) Employment 1b) Business/self-employment 1c) Investments

Q2. How did you spend money in 2008 on Priority One items 2a) Savings 2b) Investments 2c) Insurance 2d) Personal Development 2e) Taxation

Q3. How did you spend money in 2008 on Priority Two items 3a) Fixed expenses e.g. Rent, Minimum debt payments, Utilities

Q4. How did you spend money in 2008 on Priority Three items 4a) Entertainment, Donations, Travel, Vacation, Parties

Q5. How much new debt did you acquire? How much new debt was for assets, investment, business or personal development?

Q6. How much in assets do you own? 6a) House, investments, land etc

Q7. How much in liabilities do you owe? 7a) Mortgage, Consumer debt, Other debt etc

The 3 Prong Approach to Hanging In There

When the economy goes south and the media bombards us with grim news of escalating unemployment, company bankruptcies and home foreclosures, it sure sends a shiver down your spine.

However, If you go down history lane you will see that bad times and good times are just part and parcel of the cycle of life. It would be immature to expect global financial prosperity to increase positively ad infinitum.

As Jim Rohn, the great motivational speaker wisely put it, every 10 years is very much like the last ten years. Some years have more opportunities than challenges and some years will have more challenges than opportunities. You have guessed it right - these are the years when we are faced with more challenges. But all the same, opportunities do exist.

The good thing about all this is that bad times do not last forever and new opportunities arise amidst the doom and gloom. I will offer you 3 simple tactics to see you through the tough times. If you stay positive and search and ask and knock, you will survive and set yourself up for greater success when the tide turns.

Tip Number 1 - You need to learn new things. Albert Einstein, the science genius said we cannot improve our situation unless we first improve ourselves.

1a) You therefore need to learn new ways of making money to safe guard your current lifestyle or replace a failed source of income. Be creative and use the skills and knowledge you have or go to school and acquire new skills.

1b) You can also make use of the large availability of skills and knowledge of the people who have been laid of. Can you imagine how expensive and difficult it would be to tap into this labor market when the economy is at its peak? This is a golden chance to partner with others who are waiting for someone like you to shine a light in their gloomy tunnel.

1c) Reduce the amount of time you watch negative news and listen to friends and family complaints. If you commit your life to negative things you will feel discouraged and hopeless and hence attract the same things you fear in your life.

Tip number 2 - You must change your habits and attitudes towards money. According to David Bach, author of "Start Late, Finish Rich", 50% of Americans have less than $50,000 in savings. In fact almost a third (30%) have less than $1,000 in savings. This means the average family does not save for a rainy day. Well, it is raining heavily now and it is hurting badly because families do not have adequate savings to sustain them as they look for alternative sources of income.

2a) Create a budget, examine your bank accounts and credit card accounts with a surgeons scalpel and slash off unnecessary expenses and stop the bleeding. Remember to focus on the big expenses too. We all have a habit of focussing on the small stuff and we forget the items which have a large impact on our finances.

For example. If you cannot afford to rent a 3-bedroom apartment, i am sorry you worry so much about the Joneses but please down grade next month and save a couple hundred bucks. Downgrading your lifestyle is an economic strategy and should not mean you will never rise up again.

2b) You also need to stop spending what you do not have. Most people confuse credit cards with money and they assume available credit means money in the bank. If you recognize the difference you will save yourself high interest fees and unnecessary and unaffordable expenses.

Tip number 3 - Invest your money. Keep your money in accounts that generate income. Avoid keeping money in non-interest earning or low-interest earning accounts e.g. checking accounts and bank saving accounts.

3a) Look out for high interest earning money markets and certificates of deposits which are federally insured to protect you against bank failure.

3b) Longterm investments should mainly be in stocks that pay dividends. This ensures you will receive an income as you wait for the stock market to improve and for stock prices to rise.

Above three tips can be summarized as personal development that creates additional sources of income while investing funds in accounts that generate income in excess of the rate of inflation.

You can also read the following hub on money saving tips http://hubpages.com/hub/Ten-Common-Mistakes-About-Money